|
|
||||||
|
Frequently Asked Questions (FAQ)-FntofModesto.com |
||||||
|
|
||||||
|
What do I need to do before closing escrow?
What
is an escrow? Top of Page An escrow is
created when money and/or documents are deposited by two or more parties
with a third neutral party, which are to be delivered upon the completion
of certain conditions. The third neutral party is known as the
escrow agent or escrow holder. The authority
given to an escrow holder is strictly limited by instructions provided by
the parties involved. Consequently, an escrow holder acts on mutual
instructions deposited into escrow and DOES NOT represent any party.
The escrow officer is authorized by instructions to allocate the funds for
items during the escrow period, such as real estate commissions, title
insurance, liens, recording fees, and other closing costs.
Instructions also specify the method of collecting funds, proration
issues, time limitations and all the terms of the transaction.
The escrow process protects all parties involved by retaining money and
documents until the mutual instructions are met. The
statutory definition of escrow is found in Section 17003 of the California
Financial Code and reads as follows: "Escrow" means any
transaction wherein on person, for the purpose of effecting the sale,
transfer, encumbering, or leasing of real or personal property to another
person, delivers any written instrument, money, evidence of title to real
or personal property, or other thing of value to a third person to be held
by such third person until the happening of a specified event of the
performance of a prescribed condition, when it is then to be delivered by
such third person to a grantee, grantor, promisee, promisor, obligee,
obligor, bailee, bailor, or any agent or employee of any of the latter. How do I open an escrow? Top of Page
Opening
an Escrow - A Checklist for Success
The
company at which your escrow is opened can be negotiated in your purchase
agreement. As soon as you execute the purchase agreement, the
buyer's or their agent will place the buyer's initial deposit into an
escrow account at Fidelity National Title. The following checklist
covers some of the information needed to open escrow. 1.
A copy of the Seller's existing title policy, if possible. If the
policy is not available, provide the Escrow Officer with the following: 2.
Direct which liens are to remain and which are to be paid in full.
Provide the name, address and loan number(s) of existing lienholders.
Request a 30-day notice letter if an FHA loan is being paid off. 3.
Full names, addresses (including zip codes) and phone numbers of parties
involved. This includes buyers, sellers, real estate agents and any
new lenders with the name of the loan officer. 4.
Vesting - How buyers desire to take title. Include the correct
spelling of each buyer's name. 5.
Consider the issue of required owner occupancy for residential property. 6.
What will the amount of the Buyer's deposit be? Direct whether funds
are to be deposited into escrow or held in the broker's trust account. 7.
Include information on the amounts of commission and breakdown of
payments. 8.
Inform the Escrow Officer of the type of property (Single Family, land
with mobile home, etc.) 9.
If a termite report is required, provide information as to who is paying
the fee. If corrective work is required, promptly order and deposit
into escrow. 10.
If there are rents to prorate, leases to assign and/or a Bill of Sale to
be drawn, secure and deposit into escrow a rental schedule showing amounts
of rents, date rents are paid and the amount of security/cleaning deposits
to be credited to buyer. An inventory of personal property for the
Bill of Sale and copies of all leases to be assigned should also be
provided to escrow. 11.
Inform the Escrow Officer of all items to be prorated and the proration
date. 12.
If there is a Homeowner's Association, provide us with the name and
address of the management company. 13.
Provide us with the hazard insurance agent's name and phone number.
Promptly order and deposit into escrow. 14.
If a loan is remaining that has an existing trust fund for taxes and
insurance, direct how said account is to be handled. 15. Submit
all terms of notes and security documents to be typed by escrow officer. 16. Direct
who is to receive copies of the preliminary title report and the number of
copies to be sent. Provide information as to whether copies of the
tract restrictions or CC&R's are required. 17. Discuss
all closing costs and who will be responsible for each. 18. Communicate
all contingencies and conditions required prior to closing. 19. If
the Seller is a non-resident of California, contact your escrow office
immediately as additional disclosures may be required. 20. If
Seller or Buyer is a corporation, submit the Articles of Incorporation,
bylaws, and a corporate resolution authorizing the sale or purchase of the
subject property. 21. If
the Seller or Buyer is a partnership, submit a copy of the partnership
agreement and a copy of the recorded statement/certificate of partnership.
