The Escrow Process & the Expectations of Those Involved
Understanding the Escrow Closing Process
It is helpful to know that “closing” does not mean the day the buyer signs loan documents, and it does not mean the day the loan is funded by the lender. Escrow closes on the day that the Grant Deed is recorded in the official records at the County Recorder’s office. Once that document is date-stamped by the County Clerk, ownership of the property has officially changed hands.
Understanding how much time to allow for the final closing process will help reduce some of the stress and frustration that can accompany closing and escrow.
The lender gives final approval and is ready to
“draw docs”. From there it may take up
to 48 hours from the time the final approval is given until the documents are received
by the Escrow Officer.
The Escrow Officer then contacts the buyer and
sets an appointment to sign the documents. From there, the Escrow Officer “packages”
all documents and returns them to the lender usually the day after the buyer signed
them.
You should allow up to 72 hours for the lender
to check the documents in and review them. Once final review is completed, the
lender will issue the funds to the Escrow Company. Recording of the Grant Deed
is scheduled for the next business day after the funds are received.
The Grant Deed is taken to the County Hall of
Records by a Title Insurance Representative.
Once the county clerk stamps it with a date and document number, closing
is complete.
The title company notifies the Escrow Officer and
transfers all funds they are holding from the lender to the escrow who confirms
with the buyer, seller and agents that there is a confirmation of closing.
When the Title Insurance Company receives
confirmation of recording from their representative at the hall of records, the
Title Company will wire transfer all funds they are holding from the buyer’s
lender to the Escrow Company.
At that point, the Escrow Officer will begin
the process of balancing the file and disbursing funds to pay-off the seller’s
existing mortgages, liens, and any other payments that the Officer has been instructed
to pay through escrow.
What to Expect from the Parties Involved
Once an
offer is made and accepted, the escrow process begins. Click the drop-down arrows below for an overview of what to expect from
the parties involved.
The Buyer(s)
Makes an offer to purchase, or
accepts a counter offer from the seller, which is accompanied by a good
faith deposit.
Approves and signs the escrow
instructions and other related instruments required to complete the
transaction.
Approves the preliminary report
or title commitment and any property disclosure or inspection report
required in the purchase and sale agreement.
Approves and signs new loan
documents and fulfills any remaining conditions contained in the
contract. If necessary, approves
any changes by signing amendments in the escrow instructions.
Deposit funds necessary to close
the escrow.
The Lender (if
applicable)
Accepts the new loan application
and other related documents from the Buyer(s) and begins the qualification
process.
Orders and reviews all pertinent
documentation.
Submits the loan package to the
appropriate committee and/or underwriters for approval. Once approved, loan conditions and title
insurance requirements are established.
Informs Buyer(s) of loan
approval terms, commitment expiration date and provides a good faith
estimate of the closing costs.
Deposits the new loan documents
and instructions with the settlement agent for Buyer's approval and
signature.
Reviews and approves the
executed loan package and coordinates the loan funding with the escrow
officer.
The Escrow Officer
(Western Pacific Escrow)
An order is received for escrow
and title services.
Places order for the preliminary
report or title commitment for the subject property from WPE.
Acts as the impartial
"stakeholder" or depository, in a fiduciary capacity, for all
documents and monies required to complete the transaction per written
instructions of the principals.
Prepares the escrow instructions
and required documents in accordance with terms of the sale.
Once authorization is received,
the escrow officer orders demands on existing deeds of trust and liens or judgments and when applicable, orders the beneficiary's statement or
formal assumption package.
Reviews documents received in
the escrow including the preliminary report or title commitment, payoff or assumption statements, new loan package and other related instruments.
Reviews the conditions in the
lender's instructions including the hazard and title insurance
requirements.
Presents the documents,
statements, loan package, estimated closing statements and other related
documents to the principal for approval and signature, and requests the
balance of the buyer's funds.
Receives the proceeds of the
loan from the lender.
Determines when the transaction
will be in the position to close and advises the parties.
Assisted by title personnel, the
escrow officer records the deed, deed of trust and other documents
required to complete the transaction with the County Recorder and orders
the title insurance policies.
Closes the transaction by
preparing the final settlement statements, disbursing the proceeds to the
Seller, and pays off existing
encumbrances and other obligations.
Delivers the appropriate
statements, funds and remaining documents to the principals, agents and/or
lenders.
The Seller(s)
Accepts Buyer's Offer to
Purchase and initial good faith deposit to open escrow.
Submits documents and
information to escrow holder, such as: addresses of lien holders, tax
receipts, equipment warranties, home warranty contracts, any leases and/or
rental agreements.
Approves and signs the escrow
instructions, grant deed and other related documents required to complete
the transaction.
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.
Fulfills any remaining
conditions specified in the contract and/or escrow instructions and
approves the pay-off demands and/or beneficiary's statements.
Approves final changes by
signing amendments to the escrow instructions or contract.
Western Pacific Escrow
is a full service closing office
providing residential resales, loan escrow and refinance, 1031 tax deferred
exchanges and notary services. We
dedicate ourselves to working as a team with our clients and all parties
involved to accomplish a smooth and enjoyable closing experience. Close your residential transaction with Western Pacific Escrow
and receive the
quality assistance and excellent service you and your clients deserve.
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