Q. What is escrow?
A. The buyer and seller in a real estate transaction do business through a neutral third-party intermediary, the escrow company. Mutual, specific written instructions are provided and carried out by the escrow officer in the exchange of funds and property.
Q. Why do I need escrow?
A. Every party involved in a real estate transaction, including the buyer, seller, borrower and lender, wants to ensure that no funds or property changes hands until every instruction and requirement in the transaction is followed. The escrow holder of the transaction has the important obligation of safeguarding funds and documents and disbursing funds and conveying title only when all provisions of escrow have been met.
Q. Who chooses the escrow company?
A. In California, it is customary for the seller to choose the escrow company, although this is negotiable in the contract and the decision must be mutual.
Q. How should I prepare for escrow?
A. Communication is important to limit the pressure of processing escrow, obtaining a mortgage and planning a move. To avoid delays in closing, we recommend taking these steps. If any buyer or seller plans to be out of town before escrow closes, contact the loan officer and escrow officer. Do not change employment status or incur new debt, as both credit and employment status will be verified again as late as the escrow closing date. Valid picture ID will be necessary for closing document notarization. Buyers are encouraged to apply for homeowner's insurance as soon as possible to avoid delays. All closing funds must clear the escrow trust before escrow closing. Wire transfers generally clear within 2-6 days and California cashier's checks within 1-2 days. Personal or corporate checks may take much longer and delay closing.
Q. The contract gives a specific number of days for closing. Can I rely on this?
A. Bayside Escrow will work tirelessly with all parties involved to close on time. There are many factors that may affect the closing date, however. Closing is based on lender approval, appraisals, delays in receiving information from a Homeowner's Association, and loan funding, and many problems could potentially arise that delay closing.
Q. How is the length of escrow decided?
A. The real estate agent generally determines a closing date based on the time it takes for a lender to process a loan, and to ensure contingencies agreed to in the purchase agreement are satisfied. Except in the case of all-cash transactions, a minimum of 30 days is required for the mortgage to be funded and inspections to be completed.
Q. Who pays the fees and costs?
A. The charges associated with the transaction depend on the complexity and type of the transaction and the terms in the purchase agreement. The seller generally pays for the costs involved in making sure the buyer has a clear title while the buyer usually pays for costs associated with financing. Escrow fees are generally split 50/50.
Q. What are my closing costs?
You will receive an estimated closing statement before escrow closes, and several estimated statements will be prepared throughout the escrow process to get the buyer's loan approved and finalized. Escrow will advise the final amount of funds that must be wired to escrow, including closing costs and the down payment.
Q. Can the escrow officer handle disputes between parties?
A. The escrow officer's duties are limited to following escrow instructions as agreed at the time of purchase and any written modifications signed by both parties. California law prohibits an escrow officer from favoring any party in the transaction, and the escrow officer cannot serve as a referee in disputes between parties. If a dispute arises, that the parties cannot resolve on their own, the escrow officer will stop processing escrow until an agreement is received.
Q. If the buyer and seller are not happy with the service provided; can they switch companies during the escrow process?
A. Yes, but both the seller and buyer must agree that the escrow company should be terminated, and they must agree on a new company. If both parties agree to these items, they must notify the original escrow officer of the change in writing and provide instruction to the original officer to transfer the funds and documents to the new company. The new escrow company will then resume the escrow process with new escrow instructions.