Shining A Light On Escrow to Bring Clarity and Understanding
The fact of the matter is that escrow can be very confusing. There are many parties involved beyond the buyer, seller, and their agents. Each of these additional parties has important duties to perform and many require something of the buyer, seller, or both. To help bring clarity about escrow to buyers and sellers, we’ve compiled this list of links and articles.
Helpful Links and Articles for Buyers & Sellers
PARTIES TO ESCROW: We’ve provided a simple, at-a-glance view of all the companies and individuals typically involved in the escrow process. Click to download our Parties To Escrow PDF.
DEPARTMENT OF CORPORATIONS: The body that governs all independently owned escrow companies (like Lighthouse Escrow) has some excellent articles discussing the escrow process and how homeowners can avoid scams.
- Glossary of Financial Terms
- Nontraditional Mortgage and Loan Information
- Mortgage refinancing calculator
- How much can you afford to pay for a home?
- Predatory lending fact sheet
- A brief outline of escrow law
LIGHTHOUSE ESCROW PUBLISHERS: Buyers and sellers who work with us, or almost any other escrow company, will receive a lot of information, check lists, and packets. To help buyers and sellers make sense of all these things, we’ve written up some articles on the documents these individuals will have to work through during the escrow process:
- What Happens After Escrow Closes
- Buyer’s Opening Document Package
- Understanding Property Inspection Reports and Disclosures
- Difference Between Independent, Broker-Owned, and Title-Owned Escrow Companies.
1. WHAT IS ESCROW?
“Escrow” is the formal procedure utilizing an independent third party, or Escrow Agent, to effect the transfer or sale of the terms of, or an encumbrance upon, property. They act as an impartial intermediary between the Buyer and Seller. To learn more about escrow on subjects not necessarily relevant to buyers or sellers, visit our Learn About Escrow page.
2. WHAT SHOULD THE BUYER BRING TO THEIR DOCUMENT SIGNING APPOINTMENT?
At the time of the document signing, the Buyer must present a valid form of identification to the Notary Public. The ID must be current or have been issued within five (5) years. Common, accepted forms included:
- A California Issued Identification Card or Driver’s License
- A Driver’s License issued by a state other than California or by a Canadian or Mexican public agency authorized to issue drivers’ licenses
- A Passport issued by the Department of State of the United States or a foreign government
- An ID card issued by any branch of the armed forces of the United States
3. AFTER THE BUYER SIGNS THE LOAN DOCUMENTS, WHEN WILL THE ESCROW CLOSE ON A SALE?
The closing day is established by the parties and stated in the Purchase Contract. Typically, the escrow will close 2-3 days after the Lender has received the signed loan documents. During this time, the documents are reviewed by the Lender and the loan funding is scheduled.
4. AFTER THE BUYER SIGNS THE LOAN DOCUMENTS, WHEN WILL THE ESCROW CLOSE ON A REFINANCE?
Escrow can close as soon as all lender conditions are met and Escrow has received all final funds needed. Owner occupied, primary residences are subject to a 3 day “Right to Cancel” even though funding can happen right away. This means that the owner can cancel the refinance up to 3 days after it has been finalized even if the funding has already gone through. However, this 3 day “Right to Cancel” is not extended to refinances on 2nd homes or non-owner occupied homes.
5. WHEN SHOULD THE BUYER DEPOSIT THEIR CLOSING FUNDS?
The Buyer’s funds must be deposited in the form of a wire transfer, cashier’s check or official check. They must be deposited in escrow at least 24 hours prior to authorization of recording with the title company.
6. WHY CAN’T ESCROW OFFICERS ACCEPT A PERSONAL CHECK AT THE TIME OF CLOSING?
Escrow officers do not accept personal checks because they do not want to delay escrow closing. Deposits by personal check are subject to clearance and verification of payment by the financial institution on which the funds were drawn. If the check is drawn on an out-of-state bank, the check clearing process may be delayed an additional one to ten business days.
7. AT CLOSING, WHEN CAN THE SELLER EXPECT TO RECEIVE THE NET PROCEEDS?
Once the recording is completed, the Escrow Officer must wait for the title company to make any loan payoffs, tax payments, etc. and forward the remaining funds via wire transfer to Escrow’s bank for final disbursements. If the Seller requests the net sale proceeds in the form of a Wire, then it will be sent by the next business day after the wire is received from Title. However, a standard trust accounting check can be issued on the same day that the wire is received by Escrow’s bank.
8. WHO WILL PROVIDE THE BUYER WITH THE KEYS TO THEIR NEW HOME?
Once the Escrow Officer confirms that the recording is completed, the Real Estate Agents are notified and the keys can be provided to the Buyer by their Agent.
Service, Innovation, Philanthropy
Our core values make us distinct among escrow companies in southern California. If you’re a buyer or a seller interested in refinancing or selling your home, we invite you to consider the Lighthouse Distinction:
Service & Innovation
We take care to ensure you stay informed, your finances secured, and your documents handled properly and promptly from beginning to end. We’re changing expectations. For example, you can expect to call and speak directly with knowledgeable, experienced escrow officers not secretaries and automated phone directories. We use the latest technology, from Greenfolders to our content rich website, to simplify the escrow process and keep you informed.
Excellent character is paramount to the service we provide and few things demonstrate excellent character more than cheerful giving. Every month, Lighthouse Escrow is honored to donate to organizations and charities doing good work for our community. Click the button below to learn more about our philanthropy and how you can participate in it.
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