Resources

How Escrow Works in Real Estate

Escrow is a process designed to protect everyone involved in a real estate transaction. Here's how it works:

Introducing the Escrow Agent

A neutral third party (like Rocky Mountain Escrow), known as the escrow agent, steps in to manage important aspects of the deal. They are impartial and ensure the terms of the agreement are followed.

Holding Funds and Documents

The buyer deposits their earnest money or down payment into the escrow account, and the seller provides documents like the deed. The escrow agent securely holds these until all conditions of the sale are met.

Managing the Process

The escrow agent oversees the transaction, ensuring both parties fulfill their obligations. For example, the buyer may need to secure financing, and the seller may need to handle repairs or inspections.

Closing the Deal

Once everything is in order – funds, documents, conditions and approvals – the escrow agent coordinates the final step. The money is transferred to the seller, and the title or ownership is transferred to the buyer.

Escrow States vs. Non-Escrow States

The key difference between escrow states and non-escrow states lies in how real estate transactions are finalized.

Escrow States rely on a neutral third party, known as an escrow agent, to handle funds, documents and the closing process. The escrow agent ensures all conditions of the sale are met before distributing funds and transferring ownership. This method offers a centralized, streamlined approach.
Non-Escrow States (also called Title States), like Colorado, use a title company or a real estate attorney to manage the closing process. Instead of a neutral escrow agent, the buyer and seller interact more directly with these service providers, who handle title work and oversee the transaction. This creates a more personalized but equally secure approach to closing.

While both models are effective, Colorado’s non-escrow structure benefits from the close coordination between title companies and legal professionals. This ensures smooth and secure real estate transactions tailored to your needs.

FAQS

Answers You Can Count On

About our Services

What does Rocky Mountain Escrow do?

We service private real estate loans, seller carry-back financing, and other long-term escrow accounts, such as contracts for deed. We act as a neutral third party to collect and distribute payments and maintain payment records. The escrow company receives payments from the buyer, applies them to the principal and interest, and then forwards the payments to the seller.

Who typically uses RME services?

We work with buyers, sellers, realtors, attorneys, title companies, and private lenders involved in non-traditional financing arrangements such as owner carry-back loans.

What happens if the buyer doesn't make payments?

If the buyer fails to pay, the seller may request that Rocky Mountain Escrow send a late notice to the buyer or have an attorney send a demand notice. Typically, late notices are sent when payment is at least 15 days overdue. If payment is not made, the seller may proceed with contacting an attorney to initiate the process of reclaiming the property.

How long have you been in business?

We’ve been locally owned and operated for over 40 years, proficiently serving thousands of clients across the Four Corners region.

Getting Started

What documents are needed?

The required documents include Executed Escrow Instructions for both parties; the original Promissory Note; Deed of Trust; and a completed W-9 form.

Who pays the fees?

The responsibility for fees is negotiable. Either the buyer can cover all the costs, the seller can pay them, or they can be divided between both parties.

How much are the fees?

To view the fee schedule, click here.

Payments & Account Access

How do I make my payment?

We offer several payment options, including automatic bank withdrawal, manual payment by email, checks, etc. Please contact us to determine the method that works best for you.

Can I pay with a credit or debit card?

We are unable to accept card payments, but we can set up automatic withdrawals from a checking or savings account.

Can I make my payment over the phone?

No, we do not accept phone payments. However, we can set up automatic payments from your bank account or a one-time ACH payment.

Do I need a payment coupon?

While not required, including a payment coupon helps ensure your payment is posted promptly and accurately. If you don’t have one, please write your account number on the memo line of your check or include the name under which the account was set up. If there is an address associated with the property, include that address.

Can I pay additional principal toward my loan balance?

Yes. as long as your regular payments are current and there are no prepayment penalties outlined in your Promissory Note, we can accept extra payments to be applied directly toward the principal.

If I make a principal reduction payment, will my monthly payment change?

Depends. Your monthly payment amount will remain the same as specified on your promissory note unless your Promissory Note provides for the payment to be recalculated, or your lender agrees in writing to change the monthly payment amount. Extra principal payments will reduce your loan term and save interest over time.

Account Info & Statements

How do I access my account online?

We offer secure view-only online access where you can view your balance, payment history, and year-end statements 24/7. Contact us to get set up.

How do I get my current balance or a payoff amount?

Contact us directly for a payoff statement or log in to your online account for your current balance. We’re happy to provide balance details or an official payoff statement. We provide one payoff statement a year for free if requested.

Do I receive a year-end statement?

Yes. Both buyers and sellers will receive a year-end tax statement sent out by January 31st each year. This includes a full payment history for that year and is designed to comply with IRS regulations. We also file a 1098 for all borrowers, so those who qualify can take a tax deduction for interest paid.

Do you report to credit bureaus?

We do not report to credit bureaus, as many do not currently rate privately held accounts. However, with written permission from the borrower, we can provide verification of a loan and payment history to creditors as needed.

How can I change my account information?

All account updates must be submitted in writing and signed to maintain complete and accurate records.

Downloadable Forms

Rocky Mountain Escrow recommends the use of attorney-prepared documents to ensure accuracy and compliance. The cost of document preparation is typically the responsibility of the borrower.