The Life of an Escrow

THE BUYER(S):


STEP 1 - Submit a written offer to purchase (or accept the counter-offer) accompanied by a good faith deposit amount.

STEP 2 - Applies for a new loan, completing all required forms and often prepaying certain fees such as credit report and appraisal costs.

STEP 3 - Approves the preliminary report and any property disclosure, or inspection reports called for by the purchase and sale agreement (Deposit Receipt).

STEP 4 - Approves and signs the escrow instructions, new loan documents and other related instruments, required to complete the transaction.

STEP 5 - Fulfills any remaining conditions specified in the contract, lender's instructions and/or the escrow instructions.

STEP 6 - Approves any final charges by signing amendments to the escrow instructions or contract.

STEP 7 - Deposits sufficient funds in the escrow to pay the remaining down payment and closing costs.


THE LENDER:


STEP 1 - Accepts the new loan application and other related documents from the borrower and begins the qualification process.

STEP 2 - Orders and reviews the property appraisal, credit report, verification of employment, verification of deposit, preliminary report and other related information.

STEP 3 - Submits the entire package to the loan committee and/or underwriters for approval. When approval, loan conditions and title insurance requirements are established.

STEP 4 - Informs borrower's of loan approval, terms and commitment, expiration date, and provides a good faith estimate of the closing costs.

STEP 5 - Deposits the new loan documents and instructions with the escrow holder for borrower's approval and signature.

STEP 6 - Reviews and approves the executed loan package and coordinates the loan funding with the Escrow Officer.


THE ESCROW OFFICER:


STEP 1 - Receives an order for the title and escrow services.

STEP 2 - Orders the title search and examination on the subject property. Acts as the impartial "stakeholder" or depository, in fiduciary capacity for all documents and monies required to complete the transaction per written instructions from the principals.

STEP 3 - With authorization from the lender, agent or principal, orders demands on existing deeds of trust and liens or judgements, if any. For an assumption or subject to loan, orders the beneficiary's statement or the formal assumption package.

STEP 4 - Reviews documents received in the escrow: Preliminary Title Report, payoff of assumption statements, new loan package, and other related instruments. Reviews the condition in the lender's instructions, including the hazard and title insurance requirements.

STEP 5 - Prepares the escrow instruction and required documents, together with a preliminary estimate of settlement charges for the borrower in accordance with the terms of the sale.

STEP 6 - Presents the instructions, documents, statements, loan package and other related documents to the principal for approval.

STEP 7 - Reviews the signed instructions and documents, returns the loan package, and requests the lender's funds.

STEP 8 - Receives the balance of funds required from the borrower and/or proceeds of the loan from the lender.

STEP 9 - Determines when the transaction will be in the position to close and advises the parties involved.

STEP 10 - Assisted by title personnel, records the deed of trust and other documents required to complete the transaction with the County Recorder and orders the title insurance policies.

STEP 11 - Closes the escrow by preparing the final settlement statements, disbursing the proceeds to the seller, paying off the existing encumbrances and other obligations. Delivers the appropriate statements, funds and remaining documents to the principals and/or the lenders.


THE SELLER(S): Buyer's offer to purchase and initial good faith deposit to open escrow.


STEP 1 - Submits documents and information to the escrow holder, such as: address of lien holders, tax receipts, equipment warranties, home warranty contracts, any leases and/or rental agreements, etc.

STEP 2 - Orders inspections, receives clearances and approves final reports and/or repairs to the property as required by the terms of the purchase and sale agreement (Deposit Receipt).

STEP 3 - Approves and signs the escrow instructions, payoff demands, grant deed and other related documents required to complete the transactions.

STEP 4 - Approves any final changes by signing amendments to the escrow instructions or contracts.