Life Of a an Escrow
A look at all parties.
What is Escrow
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.
An escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan requirements, deeds and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction.
Here is a basic overview of the escrow process.
The Buyer
Chooses a Real Estate
Agent
Gets pre-approval letter
from Lender and provides
to Real Estate Agent.
Makes offer to purchase. Upon acceptance, opens escrow and
deposits earnest money.
Finalizes loan application
with Lender. Receives a
Loan Estimate from Lender
Completes and returns
opening package from Pacific Coast Title
Schedules inspections
and evaluates findings.
Reviews title commitment/
preliminary report.
Provides all requested
paperwork to Lender (bank
statements, tax returns,
etc.) All invoices and final
approvals should be to the
lender no later than 10 days
prior to loan consummation
Lender (or Escrow Officer)
prepares CD and delivers to
Buyer at least 3 days prior to
loan consummation
Escrow officer or real
estate agent contacts the
buyer to schedule signing
appointment.to
loan consummation
Buyer consummates loan,
executes settlement
documents, & deposits
funds via wire transfer.
Documents are recorded
and the keys are delivered!
The Seller
Chooses a Real Estate
Agent
Accepts Buyer’s offer to
purchase.
Completes and returns
opening package from Pacific Coast Title Company including information such as
forwarding address, payoff
lender contact information
and loan numbers.
Orders any work for
inspections and/or repairs
to be done as required by
the purchase agreement.
Escrow officer or real
estate agent contacts the
seller to schedule signing
appointment.
Documents are recorded
and all proceeds from sale
are received.
The Escrow
Upon receipt of order and
earnest money deposit,
orders title examination.
Requests necessary
information from buyers and
sellers via opening packages
Reviews title commitment /
preliminary report.
Upon receipt of opening
packages, orders demands
for payoffs. Contacts buyer
or seller when additional
information is required
for the title commitment/
preliminary report.
All demands, invoices, and
fees must be collected
and sent to lender at
least 10 days prior to loan
consummation.
Coordinates with lender on
the preparation of the CD.
Reviews all documents,
demands, and instructions
and prepares settlement
statements and any other
required documents.
Schedules signing
appointment and informs buyer of funds due
at settlement.
Once loan is consummated,
sends funding package to
lender for review.
Prepares recording
instructions and submits
docs for recording.
Documents are recorded and
funds are disbursed. Issues
final settlement statement.
The Lender
Accepts Buyer’s application
and begins the qualification
process. Provides Buyer
with Loan Estimate.
Orders and reviews title
commitment / preliminary
report, property appraisal,
credit report, employment
and funds verification.
Underwriting reviews loan
package for approval.
Collects information
such as title commitment
/ preliminary report,
appraisal, credit report,
employment and funds
verification. Reviews
and requests additional
information for final loan
approval.
Coordinates with Escrow
Officer on the preparation
of the Closing Disclosure,
which is delivered to Buyer
at least 3 days prior to loan
consummation.
Delivers loan documents
to escrow.
Upon review of signed loan
documents, authorizes loan
funding.
Reviews all documents,
demands, and instructions.
Prepares settlement
statements and other
required documents