Escrow is a neutral depository for funds and documents needed to complete a real estate transaction. When a buyer and seller have signed a purchase contract, a copy of that contract along with the buyer’s earnest money check is deposited into escrow. This constitutes opening of escrow and the escrow process begins and progresses as follows:
A copy of existing deed is ordered by the escrow officer, to obtain the legal description of the property and the names of the record owners.
The escrow officer or an assistant then orders a commitment for title insurance from the company’s title department, in order to determine what will be required to close the transaction and to inform the buyer and the buyer’s lender what will remain of record against the property after closing.
Statements from the seller’s existing lender and the homeowners association are ordered in order to determine the amounts needed for payoff and/or transfer at the close of escrow.
Copies of the commitment for title insurance, covenants, conditions and restrictions and termite inspection reports are forwarded to buyer, seller and lender for their approval as received.
Upon receipt of the buyer’s loan documents from the buyer’s lender, the escrow officer prepares the settlement statement (or HUD), based on the information provided by the buyer’s new lender, the statements from homeowners association and payoff lenders and the purchase contract. The buyer and seller are contacted separately to schedule signing appointments for each. Buyer and seller sign separately. The buyer will deposit closing funds at the scheduled signing time unless other arrangements are previously made.
After signing, the loan documents are returned to the buyer’s lender for approval and funding. Upon receipt of the loan proceeds from the lender, the escrow officer will release the documents in the transaction for recording with the County Recorder on the agreed upon recording date. After recording, the funds are disbursed and copies of all documents are provided to REALTORS®, buyers and sellers and the title insurance policies are issued to the buyer and the buyer’s new lender.
In Arizona, real estate agents are authorized to write purchase contracts and escrow/title companies are authorized to complete standard documents to close a real estate transaction. As a result, attorneys are not commonly engaged in real estate closings of residential property. The real estate professionals generally involved include the real estate agents, the escrow officer and the buyer’s loan officer.
Be advised, however, that none of the above referenced professionals are allowed by law to offer legal advice. If you have a complex transaction or have questions or doubts that cannot be answered by your real estate professionals, it is important that you consult with an attorney.
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