The Escrow Process
When a buyer and seller agree to buy or sell property most parties want a disinterested third party to collect and disburse funds. The third party is usually an escrow agent. The process begins when the escrow agent receives the purchase contract signed by the seller and buyer and earnest money is deposited into an interest bearing account. For your protection, Arizona licenses escrow agents and regularly reviews their performance.
Once the escrow agent has opened a file, all monies and documents are handled in accordance with terms and conditions of the contract. If the buyer and seller find it necessary to make changes to their transaction they will outline them for the escrow agent who will then convert them into a written agreement that will be executed by both parties.
The escrow officer will prepare documents and obtain items that may be necessary for the closing. These will include the title commitment (which details the current status of the title to be transferred and what conditions may be needed to transfer title), demands for payoffs and requirements that others may have, like homeowners associations, etc.
Helpful Points to consider:
Contact your escrow agent to schedule an appointment when you believe the escrow may be approaching closing.
Contact your escrow agent early to allow the escrow officer time to properly prepare the file for closing. Most closings take place in the last two weeks of the month so scheduling a closing could become difficult if you don’t contact them at an early date.
In order for the title company to calculate the buyer’s final closing funds requirement they will need a statement from the lender regarding their costs.
Moneys required for a closing must be in form of a cashier’s check or a direct wire into the escrow trust account. Submitting a personal check may delay the closing as the check must clear the bank before any further disbursements will be made.
Your closing will go smoothly if you do the following:
The buyer must obtain their hazard insurance policy as required by the new lender.
All the contingencies required in the contract or by the new lender have been satisfied.
The termite inspection has been completed.
If a new loan is required, the buyer needs to be approved by the lender.
If a home warranty is required, verify it has been ordered.
To Summarize: The escrow process was developed to help facilitate the sale or purchase of your home. The escrow agent accomplishes this by:
Acting as the impartial “stake holder, or depository of documents and funds.
Processing and coordinating the flow of documents and funds.
Keeping all parties informed of progress on the escrow.
Responding to the lender’s requirements.
Securing a title insurance policy.
Obtaining approvals of reports and documents from the parties required.
Prorating and adjusting insurance, tax, rents, etc.
Recording the deed and loan documents.
Maintaining security and accountability of moneys owed and owing.