What determines the buyers possession of the property?

It is whatever was agreed upon in the purchase contract. Buyer and seller should negotiate a possession date and time that best coordinates with their schedule prior to opening escrow.

Who with and When does the Buyers Transfer of Keys to the subject property?

Buyer's Agent will notify the buyer when escrow closes and coordinate the key exchange at that time. Keys do not normally get handled through escrow.

What is normal escrow/lender processing timeframes?

Escrows are typically 30 days to give the buyer sufficient time to qualify and establish a new loan along with do necessary investigation to confirm the property is what the buyer wants. Escrows can be closed in as little as 1 week if buyer is purchasing "as is" AND all cash. In the event buyer is obtaining financing, loan documents should be in escrow roughly 5 business days prior to the closing date.

When does escrow begin to process the transaction?

Once the terms are agreed upon and the contract is accepted escrow is opened. Buyer has 3 days from acceptance to deposit money and open an account with escrow.

Why does it take 5 business days to Process Loan Doc / Funding / Recording Time Frames?

Most lenders require the executed loan documents back for review prior to funding (sending buyer’s loan proceeds to escrow) Lender review times range between 24 hours to 72 hours before they will provide Buyer’s loan proceeds to escrow holder. The County Recorders Office requires 24 hour notice prior to recording the documents, so Buyer’s loan funds the day before recording/closing.

Do lenders accept electronic signatures on the purchase contract?

It is still questionable at this point. Some do, some dont, it might be in your best interest to just sign the old fashioned way to avoid a big urgent inconvenience later.

What is an impound account?

A reserve account established and paid through your loan for your property taxes and insurance. The amounts are collected with your monthly mortgage payment and are set aside in an "impound/escrow account". Your lender will pay your taxes and insurance when they become due and payable. Lenders will require you to keep at least 2 months cushion in this account at all times.

What is the difference between an Escrow Account with the lender and the Escrow Account with an Escrow Company?

Completely different, but called the same for a couple of different reasons: “Escrow” is the third party holder of trust (your) funds. An escrow account established for your real estate transaction is there to hold buyer’s funds and seller’s documents until both parties have satisfied themselves and authorized an exchange/transfer. An Escrow Account established with your lender is an account set aside that you pay into monthly for your taxes and insurance payments. (see question above)

What are prorations and how are they determined?

Prorations are a debit/credit through escrow for taxes and homeowner’s association dues for the current installment. Example: If you are closing escrow in September, 1st installment taxes began 7/1 but are not due yet. The seller would credit the buyer from the first day of the installment (7/1) to the day you close escrow (last day property was owned by seller) based on the latest available tax bill. Buyer will be responsible to pay the full amount of taxes when due in November, but has already been credited from seller for the time the seller owned the property.

What is reassessment of the property and supplemental taxes?

The County Assessor’s Office will reassess the property upon transfer of ownership based on the purchase price. A supplemental tax bill is the difference between the seller’s assessed value and the buyers new value. If you are a buyer who established an impound account for taxes and you receive a supplemental bill, it is your responsibility to notify your lender.

What is the difference between Pre-Loan Approval / Conditional Loan Approval / Final Loan Approval?

• Pre-loan approval: “based on your credit score and income to debt ratio, we think you qualify for a loan”
• Conditional loan approval: “we have reviewed your application and we want to give you a loan but need the following items first”
• Final Loan Approval: “we are ready to give you the loan now, get ready to sign”

What is Section I and Section II on Termite Reports?

• Section 1 items are evidence of dryrot or active infestation and are required to be corrected prior to closing escrow by Buyer’s new lender.
• Section 2 items make reference to items that may be a problem such as water stains, water damage, earth to wood contact, etc. and are not required by most lenders to be corrected prior to closing escrow.

Who determines fair market value?

Fair Market value is determined by other properties that have sold and at what price in your neighborhood that are comparable to your property.

From whom do I get a copy of my appraisal?

Your Lender should provide you with a copy of the appraisal report before you close escrow.

What is a preliminary title report?

7-20 page “chain of title” or search of the property in question. The items referenced in the preliminary title report usually consist of current property taxes, easements for access (walkways), utility easements (telephone poles) and any mortgages, judgements or liens that would need to be cleared up at closing.

What is title insurance? (Owner’s Premium and Lender’s Policy) Who pays?

An Owner’s Policy of Title Insurance is usually furnished by a seller to a buyer to ensure the buyer that there are no voluntary or involutary liens of record. Title Insurance is the only type of insurance you can obtain that insures the past instead of future. In the event an item shows up that was for the seller after the policy is issued, the title company would clear that item for the buyer/new owner. A Lender’s Policy of Title Insurance is usually purchase by a buyer/borrower as a requirement of a new loan. A Loan Policy insures the lender against loss caused by invalid title in the borrower (ownership) and/or seniority of position on title.

What is an earnest money deposit?

The initial deposit provided by buyer to open an escrow. These funds are applied toward the total consideration (purchase price) at closing.

What is the difference between a Grant Deed and Quitclaim Deed?

• Grant Deed: Acquisition Deed, used to add or transfer title from one person to another.
• Quitclaim Deed: Used to remove person(s) from title.

What are closing costs and how are the estimated?

