Escrow
and Title Companies
What
is Escrow and Why do I need a Title Company?
Buying or selling
real estate usually involves the transfer of large sums of money.
It is essential that the transfer of these funds and related
documents from one party to another be handled in a neutral, secure
and knowledgeable manner. For the protection of buyer, seller and
lender the escrow process was developed.
As a buyer or
seller, you want to be certain all conditions of sale have been met
before property and money change hands. The definition of an escrow
is a transaction where one party engaged in the sale, transfer or
lease of real or personal property with another person delivers a
written instrument, money or other items of value to a neutral third
person, called an escrow agent or escrow holder. This third person
holds the money or items for disbursement upon the happening of a
specified event or the performance of a specified condition. This
includes receiving funds and documents necessary to comply with those
instructions, completing or obtaining required forms and handling
final delivery of all items to the proper parties upon the successful
completion of the escrow.
The escrow must be
provided with the necessary information to close the transaction.
This may include loan documents, tax statements, fire and other
insurance policies, title insurance policies, terms of sale and any
seller-assisted financing, and requests for payment for various
services to be paid out of escrow funds.
When all the
instructions in the escrow have been carried out, the closing can
take place. At this time, all outstanding funds are collected and
fees - such as title insurance premiums, real estate commissions,
termite inspection charges are paid. Title to the property is then
transferred under the terms of the escrow instructions and
appropriate title insurance is issued.
The following items
represent a typical list of what an escrow holder does:
THE ESCROW
HOLDER:
serves as the
neutral "stakeholder" and the communications link to all
parties in the transaction;
prepares escrow
instructions;
requests a
preliminary title search to determine the present condition of title
to the property;
requests a
beneficiary's statement if debt or obligation is to be taken over by
the buyer;
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;
requests issuance
of the title insurance policy;
closes escrow when
all the instructions of buyer and seller have been carried out;
disburses funds as
authorized by instructions, including charges for title insurance,
recording fees, real estate commissions and loan payoffs;
prepares final
statements for the parties accounting for the disposition of all
funds deposited in escrow. (These are useful in the preparation of
tax returns.)
The Escrow
Holder Does Not:
Here are a few
title companies we recommend:
For more about
Placer Title Company, go to www.placertitle.com
For more about
Chicago Title Company, go to www.chicagotitle.com
For
more about North American Title Company, go to www.nat.com
|
