Coordinating Title Companies and Lenders in your Tucson home purchase or salePosted on August 26th, 2011 2 comments
Your Tucson home purchase or sale will involve a neutral third party, called an escrow or title company, who will make sure all conditions of the sale are met before a transfer of funds and property occurs between the buyer and seller. The escrow agent (or escrow/title officer) will verify property details- including legal description, and valid ownership. Additionally, they will gather all the paperwork from both the buyer and seller, including contracts and all other pertaining documents- including transfer information from home owner’s associations (a.k.a. HOA’s).
As your Realtor, Sarah will assist you throughout this process by helping you to select the right title company and escrow officer to best suit your needs. By checking in regularly with the escrow officer during the term of the escrow, Sarah will ensure that the process of transfer is being handled properly and timely, until the close of escrow is official, and the house is yours. Overseeing the escrow includes verifying that the information contained on the preliminary title report is correct, and that there are no encumbrances (clouds on title) that cannot be removed on the property.
Sarah will also check with your Mortgage broker, banker, or lender to ensure that they are getting all of the necessary paperwork as well as the appraisal to the title company. Also, Sarah will verify that they are meeting the time frames contained in the purchase contract. This is especially important, since the new residential purchase contract states that lenders are required to provide the seller with regular loan status updates (LSU’s).
The Title Company’s Responsibilities include:
Opening Escrow/ Depositing Earnest Money
You will have the opportunity to select an escrow officer when your purchase contract is being drafted. The first step the title company will be involved in is holding your earnest money funds, a deposit made to the title company that shows the buyer’s good faith. Sarah will be responsible for opening escrow, and making sure the title company deposits your earnest money into a neutral escrow account. At the time she is drafting your purchase contract, she can recommend a suitable amount of earnest money- based on the purchase price of the property. Higher amounts of earnest money will show the seller how serious your offer is.
The title company does a search to make sure that the seller actually owns the property that he or she is attempting to sell, as well as establishing a correct legal description, and a proper chain of title (history) for the property. A title officer/title examiner will also make sure the title is clear by checking for liens on the property. This can include:
- Property Taxes – Coordinating the payment or credit of property taxes for the current year. If taxes are delinquent, confirming any late fees owed.
- Home Owners Association(s) – (if applicable) Checking to see whether dues are current and coordinating transfer fees and pro-rations of dues relative to the particular HOA. Ensuring that the buyer is aware of the amount of dues and that the new buyer’s membership in the HOA is established.
- Other unpaid Liens, judgements, debts, or legal fees – The preliminary title report will provide the buyer with any and all encumbrances pertaining to the property.
- Making sure that the seller has the ability to pay off all existing mortgages owed on the property. This is especially important in today’s market, considering the high number of home sellers who are upside down on their mortgages. Once the title company has verified that the sale is not a short sale, if the sales price is not sufficient to cover all of the loan payoffs (and the sale has not been specified as a short sale), it is the title company’s responsibility to make sure the seller will have the necessary funds to close escrow.
If a property (or seller) has numerous encumbrances or liens (this could include, but is not limited to mortgages, judgement liens, tax liens, contractor’s liens) which cannot be cleared up prior to close of escrow, it may affect the saleability of the property. Therefore, the title company’s ability to issue a title policy would be affected, as would the seller’s ability to provide clear title to the property. Sarah will serve as your guide in this process. If necessary, (and the transaction necessitates it), she may recommend that you obtain legal or tax advice.
The title company will provide you with title insurance for a fee, which means they hold a title insurance policy for the property in their secure title library. The Owner’s Title Policy (OTP) is paid by the seller to ensure that you are being issued a title policy free from encumbrances. Evidence of this title insurance policy is recorded when the property changes hands. If anyone ever tries to claim ownership in your property, the title insurance covers the cost of proving your rights to the property by establishing a clear chain of title.
Transfer of Funds and Title
Once the title search is complete and the title policy has been issued, you are now ready to “close escrow.” Sarah will schedule a “closing appointment” at the title company, which if you are getting a mortgage will take about an hour to sign the closing documents required by your lender and the title company. Sarah will attend this appointment with you, which will be conducted at the title company’s office. You will need to bring the amount owed at the closing, the amount of which Sarah will inform you in advance.
Your closing funds will need to be in the form of a cashier’s check, as that is required based on the 2002 “Good Funds Law” in the state of Arizona. More than likely, your lender may also require you to put money into “escrow” to establish the impound accounts to cover the property taxes and homeowners insurance portion of your monthly mortgage payment. Sarah will make sure that you receive a “Good Funds Estimate” from your lender, and also an estimated closing cost statement from the title company, so that you know what to expect before getting to the closing table.
Congratulations, you have now made it to the close of escrow, and now you can celebrate your new home! Please call Sarah Ley with any real estate or title questions you may have at (520) 404-0544. Sarah has been assisting Tucson home buyers and sellers for over 12 years.Buying a Home in Tucson, Escrow & Title Buying a Home in Tucson, escrow and title process in buying a home
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