The
Escrow Process
What is Escrow?
Escrow is the process
used to transfer property from one owner to another. Typically referred
to as "closing the sale," escrow acts as a neutral third
party to the transaction and carries out the instructions of the
purchase and sale agreement. The Escrow Officer draws the legal
documents necessary to close the sale, coordinates the closing
activities and is responsible for the transfer of monies pertinent to
the sale.
The Life Of An Escrow
-
Purchase and
Sale Agreement: The purchase transaction begins when the buyer
and seller write the purchase and sale agreement.
-
Mutual
Acceptance: Once the buyer's offer is approved by the seller the
completed agreement, signed by all parties, is sent to the agreed
upon Escrow company.
-
Escrow:
Escrow Officers review title reports, pay off liens/judgments,
review the documents for accuracy and follow through on all details
noted in the purchase agreement.
-
Signing of
Documents: Separately, the buyer and seller meet with the Escrow
Officer to sign closing and loan documents.
-
Lender’s Final
Approval: The signed loan documents are then sent to the lender
for final approval.
-
Recordation of
Documents: The title company examines the documents and sends
them to the county recorders office to be recorded for public
records.
-
Confirmation of
Closing: Once Escrow receives final figures from the title
company the transaction is complete. Funds are then disbursed to all
parties involved.
Who Takes Care Of What?
The Seller: The
seller clears unsettled matters on the preliminary title report, makes
all noted repairs to subject property and signs escrow instructions.
The Buyer: The
buyer reviews the preliminary report and codes, covenants and restrictions (if
provided), secures financing with lender, signs loan documents, provides
hazard insurance for lender, signs escrow instructions, deposits funds
and receives owner’s title insurance policy.
The Lender: The
lender reviews the preliminary title report, qualifies the buyer,
discloses closing costs, issues loan commitment and lender’s escrow
instructions, arranges hazard insurance with buyer, prepares loan
documents for escrow, receives and reviews executed loan documents,
funds loan to title and receives lender’s title insurance policy.
The Escrow Officer:
The Escrow Officer orders and reviews the preliminary report, provides
copies of report to all parties; works with seller to clear liens, judgments,
etc.; receives and prepares seller’s and buyer’s escrow
instructions, receives buyer’s funds for escrow and deposits, complies
with the lender’s escrow instructions, arranges new loan funding with
lender, prepares document/special instructions, disburses
monies/documents to appropriate parties, prepares final closing
statement for buyer and seller.
