Escrow, Inspection and Appraisal
In Southern California an escrow company (sometimes a division of a title insurance company) is used in a sale transaction, not an attorney. It is the duty of the escrow company to maintain neutrality in the transaction, to hold the buyer’s good faith deposit and to handle the closing funds. The escrow officer will order the title insurance, and homeowner documentation if applicable, and prepare escrow instructions to mirror the accepted offer. He or she will be in communication with the buyer’s agent and the seller’s agent and the lender to see that the terms of the offer are carried out to the satisfaction of both sides. The contract terms cannot be changed, once ratified, unless both parties agree.
Title insurance is essential so that the buyer can be sure that the title to the property is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title as your buyer becomes the new owner. Some properties are subject to restrictions which limit various activities, such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use the property. The buyer will have the right to approve the title report within the contingency period.
Once you have accepted the buyer’s offer, the buyer will have the option of choosing a property inspector – at the buyer’s expense – to inspect the property within the contingency timeframe in the contract. The buyer’s agent will be expected to accompany the buyer to your home for the inspection, which will take approximately 2 to 3 hours, depending upon the size and age of the property. The purpose of the inspection is to ensure that there are no structural defects or code or safety items which need to be corrected. Once the buyer(s) and the buyer’s agent have received a copy of the inspection report, it will be forwarded to you along with the buyer’s repair request if applicable. You will have the opportunity to respond and to negotiate any repair request.
To protect its investment, the buyer’s lender will order an appraisal of your property. We will endeavor to meet the appraiser for you and provide the best comps and any other information that may help him or her to bring in the appraisal report at value. You and we will know the results of the appraisal within a few days after the appraiser’s visit.
Your buyer(s) will be signing loan documents a few days before closing, usually at the escrow office. You will not need to be present. Throughout the transaction we will be in touch with the lender to ensure that things are going smoothly. A day or two after the buyer has signed loan documents, the lender will fund the loan. Later that same day – or the following day, we can expect the house to record in the buyer’s name. You will not need to be present or to do anything; we will be notifying you personally that the transaction has closed.
The escrow officer will be disbursing funds once he or she received the final recording information from the title company and has balanced the account. All outstanding encumbrances, such as your loan(s), the termite work invoice if there is one, and any other charges which are your responsibility, will be paid. Your equity funds will be sent to you by check or wired to you, per whatever instructions you gave to the escrow officer, and you will receive a final closing statement.
We will be in close contact with you throughout the transaction and will advise you as to your responsibilities as the sale progresses and keep you fully informed.