Page 22 - English CA Buyer Seller Guide
P. 22
Opening Escrow
The selection of the escrow holder is normally done by RED FLAGS IN THE ESCROW/TITLE PROCESS
agreement between the parties to a transaction. Typically,
the escrow is then opened by the real estate agent. Which A “red flag” is a signal to pay attention! The below are
agent (the "seller side" or the "buyer side") will open the some of the items which may cause delays or other
escrow is generally determined by local practice. problems within a transaction and must be addressed well
before the closing.
Escrow may be opened via telephone, email, website
form or in person, depending upon the preference of the • Bankruptcies
agent and which options are available through the escrow • Business trusts
company. An escrow file number is assigned and the • Clearing liens and judgments, including child or
appropriate information is entered into the computer.
Upon issuance of the escrow file number, the escrow spousal support liens
officer will order a Preliminary Report from the title
company or title department. • Encroachment or off record easements
• Establishing fact of death–joint tenancy Family trusts
The escrow officer will need some basic information in • Foreclosures
order to open and proceed with the escrow: • Physical inspection results–Encroachment, off-record
• Correct street address, and parcel # if available easements
• Sales price
• Full names of all parties involved and marital status • Probates
• Contact information for all parties • Power of Attorney–Use of, proper execution
• Existing lender name, loan number, contact information
Proper execution of documents
and approximate unpaid balance
• Proper jurats, notary seals
• HOA (Homeowner's association) information, such as • Recent construction
• Transfers or loans involving corporations or partnerships
address and dues • Last minute change in buyers
• Last minute change in type of title insurance coverage
• HOA management company information (if any)
• Commission amount and additional conditions RED FLAG EXAMPLES
In general, the first item to enter the escrow is the buyer's TAXES: These are usually standard, showing the status
initial deposit. The escrow file will grow, item by item, of the current tax year.
until all of the conditions have been met and the escrow RED FLAG: Postponed property taxes is a program put
is ready to close. on by the state for senior citizens. It allows the owner to
postpone the taxes until the property is sold or refinanced.
THE ESCROW OFFICER WILL ALSO NEED THE The owner applies to the state, and the state provides
FOLLOWING FROM THE BUYER'S AGENT: “checks” that the owner uses to pay the taxes. The reason
this is a red flag is because a demand will need to be ordered
• How the buyer(s) wants to take title (see pg. 18) from the state by escrow in order to pay off the postponed
• New lender information taxes. It may take up to two weeks to get a demand.
• Fire/hazard insurance information for new policy or
CC&R’S: These are standard. The CC&R’s should be
existing policy provided to the buyer by escrow. The buyer should read
these thoroughly, especially if improvements to the property
are contemplated.
RED FLAG: Some CC&R’s prohibit certain types of
improvements.
22
The selection of the escrow holder is normally done by RED FLAGS IN THE ESCROW/TITLE PROCESS
agreement between the parties to a transaction. Typically,
the escrow is then opened by the real estate agent. Which A “red flag” is a signal to pay attention! The below are
agent (the "seller side" or the "buyer side") will open the some of the items which may cause delays or other
escrow is generally determined by local practice. problems within a transaction and must be addressed well
before the closing.
Escrow may be opened via telephone, email, website
form or in person, depending upon the preference of the • Bankruptcies
agent and which options are available through the escrow • Business trusts
company. An escrow file number is assigned and the • Clearing liens and judgments, including child or
appropriate information is entered into the computer.
Upon issuance of the escrow file number, the escrow spousal support liens
officer will order a Preliminary Report from the title
company or title department. • Encroachment or off record easements
• Establishing fact of death–joint tenancy Family trusts
The escrow officer will need some basic information in • Foreclosures
order to open and proceed with the escrow: • Physical inspection results–Encroachment, off-record
• Correct street address, and parcel # if available easements
• Sales price
• Full names of all parties involved and marital status • Probates
• Contact information for all parties • Power of Attorney–Use of, proper execution
• Existing lender name, loan number, contact information
Proper execution of documents
and approximate unpaid balance
• Proper jurats, notary seals
• HOA (Homeowner's association) information, such as • Recent construction
• Transfers or loans involving corporations or partnerships
address and dues • Last minute change in buyers
• Last minute change in type of title insurance coverage
• HOA management company information (if any)
• Commission amount and additional conditions RED FLAG EXAMPLES
In general, the first item to enter the escrow is the buyer's TAXES: These are usually standard, showing the status
initial deposit. The escrow file will grow, item by item, of the current tax year.
until all of the conditions have been met and the escrow RED FLAG: Postponed property taxes is a program put
is ready to close. on by the state for senior citizens. It allows the owner to
postpone the taxes until the property is sold or refinanced.
THE ESCROW OFFICER WILL ALSO NEED THE The owner applies to the state, and the state provides
FOLLOWING FROM THE BUYER'S AGENT: “checks” that the owner uses to pay the taxes. The reason
this is a red flag is because a demand will need to be ordered
• How the buyer(s) wants to take title (see pg. 18) from the state by escrow in order to pay off the postponed
• New lender information taxes. It may take up to two weeks to get a demand.
• Fire/hazard insurance information for new policy or
CC&R’S: These are standard. The CC&R’s should be
existing policy provided to the buyer by escrow. The buyer should read
these thoroughly, especially if improvements to the property
are contemplated.
RED FLAG: Some CC&R’s prohibit certain types of
improvements.
22
