Once a buyers’ offer for real estate in Big Bear or Lake Arrowhead
has been accepted by a Seller, the process starts. The actions taken
by the various people are:
Sends the good faith deposit to escrow.
Approves and signs the escrow instructions and any other documents
to complete the sale.
Approves the preliminary report and any property, disclosure or inspection
report called by the purchase and sale agreement.
Approves and signs new loan documents and fulfills any remaining conditions
contained in the contract, lender's instructions and/or the escrow
Orders inspections, gets any clearances approves final reports and
sometimes requests repairs to the property.
Deposits funds necessary to close the escrow. Approves any changes
by signing amendments in the escrow instructions.
Deposits the down payment, and either the loan amount or additional
money required to pay the purchase price with the escrow holder
Signs deed of trust that might be required to secure loans.
Fulfills any other conditions specified in the escrow instructions.
Approves and signs any amendments to the escrow instructions or contract.
Accepts Buyer's Offer to Purchase and initial good faith deposit to
Submits documents and information to escrow holder, possibly including:
contact information of any lien holders such as the bank that has
the existing loan, tax receipts, and if there are any, leases or rental
Approves and signs the escrow instructions, deeds need for the transfer
of title to the buyer, and any other documents needed to complete
Does any repairs to the property as required by the terms of the sale
contract or subsequently agreed to by the parties.
Fulfills any remaining conditions specified in the contract or escrow
Approves the pay off demands and/or beneficiary's statements.
Approves and signs any amendments to the escrow instructions or contract.
there is a lender, that lender:
Receives the new loan application and any other documents required
from the Buyer(s) to begins the qualification process (this may have
been started before the offer is even made or accepted.
Creates a “loan package” by ordering and reviewing the
property appraisal, credit report, verification of employment, verification
of deposit(s), preliminary report and any other documents required
to complete the loan.
Submits the entire package to underwriter for approval. After approval
there will be loan conditions and title insurance requirements.
Informs Buyer(s) of loan approval terms, loan lock expiration date
and provides a good faith estimate (“HUD-1”) of the closing
Deposits the new loan documents and instructions with Escrow.
Reviews and approves the executed loan package and coordinates the
loan funding with the escrow officer.
The escrow holder can only follow the instructions as stated, and
may not exceed them.
Orders the preliminary report and examination on the subject property
from Chicago Title.
Acts as the neutral third party. In its fiduciary capacity, it acts
as a depository for all documents and monies required to complete
the transaction according to the written instructions of the parties
of the sale contract.
Prepares the escrow instructions
Prepares some other appropriate and required documents as required
by written terms of the sale.
With the authorization of the Seller or their real estate agent, orders
demands on existing deeds of trust and liens or judgments, if any.
In some cases orders the beneficiary's statement or formal assumption
Reviews documents received in the escrow: preliminary report, payoff
or assumption statements, new loan package and other appropriate document.
Reviews the conditions in the lender's instructions including the
hazard and title insurance requirements.
Presents the documents, statements, loan package, estimated closing
statements (HUD-1) and other related documents to the Buyer or Seller
for approval and signature.
Requests the down payment or any other funds that come directly from
Reviews the amount of any loan.
Determines when the transaction will close.
Prorates insurance, taxes, rents, etc.
Orders the title insurance policies.
Receives funds from the buyer and/or any lender.
Coordinates with the title company the recording with the County Recorder
of the deed, deed of trust and other documents required to complete
Disburses funds for title insurance, recording fees, real estate commissions,
lien clearance, etc.
Closes the escrow by preparing the final settlement statements, disbursing
the proceeds to the Seller, paying off the existing loans, encumbrances
and other obligations.
Delivers the appropriate statements, funds and remaining documents
to the Buyer and Seller, real estate agents, and lender.
Who can perform an Escrow?
In California there are different types of escrow companies, with
different types of licenses. Resorts West Escrow is licensed and regulated
by the Department of Corporations (DOC). This requires an extensive
licensing procedure, a detailed background check of every employee,
strict financial rules and required monetary reserves. So, under DOC
licensing Resorts West Escrow is subject to rigorous laws and business
practices. Resorts West Escrow is also audited by the Department of
Corporations on a regular basis to ensure it maintains the highest
level of financial fiduciary responsibilities. Fines can be imposed
and an escrow company can be suspended from operating if any rules
are found to be violated during an audit or otherwise Another requirement
is that Resorts West Escrow be bonded, and be a member of the Escrow
Agents Fidelity Corporation (EAFC).
Some escrow services are performed by real estate brokerages. They
may have a different name or office than the brokerage, but they are
really just part of that real estate sales office. The real estate
brokers performing these escrow are regulated by the California Department
of Real Estate, and there is little regulation or oversight over these
types of escrows. Any real estate broker can perform escrow services,
regardless of experience or business practices, and the escrow service
is actually done by the real estate broker who is also the buyer or
seller’s agent. Its a legal requirement that the real estate
broker represent the buyer or seller as well as operate as the “neutral”
third party for the escrow.
There are two important reasons for selecting an established, independent
escrow firm. One is that real estate transactions require a tremendous
amount of technical experience and knowledge. The other is that the
escrow holder must act as a neutral third party fiduciary and will
generally be responsible for safe-guarding and properly money, deeds,
and other documents. An
escrow officer must remain completely impartial throughout the entire
escrow process. He or she will normally adopt a courteous but rather
formal manner when dealing with parties to the escrow, keeping conversation
to the matters at hand in the escrow. This formal behavior is meant
for the benefit of all concerned, since the escrow officer must follow
the instructions of both parties without bias.
It is very important to use an independent escrow company so there
is a neutral third party looking out for your interests. Your real
estate agent will be able advise you about this.
are Escrow Instructions:
Escrow instructions are written documents, signed by the parties giving
them, which direct the escrow officer in the specific steps to be
completed so the escrow can be closed.
The method by which the escrow holder is to receive and hold the purchase
price to be paid by the buyer.
The conditions under which a lapse of time or breach of purchase contract
provision will terminate the escrow without a closing.
The instruction and authorization to the escrow holder to disburse
funds for recording fees, title insurance policy, real estate commissions,
and any other closing costs incurred through escrow.
Instructions as to the proration of insurance and taxes.
Instructions to the escrow holder on the payment of prior liens and
charges against the property and distribution of the net sale proceeds.