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> Escrow, Title, Taxes and Closing Costs |
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When opening an escrow,
the buyer and seller establish terms and conditions for
the transfer of ownership of that property. These terms
and conditions are given to a neutral third party known
as the escrow holder. The Escrow Officer, in turn has
the responsibility of seeing that the terms of the escrow
are carried out. The escrow is an independent third party
- the vehicle by which the interest of all parties to
the transaction are protected.
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| How
does the Escrow Process Work? |
The Escrow officer takes
instructions based on the terms of your Purchase Agreement
and the lender's requirements. The Escrow Officer can
hold inspection reports and bills for work performed as
required by the Purchase Agreement. Other elements of
the escrow include hazard and title insurance, and the
grant deed from the seller to you. Escrow cannot be completed
until these items have been satisfied and all parties
have signed escrow documents.
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| What
Does the Escrow Holder Do? |
The Escrow holder is a
neutral third party, that maintains the escrow and impartially
overses the escrow process, ensuring that all conditions
of the sale are properly met.
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| The
Escrow holder's duties include: |
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Serve as the neurtral agent and
the liason between all parties involved. |
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Prepare the escrow instructions. |
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Request a Perliminary Title Search
to determin the status of title to the property. |
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Comply with the lender's requirements
as specified in its instructions to escrow. |
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Receive tand handle purchase funds
from the buyer. |
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Prepare or secure the deed and
documents related to the escrow. |
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Pronate taxes, interest, insurance
and rents. |
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Secure releases of all contingencies
or other conditions imposed on the escrow. |
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Record the deed and any other
documents. |
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Request the title insurance policy. |
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Close the escrow pursuant to instructions
supplied by the seller, biyer and lender, if any. |
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Disburse funds as authorized by
the instructions, including charges for title insurance,
recording fees, real estate commissions and loan
payoffs. |
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Prepare final statements for all
parties involved that account for the disposition
of all funds held in the escrow account. |
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| How
Do I Open An Escrow? |
When your offer is accepted,
your real estate agent will open escrow. As soon as you
execute the Purchase Agreement, your realtor will place
you initial deposit (earnest money) into an escrow account.
Written evidence of the deposit is generally included
in you copy of the sales contract. The funds will then
be deposited in a separate escrow account and processed
through you local bank. You will receive a receipt for
the funds from the escrow company.
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| What
Information Will I Have to Provide? |
| You may be
asked to complete a Statement of Indentity as part of
the paperwork. Because many people have the same name,
the Statement of Identity is used to identify the specific
person involved in the transaction through such information
as date of birth, social security number, etc. this information
is strictly confidential. |
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| How
Long is an Escrow? |
| The length
of an escrow is determined by the terms of the Purchase
Agreement and can range from a few days to several months.
The average length of an escrow is usually 30 to 45 days. |
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| When
Do I sign Escrow Instructions and Where? |
| A few days
before closing, your Escrow Officer or your realtor will
contact you to make the appointment for you to sign your
escrow instructions, grant deed and final papers. At this
time, your Escrow Officer will also tell you the amount
of money you will need to bring in. |
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| Your
Appointment |
This is a
list of items you will need in preparation for your appointment
to sign escrow papers :
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Identification
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All Parties - These are several
acceptable forms of identification which may be
presented. One of the following forms must be presented
at the signing of escrow in order for the signature
to be notarized: a current driver's license or passport
or State of California Department of Motor Vehicles
ID card. |
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Cashier's Check
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Buyers - You need a cashier's
check or a certified check issued by a California
(or your state) financial institution made payable
to The escrow company in the amount givent to you
by your Escrow Officer. A personal check will delay
the closing since Fidelity is required by law to
have "good funds" before disbursing funds
from the escrow. |
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Lender's Requirements |
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Buyers - Check with your lender
to make sure you have satisfied all your lender's
requirements before coming to The escrow company. |
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Fire and Hazard Insurance |
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Buyers - You must have fire and
hazard insurance in place before the lender will
send money to The escrow company to fund the loan.
Whenever you buy a home. you must have insurance.
