At the start of the Escrow process, you and the seller will sign a sales contract with a purchase price, inspection reports, disbursements, and any other information crucial to closing.
For example, some contracts contain matters of record that the buyer needs to fulfill in order to acquire the property title. Escrow instructions will also give the date of the closing and the date at which you will take control of your new property. You might deposit earnest funds at this time.
The escrow service will then complete a title search and contact any lenders of record. By searching through public records, the escrow company will find any property assessments, liens, or other legal documents that could have any effect on the sale of the property. The title search prevents the seller from selling a property with undisclosed liens or debts. Before the process can continue, the seller must eliminate any debts or liens or the buyer must approve changes to the sales contract.
You will then review and accept reports related to the condition of your property. This includes structural pest control reports and roofing reports. Sales are often contingent on these reports. If a pest control report shows a massive termite infestation, for instance, you will not have to purchase the property unless the seller rectifies the damage.
By this point, you're ready to close, and you only need to complete a few more steps to take possession of the property. You’ll need to deposit your down payment if you haven’t already done so. If you’re obtaining financing, you’ll need to read and accept documents for your new loan before closing. You will need to accept and activate any insurance policies contingent to the sale, and you might also need to accept new loan instructions, depending on how the other reports and title search turned out.
Finally, you’re ready to close on your new property. The seller will sign a closing affidavit, affirming that they’ve disclosed all information pertinent to the sale, and transfer the deed. You’ll sign for the new mortgage and receive copies of relevant documents. Everyone present at the closing will get paid, and you or the seller will pay closing costs depending on your sales contract; closing costs can include recording fees, liens, home inspections, home warranties, appraisals, and disbursements, which are collected by the escrow holder. This officially closes the escrow.
While the escrow process varies somewhat from state to state, most states follow the general process outlined above. You should speak with your escrow agent for more information and research the closing process in your own state before agreeing to a contract.
Focus Escrow can help you with everything related to your escrow. Please contact us by phone for immediate assistance. (562) 696-0793