Charges incurred to purchase or sell a property. Common closing costs include: Title Charges, Escrow Fees, Inspection reports, disclosure reports, Transfer Fees and Loan Charges – See our section regarding closing costs.

When does the seller get paid?

California State Law requires Escrow Holder to verify the transfer documents have recorded with County Recorders Office prior to disbursing any funds. Typically the Seller gets paid within 24 hours of recording. Mostly same business day, but depending on what time confirmation of recording is received by escrow holder, funds may not be available until the next business morning.

What are the different forms of payments that are accepted to the escrow trust account?

California State Law requires all funds to be “good funds” in order to close. Personal checks take 10 business days to clear, Official (bank) checks take 3-5 business days to clear and Cashier’s checks take 1 day. More and more these days, Title Companies are placing holds on Cashier’s Checks to verify issuance due to fraud and the risk of the bank going out of business before they can honor their check so we strongly recommend wire transfers only for closing funds.

Are all escrow companies licensed and bonded?

No, only independent escrow companies are required to be bonded. Independent escrow companies are also required to have a certain amount of liquid assets, have spot audits conducted by the department of corporations and also, all employees of an independent escrow company must pass a background check from the department of justice. See why choose independent escrow tab.

Do I have to be present at time of closing escrow to sign papers?

No. Unlike attorney states, escrow closing states are handled much different. All documents required for your signature either as buyer or seller are obtained prior to closing. Usually once the buyer’s loan documents come in, escrow will gather the balance of documents required for your signature at that time. Sometimes escrow is notified of changes in terms between the time you have signed the final paperwork and closing. If that is the case, escrow will notify you of additional items required for your signature which can be handled via email or fax.

What is the difference between mortgage broker and direct lender?

• A Mortgage Broker qualifies your situation and finds a lender that can give you a loan that best suits your needs.
• A Direct Lender finds a program within their organization that best suits your needs.

What is a bulk sale?

Sale of equipment, furnishings, inventory and good will of a business.

What is the difference between a single family residence and a Planned Unit Development?

Both are detached dwellings. A Planned Unit Development, also known as a PUD is encumbered by Covenants, Conditions and Restrictions (CC&Rs) of a Homeowner’s Association. A single family residence does not have a Homeowner’s Association.

Where and what type of properties require retrofitting?

Some cities such as Los Angeles, Pasadena and now Burbank require a mandatory report certifying a property at transfer meets the requirements of the city for items such as low flush toilets, earthquake shut off valve, impact glazing, etc. A retrofitter or qualified licensed entity will inspect a property to confirm all items are up to code per the city requirements.

What is the Certificate of Compliance?

A document signed by a licensed Contractor, Retrofitter or Realtor certifying the property to be compliant with the city ordinances.

Who determines what type of insurance I need for the property?

A Mortgage Lender. Depending on whether you are located in a fire and/or flood area will determine what they will require. It is strongly advised that you confirm with your lender what type of insurance will be required in advance so that you have time to shop around for a policy that fits your needs. Lenders will require evidence of insurance urgently through escrow so it is very important you are prepared for that phone call as to who you will obtain the policy with.

What is an APN#?

Accessors Parcel Number. A ten digit number used by the Assessor’s Office to identify your property. You APN number can be found on your tax bill or the Deed you received from the county after you purchased your home.

What is Documentary transfer tax?

A fee charged by the County Recorder’s Office for a transfer in Title (ownership). Cost is based on total consideration (amount of money exchanged for transfer).

How is it determined if I will have Real Estate Withholding?

If you are selling your property, a Franchise Tax Board form (593) Real Estate Withhold Certificate will come to you with your initial paperwork from escrow. This form asks questions that will qualify whether or not it is necessary to send a portion of your sale proceeds to the Franchise Tax Board as prepayment of income taxes. NOTE: If you are selling your primary residence, you have lived in the home 2 out of the last 5 years, you are doing a 1031 tax deffered exchange or are subject to a loss, you will not be subject to real estate withholding.

After escrow closes, what documentation will I get to show I am owner?  When should I expect it?

Once your escrow closes you will receive a closing package consisting of your final closing statement/HUD, a copy of your insurance policy and other documents that were held for you through the course of the transaction. The County Recorder’s Office will send the Deed direct to you. (typically 6-8 weeks after escrow closes).

What type of Valid ID will I need to complete the transaction?

Both a buyer and seller will be required to sign documents that require a notary acknowledgement. A Driver’s license, state issued I.D. or passport will be required for a document to be notarized.

If part of my down payment is a gift, What documentation will escrow need?

Anytime funds are received by a person other than our Buyer or Seller, a third party authorization form will need to be completed. This form authorizes escrow holder to use the third party funds through escrow to benefit either the buyer or seller with no consideration due the depositor.

What do I do if I don’t have an agent but I have a buyer to buy my property?

Although we suggest you seek professional advice, we also handle “For sale by Owner” transactions and would be happy to walk you through the process. Call us for more info.

How can I help make the transaction smooth?

Be Patient. Be Available. The Real Estate Industry has changed dramatically over the past couple of years. Between short sale transactions and bank requirements of a new loan, we are dealing with something new every day. All of us work very dilligently to close your transaction very smoothly and quickly. In todays market, banks will require review of your file 2-4 times before they ultimately say yes, and they may require additional items prior to. You being proactive, available and cooperative will make the difference in a good experience vs bad.