Once you have spoken to your insurance agent, call
The escrow comapny with the insurance agent's name
and phone number so they can make sure the policy
complies with your lender's requirments. |
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Title to your Home |
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Buyers - You may refer to the
"Methods of Holding Title" in the next
section of this book for general information with
regard to holding title, but it is best to contact
you attorney or tax consultant. |
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| After
Your Appointment |
| After all parties have
signed all the necessary papers, your Escrow Officer will
return the buyers' loan documents to the lender for a
final review. This review usually occurs within a few
days of execution of the documents. Once the review is
completed, the lender will call your Escrow Officer so
that the neccessary final paperwork can be completed to
record the documents and close the escrow. |
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| Final Proceeds
Check |
| The proceeds check is disbursed
upon the close of escrow and your Escrow Officer is able
to verify with the Country Recorder that the documents
have recorded and legal transfer has occurred. The procceds
checks can be delivered to your realtor so that he/she
can deliver it to you, or you may make arrangements to
pick it up at The escrow company. |
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It all begins with the
offer and acceptance skillfully negotiated by the real
estate agents representing Buyer and Seller
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| The Buyer(s) |
Submit a written offer
to purchase (or accepts the Seller's counter-offer) accompanied
by a good faith deposit amount.
Applies for a new loan, completing all required forms
and often prepaying certain fees such as credit report
and appraisal costs.
Approves the preliminary report and any property disclosure
or inspection reports called for by the purchase and sale
aggreement (Deposit Receipt).
Approves and signs the escrow instruction, new loan documents
and other related instruments, required to complete the
transaction.
Fulfills any remaining conditions specified in the contract,
lender's instrunctions and/or the escrow instructions.
Approves any final changes by signing amendments to the
escrow instructions or contract.
Deposits sufficient funds in the escrow to pay the remaining
down payment and closing costs.
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| The
Lender (When applicable) |
Accepts the new loan application
and other related documents from the Byer(s) and begins
the qualification process.
Orders and reviews the property appraisal, credit report,
verification of deposit(s), preliminary report and other
related information.
Submits the entire package to the loan committee and/or
underwriter for approval.
When approved, loan conditions and title insurance requirements
are established.
Informs Buyer(s) of loan approval terms and commitment
expiration date and provides a good faith estimate of
the closing costs.
Deposits the new loan documents and instruction with the
escrow holder for Buyer's approval and signature.
Reviews and approves the executed loan package and coordinates
the loan funding with the escrow officer.
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| The Escrow Offier |
Receives an order for the
title and escrow servies for The Company.
Orders the title search and examination on subject property.
Acts as the impartial "stakeholder" or depository,
in a fiduciary capacity, for all documents and monies
required to complete the transaction per written instructions
of the principals.
With authorization from the real estate agent or principal,
orders demands on existing deeds of trust and liens or
judgements, if any.
For an assumption or subject to loan, orders the beneficiary's
statement or formal assumption package.
Reviews documents received in the escrow: preliminary
report, payoff or assumption statements, new loan package
and otehr related instruments. Reviews the conditions
in the lender's instructions including the hazard and
title insurance requirements.
Prepares the escrow instructions and reuired documents
together with a preliminary estimate of settlement charges,
for the Buyer and Seller, in accordance with the terms
of the sale.
Presents the instructions, documents, statements, loan
package(s) and other related documents to the principal(s),
for approval and signature.
Receives the balance of funds required from the Buyer
and/or the proceeds of the loan from the lender.
Determines when the transaction will be in the position
to close and advises the parties.
Assisted by title personnel, records the deed, deed of
trust and other documents required to complete the transaction
with the Country Recorder and orders the title insurance
policies.
closes the escrow by preparing the final settlement statements
disbursing the proceeds to the Seller, paying off the
existing encumbrances and other obiligations. Delivers
the appropriate statements, funds and remaining documents
to the principals, agents and/or the lenders.
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| The
Seller(s) |
Accepts Buyer's offer to
purchase and initial good faith deposit to open escrow.
Submits documents and information to the escrow holder,
such as : addresses of lien holders, tax receipts, equipment
warranties, home warranty contracts, any leases and/or
rental agreements, etc.
Orders inspections, receives clearances and approves final
reports and/or repairs to the property as required by
the terms of the purchase and sale agreement (Deposit
Receipt).
Approves and signs the escrow instructions, payoff demands,
grant deed and other related documents required to complete
the transactions.
approves any final changes by signing amendments to the
escrow instructions or contracts.
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| Title
Company |
| Examines the title
to the real property and issues a preliminary report.
Determines the requirements and documents needed to
complete the transaction and advises the escrow officer
and/or agents.
Reviews and approves the signed documents, releases
and the order for title insurance, prior to the closing
date.
When authorized by the escrow officer, records the signed
documents with the Country Recorder's office and prepared
to issue the title insurance policies.
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Escrow
| Title
| Closing
Costs | Taxes |
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