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Purchasing or selling a property involves exchanging large amounts of money and transferring significant assets. Escrow accounts help ensure they are protected. Escrow agents are neutral third parties that protect the interests of buyers, sellers, and lenders while the terms of a real estate sale are finalized. Only when all terms of the transaction have been met will the escrow agent release payment and the title to the property.


When is Escrow Used?

Escrow accounts may be used in any transaction involving large amounts of money. It is most often used in real estate. An escrow account will typically be established by an independent party during the sale of a property. The prospective buyer’s deposit will be kept safe in the account until the sale is complete, in which case the deposit will be applied to their down payment.

Lenders may also require an escrow account throughout the duration of a mortgage in which case they will take and save a portion of a homeowner’s monthly mortgage payment in escrow to cover property taxes and homeowner’s insurance.

What Are the Benefits of Escrow?

Escrow accounts help protect real estate sellers and buyers throughout a sale. Both parties can proceed with inspections and finalizing the terms of the sales agreement knowing that their money and important property documents are secure and managed by an independent third party. Sellers can remain confident that the buyer is serious about purchasing the property, while buyers can feel secure knowing their deposit is protected until the property title is transferred to them. 

Escrow and “Good Faith Deposits”

Typically, a prospective buyer will be asked to pay a “good faith deposit,” sometimes known as earnest money, before the seller will agree to let them proceed with inspections. These deposits are generally one to two percent of the asking price. By putting down a deposit, the seller can feel more comfortable taking their property off the market and opening up their homes to inspectors before the sale is final.

However, the prospective buyer needs some reassurance that they will receive their money back if they discover something troubling in an inspection and decide not to proceed with the purchase. This is where escrow accounts come in.


Escrow offers the following benefits:

  • For buyers: Protects their good faith deposit until sale is final and property title is transferred over. This is especially important while inspections are conducted; if issues arise and the sale falls through, the potential buyer can rest assured that the seller will not run away with their deposit. 
  • For sellers: A good faith deposit shows a seller that the prospective buyer is serious about purchasing their property and has the money necessary to do so. Since the property title is managed by an independent third party, the seller can rest easy knowing that their ownership rights will not be transferred to the buyer until they are compensated for the sale.

The Role of an Escrow Agent

An escrow agent can help with the following:
Coordinate communication between buyer, seller, and lender
Keep good faith deposit secure until sale is final
Conduct title search and prepare title insurance policy
Transfer property deed to buyer and sales proceeds to seller

The Sentinel Advantage

Sentinel Title & Trust gives you the confidence you need when selling or investing in a new property. Our team of escrow agents serve as trusted, independent third parties that protect the interests of buyers, sellers, and lenders throughout each sale. We’ll handle the details of your real estate transaction and ensure that all parties walk away happy.

Having served South Florida for years, Sentinel has earned a reputation for providing quality, premier title and escrow services. Learn what we can do for you by requesting a free quote.

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Owned and operated by real estate lawyers that have a combined 100 years of experience, Sentinel Title & Trust offers property owners and real estate professionals the services of a traditional title company with the added benefit of having knowledgable real estate lawyers on their side.
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