Final answer:
Escrow is the process in which a neutral third party holds funds during a real estate transaction, ensuring property taxes and home insurance are covered. Agents must deposit escrow funds within the period specified by local laws or the contract terms.
Step-by-step explanation:
The concept of escrow is central to real estate transactions. When an agent receives escrow funds, they are responsible for depositing them promptly with a neutral third party.
This third party, the escrow agent, holds the funds until certain conditions of the sale are met, ensuring that property taxes and home insurance are taken care of as part of the normal monthly payment. The exact timeline for depositing escrow funds can vary depending on local laws and the specific terms of the contract.
It is important for all parties in a real estate transaction to understand the terms of the contract thoroughly. For example, Article X specifies a ratification deadline which might influence the timing and obligations of the involved parties.
Additionally, the clause on possession determines the rights and responsibilities of the owner and residents should the agreed date of residency be affected by unforeseen circumstances.