3 Reasons to use an Escrow Company in Albuquerque
Why would I ever need an escrow company?
Imagine being the buyer of a home on a real estate contract without using an escrow company, where you have paid for 20 years. You’ve never missed a payment and you’re always on time. Until one day your seller passes away. His estate is passed to his children and on a large list of his assets is the property that you’ve been in the process of purchasing for years. But there’s a catch. The seller wasn’t keeping track of what you had paid him. He took the cash you sent him each month and bought things with it before his wife knew of the cash. It’s as if you hadn’t sent any payments. Ever! It’s your word against the deceased. Who can you turn to? How can you prove you’ve been paying? Is it possible to get the deed without starting over?
On the flip side, you’re the seller’s family of the situation above. You just want to liquidate all of your father’s assets to settle his estate and move on. But there’s a catch. Your father didn’t use an escrow company, he never kept records, and he always accepted cash. Where can you turn to clean up this mess? How will you ever settle his estate with so many loose ends? Do you really want to spend the rest of your life in court figuring it out?
Escrow is needed anytime there are 2 parties exchanging items of value (usually, real estate). A third party is needed to create trust, keep a transaction history, and hold documentation (like a deed) until the terms of the contract are fulfilled, or not. Without escrow, you open yourself up to possibilities of misinterpretation, confusion, neglect, or, even, fraud.
We Create Trust Between Strangers
An escrow company provides trust between strangers. It provides checks and balances and ensures the terms are upheld.
We Provide a Third-Party Transaction History
In the scenario above a payment history from a third party would have made all the difference in the world. A complete 20-year transaction history and documentation for each payment would end any arguments quickly and the buyer could continue to make payments as usual.
In December 2003, Sunwest Escrow received its trust powers from the State of New Mexico Financial Institutions Division and became the only company in New Mexico with the ability to act as both an escrow agent and a custodian for Individual Retirement Accounts.
We Hold Important Documents
The escrow company holds important documents to be released upon the completion, or default, of the contract. Again, in the scenario above, if an escrow company was used, the documents would have remained at the escrow company and payments would have continued as usual until one of two things happened:
When the terms of the contract are completed the documents (usually deeds) are released to the buyer for recording.
- If the terms of the contract are not completed and the contract is defaulted the documents are returned
This is just one example of how buying real estate without an escrow company can go wrong, but, sadly, we hear of these stories often, and usually too late to help. A little research can go a long way. Call us today for a free book on Real Estate Contracts and always use an escrow company in Albuquerque.