22. If
the Seller or Buyer is a trust entity, submit a copy of the trust
agreement and a signed verification of trustee. If
a power of attorney is to be used, provide escrow and the lender with the
power of attorney form for review and approval. What
is title insurance? Top of Page
What
A Title Company Does Requests A Title Report and Policy Title Report: A report showing the condition of the
title before a sale or loan transaction.
After the completion of the transaction the title policy is issued. Policy: Title insurance is insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances on the property. Drafts
a Deed of Trust: Deed of Trust is drafted by the title
company along with any other necessary documents. A Deed of Trust is a
document filed with the county showing a property is transferred to
trustee by the borrower (trustor) in favor of the lender (beneficiary) and
reconveyed upon payment in full.
Pay
Off Existing Loans The title company pays off the
existing loans when so ordered. Taxes
and Insurance The title company prorates the taxes and insurance upon instructions from the buyer and the seller. Computes
Interest On Loans Acquires
Hazard Insurance Signing of Documents Assists the buyer and seller when
signing documents. Recording
Documents The title company records the appropriate documents with the county office, giving public notice. Disbursement
What do I need to do before closing escrow? Top of Page
Close
of Escrow
Below
is a list of items that you will need before your appointment to sign the
escrow papers: 1.
Identification:
There are several
acceptable forms of identification, which may be used during the escrow
process. These include: A current driver's license, passport, State
of California Department of Motor Vehicles ID Card or Military ID. 2.
At
The Signing: Sellers
will also be asked how proceeds are to be disbursed. On rare
occasions, funds are insufficient to close escrow and you, as the seller
must deposit money into the escrow. Should this situation occur, you
will need to obtain a cashier's check or certified check issued by a
California financial institution made payable to Fidelity National Title
in the amount indicated to you by your escrow officer. A personal
check may delay the closing since Fidelity National Title is required by
law to have "good funds" (check clearance) before disbursing
funds from escrow. Similarly, an out-of-state check could cause a
delay in closing, due to delays in clearing the check. 3.
Closing
the Escrow: Closing
escrow is a legal transfer of title to the property from the seller to the
buyer and is the culmination of the transaction. After
the Close of Escrow: After
the loan has been finalized, the documents signed and recorded, and the
financial settlement completed, there are still several steps, which must
be accomplished to complete the transaction. Your existing loan is
being paid in full from the escrow. Your lender is required by law
to issue a full reconveyance (release) of their loan. As soon as the
deed of reconveyance removing the previous Deed of Trust is received, it
should be recorded and the original returned to you. This may take
several weeks. Who
Pays What?
What about property taxes? Top of Page
Important
Notice to New Property Owners Your
Tax Collector's experience had shown that many tax delinquencies occur
during the first year of property ownership. As a new property
owner, you should be aware of the manner in which real property taxes are
currently billed and paid. It
is your responsibility to obtain and pay the real property tax bill.
Failure to receive a tax bill does not relieve the imposition of penalties
after the delinquencies date. The Tax Collector has no discretion
regarding penalties. County
taxes are levied on both real and personal property and become a lien,
annually, on the first day in January preceding the fiscal year for which
such taxes are levied. The Fiscal year begins on July 1 and ends on
June 30 of the following calendar year. Property
taxes are due and payable in two installments, although the property owner
may pay both installments prior to December 10 without penalty.
If
your deed records after January 1st, the tax bill may be mailed to the
prior owner. It is your responsibility to contact the Tax
Collector's office if you fail to receive the tax bill in November of each
year. If you have made alternate arrangements for the taxes to be
paid on your behalf by a lender or agent, you may want to confirm that
they are in receipt of the current tax bill to avoid penalties. In
addition, the within described property may be subject to supplemental
real property taxes due to the change of ownership taking place through
this escrow. Any supplemental real property taxes arising as a
result of the transfer of the property to you shall be your sole
responsibility. The due dates and delinquency dates may differ. You are encouraged to contact the Tax Collector if you have any questions or if you wish to confirm your correct address on record to avoid penalties. |
||||||
