Today, I got a question from one of my subscribers. He asked me about who’s gonna hold the escrow money when you’re buying a house in Kentucky. I did some digging and thought I’d share what I found with you guys. It is not as complicated as you might think.
What’s Escrow Anyway?
First off, let’s talk about what escrow even means. Basically, it’s like a safe holding spot for money during a deal. You give your money to a third party, and they keep it safe until all the deal stuff is done and sorted out.
Who Holds the Money in Kentucky?
In Kentucky, it gets interesting. I found out that the Kentucky Real Estate Commission (KREC) is in charge. They make sure everything with escrow is on the up and up. Usually, the real estate company helping the buyer holds onto the money. But, if you’re building a new house, it could be the real estate company, the builder, or even a lawyer who’s handling the closing. They’ll hold the earnest money deposit (EMD). This is a deposit that buyers make to show that they are serious about purchasing a property.
- Earnest Money Deposit: This is the money you put down to show you’re serious about buying the house.
- Who Can Hold It?: Usually the buyer’s real estate company, but it could also be the builder or a lawyer for new construction.
What About the Rules?
There’s this thing called RESPA – it’s a set of rules that says how much escrow money can be collected. Plus, Kentucky has its own rules in something called the Kentucky Revised Statutes. So, there are laws to keep things fair and square.
- RESPA: Limits how much escrow can be collected.
- Kentucky Revised Statutes: Kentucky’s own set of rules for real estate deals.
When the Deal’s Done
Once everything’s agreed on and the deal is closed, that escrow money goes towards what you owe. I learned that both the buyer and the seller have costs to cover at closing, like transfer taxes and such.
One more thing I dug up – if a broker from another state is working with a Kentucky broker on a commercial real estate deal, it’s the Kentucky broker who has to hold the escrow funds. Just a little something extra to know.
Wrapping Up
So, that’s the gist of it. Escrow might sound a bit scary, but it’s just a way to make sure money is handled safely during a real estate deal. In Kentucky, you’ve got the KREC, some federal rules, and state laws all working together to keep things in check. Hope this helps clear things up for anyone looking to buy a house in Kentucky!
