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"Escrow" is not a company. It is a type of an
account in which a financial company, typically a bank, makes sure that two
parties, typically a buyer and seller, perform as they have agreed to before
titles and monies are allowed to pass back and forth. It is for the safety
of both buyer and seller. Thus in the case of a car sale, especially
across great distances where you really have no way to know the character
of your buyer or of your seller, by setting up an escrow account with a
bank, both the title and the payment for the car go to the bank.
Obviously both buyer and seller can trust the bank! When the car has been
shipped and received and the buyer is happy with the car, he notifies the
bank. The bank releases the money to the seller and releases the title to
the buyer.
Escrow takes place in almost 100% of home sales because of
all the legalities regarding properties and because of the larger amounts of
money. As collector car values go up and up, and scams become more
and more common, you will see more and more escrow sales of cars. It
is in your best interest whether you are the buyer OR the seller.
A side note! Beware the buyer who wants
to give you a cashier's check for your car and drive away with car and
title. A cashier's check is NOT guaranteed funds. This is a BIG
misconception! A cashier's check can have a stop payment placed on
it just like a personal check. NEVER sell a car based on a cashier's check
unless you have adequate time for the cashier's check to clear your bank before
the car and title leave your hands.
Wayne
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