Escrow Information

WHAT THE ESCROW OFFICER DOES

The escrow officer…

· Serves as the communication link to all parties in the transaction.

· Prepares escrow instructions.

· Requests a preliminary title search to determine the basis upon which a title insurance policy may be issued.

· Requests a beneficiary’s statement or pay-off demand relating to existing financing.

· Complies with lender’s requirements, specified in the escrow agreement.

· Receives purchase funds from the buyer.

· Prepares or secures the deed or other documents related to escrow.

· Prorates taxes, interest, insurance and rents according to instructions

· Secures releases of all contingencies or other conditions as imposed on any particular escrow.

· Records deeds and any other documents as instructed.

· Request issuance of the title insurance policy.

· Closes escrow when all of the instructions of buyer and seller (or lender and owner) have been carried out.

· Disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs.

· Prepares the final statements for the parties accounting for the disposition of all funds deposited in escrow.

The escrow officer does not…

· OFFER LEGAL, TAX, ACCOUNTING OR VESTMENT ADVICE.

· NEGOTIATE THE TRANSACTION.

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What The Seller Will Do

The seller will...

· Sign escrow instructions;

· Provide a copy of any contract of the seller that will affect the escrow, such as the Listing agreement, and any required disclosure statement(s);

· Include seller’s deed and title insurance policy and any unrecorded instruments affecting title;

· Provide information on the present status of existing loans, including consent to the submission of a beneficiary statement or demand for payoff, as required, and financing disclosure information if the seller is taking back a purchase-money mortgage;

· Provide certificates or releases on any mortgage, judgment, mechanic’s lien, or other encumbrance to be paid off through escrow;

· Provide any existing hazard insurance policies to be assigned to the buyer;

· Provide ant subordination agreement required by the contract;

· Provide tenant information, including their names, rent and deposit information, assignment of all leases to buyer, and the fact that tenants have been notified of the change of ownership;

· Provide executed deed on real property to the buyer;

· Provide executed bill of sale on any items of personal property, or security agreement if purchase is by installments; and

· Make available any other documents or approvals needed to close the sale.

Again, most sale expenses are open to negotiation. The seller typically will pay for the:

· Structural pest control report and repair (if needed)

· The beneficiary statement

· Existing loan payoff and prepayment fee (if any)

· Mortgage discount points in FHA transactions

· All fees in VA transactions

· Notary fees on documents prepared primarily on the seller’s behalf, and any arrearages for taxes or other prorated items

What The Buyer Will Do

The buyer will…

· Sign escrow instructions;

· Provide copy of any contract of the buyer that will affect the escrow, such as a buyer-broker agreement;

· Review preliminary report and any encumbrances of record;

· Review all loan documents, including new loans, loans to be assumed, loan buyer is taking back title “subject to”, and disclosure information if seller is taking back a purchase-money mortgage;

· Obtain hazard insurance coverage;

· Review and approve all property inspection reports and arrange for final Property inspection before closing;

· Examine the bill of sale covering any items of personal property to be conveyed separately at closing; and

· Deposit the cash needed to cover down payment, closing costs, and other expenses, such as loans to be paid off prior to funding.

Usually, expenses may be negotiated between buyer and seller. (Am exception may be a government-backed loan.) Charges typically incurred by the buyer include the:

· Loan origination fee

· Appraisal fee

· Credit report

· Lender’s title insurance

· Note and deed of trust

· Recording fees for those documents

· Notary fees for documents prepared on the buyer’s behalf

· Prepayment of loan interest

· Assumption fee (if applicable)

· New fire or other hazard insurance premiums

· FHA mortgage insurance

· Any prorated expenses the seller already has paid