Your Escrow & You

Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law : Section 17003 of the Financial Code : provides the legal definition.

Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.

The principals to the escrow : buyer, seller, lender, borrower : cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.

The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be “closed.” Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.

The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same : the Closing or Settlement Statement.

The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.

The key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.

Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a “good deal” or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.

In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question: “What can I do to expedite the closing of this escrow?”

Respond quickly to correspondence. This will assist in the timely closing of the transaction.

If you are required to deliver funds into the escrow, make sure that you provide “good” funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.

When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier’s check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.

If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender’s instructions.

It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender’s documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting a representative from the lender’s office to be present for explanation, or arrange to meet with your lender to sign the documents in their office.

Once we open escrow the time clock begins to tick. Per our California Residential Purchase agreement unless other wise agreed upon, the seller has 7 days to deliver all disclosures to the buyer, including a Title report, all Home owner’s association documents, rules regulations and financials, natural hazards disclosures and all mandatory California Real Estate seller disclosures. The buyer has 17 days to complete all of their inspections and investigations. It is highly recommend that you obtain a licensed home inspector to do a thorough inspection of the property. Once that report is completed, you will accept the home with out repairs being made, ask the seller to make some or all identified repairs necessary or you may cancel the contract without penalty if the report on the house finds it unacceptable.

The seller will also be required to do a termite inspection and provide a report.

Once you have signed off on all disclosures and have done all your investigations during the the 17 day period (unless another time frame is mutually agreed upon) You will be asked to actively sign a contingency removal document removing any and all contingencies. At that point most of the work is complete.

• The escrow fees are split
• The seller pays for Title insurance that guarantees clear title
• The seller pays all city, state and county transfer fees if applicable
• The seller pays for the termite inspection and report
• The buyer pays for the home inspection
• The seller pays for documentary transfer taxes
• The seller pays for a natural hazards disclosure
• The seller often pays for a one year hoe warranty
• The seller ensures that all smoke detectors are in working order per California code as well as carbon monoxide detectors
• Buyer pays for any costs associated with a loan unless mutually agreed upon by buyer or seller
• Property Taxes are prorated at the time of closing. Tax in the Coachella Valley are 1.125% of the total sales price and are due November 1 and April 1 of each calendar year

California is a passive closing state meaning that once you have sent all of your paperwork to escrow and all parties have signed their Closing statements, all necessary paperwork has been notarized, the seller has provided you with a a signed grant deed, you will wire into escrow the closing funds(in US dollars) at least 24 hours prior to the agreed upon closing date. You DO NOT have to physically be here to do any of this. However it is highly recommend that you or your representative(realtor in many cases) do a physical walk through inspection of the property at least 48 hours before closing to ensure all repairs have been done by a licensed contractor providing receipts and the home is delivered in the condition promised. You or your representative will at that time time a verification of property. On the day of closing the escrow and title company schedules a recording in Riverside county. Once the deed is recorded your realtor will call you with the good news and at that point Congratulations are in order you are now a happy owner of your dream home in the United States!

Estimates based on a  2500 sq ft home, not guaranteed

• Taxes 1.125% of the sales price paid semi annual
• Gas $80 per month(does not include heating a pool or spa)
• Electric $350 per month
• Water $20 per month
• Insurance $1600 annual
• Bug spray service $35 a month
• Other possible expenses to consider: cable, phone, Internet, yard service, house keeping