What is Escrow?

Webster’s vest pocket dictionary defines ESCROW as: “Deposit to be delivered upon fulfillment of a condition.”

As an escrow holder, Sonoran Title Services' duty is to act as the neutral third party. We hold all documents and all funds, pursuant to the purchase contract and escrow instructions, until all terms have been met and the property is in insurable condition; then, we make the final exchange. We do not work for the seller or for the buyer; however, we are employed by ALL parties and act only upon MUTUAL WRITTEN INSTRUCTION.

Opening Escrow

“Opening Escrow” occurs when your REALTOR® brings in a contract with your earnest money deposit. The escrow officer needs to have all signatures on the purchase contract and related documents. We will accept the contract with final signatures of a party to be forth-coming. We will make arrangements to get signatures if a REALTOR® is unable to do so.

Your escrow officer reviews the contract, receipts in the earnest money, orders the Commit-ment for Title Insurance, and prepares the documents required to close escrow. All of the documents are double checked by your escrow officer; however, it is the final responsibility of your REALTOR® to review the documents, explain them to you, and make any necessary changes or submit approval.

We do our best to understand the contract as presented, to take all calls or return them promptly, and to send out documents in a timely manner. During the last few days of the month we are extremely busy closing escrows already in progress; therefore, sometimes we are not quite as responsive . . . but your transaction is important to us and we will get back to you as soon as possible.

Closing Cost

Any questions pertaining to loan fees and charges should be directed to your loan officer. Your Escrow Officer will review and explain your settlement statement at closing. The following is designed to help you understand some of the costs associated with closing and to show you cost saving policies offered through Sonoran Title Services.

Some typical closing cost

Title Insurance Premiuim
Fee paid by an individual to insure the buyer has a marketable title and the lender is in lien position.

Real Estate Comission
Fee paid to real estate broker for services rendered in listing, showing, selling, and consummating the transfer of property.

Transfer/Assumption Charges
Fee charged by the lender to allow a new purchaser to assume the existing loan. Recording fees are assessed by the County Recorder’s Office to record document of a real estate transaction.

Loan Fees
Fees charged by a lender in connection with the processing of a new loan. These may include points, origination fee, credit report, appraisal, etc.

Escrow Fees
Fees charged by an escrow agent for services rendered in preparing documents and collecting/disbursing funds necessary to consummate a real estate transaction.

Additional Settlement Charges
Taxes, insurance, impounds and interest prorations, termite inspection fee, home warranty, Homeowners Association transfer, etc.

What do i pay for?

Your customary closing cost

Seller:

Owners Title Insurance Policy
Real Estate Commission
1/2 Escrow Fee
Escrow Fee for New VA Loan
Payoff Loans of Record and Required Fees
1/2 Homeowners Association Transfer Fees
Homeowner Association Inspection Fee
Home Warranty
Judgment Lien(s), Tax Lien(s), etc.
Recording Charges to Clear Title
1/2 Assumption/Change Records Fees for Assumptions
Prorations for Unpaid Items
Unpaid Associations Dues, Mortgage Payments, Accrued Property Taxes, etc.

Buyer:

Lenders Title Insurance Policy
1/2 Escrow Fee (except on VA)
Recording Charges for Deed and New Loan Security Insuments
1/2 Homeowners Association Transfer Fees
All New Loan Charges, except those required of the seller, -including Interest from day of funding to first of next month
Termite Inspection
1/2 Assumption/Charge Records
Fees for Assumptions
Prorations for Prepaid Items
Next Association Dues, Mortgage Pay-ment, etc.
Settlement Charges including Property Insurance (fire and extended coverage)
14 Months of Property Insurance

*Appraisal Fee: By Agreement

Various fees charged by a lender for a new loan may be negotiated unless mandated by government regulations. Please check with your REALTOR® and/or loan officer for clarification.

Closing the deal

One Step Closer to Ownership
Also called "settlement" or "escrow," the closing process is the official transfer of ownership from seller to buyer. At this stage (except for cases of fraud) all seller commitments end, and the property legally becomes the responsibility of the pur-chaser.

Invovling the release of a deed, the signing of notes, and the disburesment of funds necssary to complete the sale, settlement is a synchronized efforet of many groups. An impartial third party is entrusted with the job of seeing that the transfer of ownership takes place according to the terms of the written contract, then the closing agent holds any funds or documents until all the details have been settled and disburses them to the proper parties.

Opening escrow simply involves visiting the office that handles closings, then handing over the deposit money and giving instructions for the transaction. Customarily, each party completes their papers separately, which typically takes one to two hours.

When setting the closing date, some things to consider are:

Plan it near the end of your lease to prevent paying unnecessary rent.
Does the time of year pose any tax implications?
Give yourself enough time to move

Prior to closing, make sure the following things are in place:

Most lenders require homeowner’s insurance, so be ready to verify you’ve got it.
The day before closing, you’ll want a final walk-through of the property. Carefully inspect the premises and make certain all repairs and contract conditions are satisfied.Review the “Uniform Settlement Statement” prepared by your title company itemizing the costs of all services you must pay at closing, then…..

Be prepared to provide a cashier’s or certified check for your share of expenses on closing day.

How much will the closing cost be?
Generally, your closing costs, which include title searches, government taxes, notary fees, loan fees, escrow fees, recording fees, reconveyance fees, prorations and sales commissions, will range between 4 and 5 percent of your purchase price.

Closing Escrow

Your escrow officer will call you to make an appointment for you to sign your lender’s package as well as your deed, affidavit, and all other required documents. You should allow a minimum of 60 minutes for this process. If you would like, ask your REALTOR® and/or your loan officer to be present in case you should have questions.

Bring the following items to your appoinment:

Identification: You must have a photo ID, which can be in the form of a current driver’s license or a current passport, and one other form of identification. Identification must be presented in order for your signatures to be notarized.

Good Funds: Please plan ahead so that the necessary funds will be available at the time of closing. Your escrow officer will prepare a pre-audit for you prior to your signing, which will indicate the amount of funds required by you to close. The law requires us to have Good Funds, which consist of a Cashier’s Check or Certified Check drawn on an Arizona banking or savings institution or a Wire Transfer.

Insurance: Proof of homeowner’s insurance on the property must be provided for your lender. Bring in the name, company, address, and phone number of your insurance agent

If a new loan is being obtained, generally the signed loan package must be returned to the lender for review and subsequent funding of the loan. Upon the escrow holder’s receipt of all GOOD FUNDS, including but not limited to the buyer’s closing funds, loan proceeds, and fulfillment of conditions and contingencies, the documents are then released for RECORDATION. Upon confirmation of recordation, all funds are disbursed and closing packages provided to all parties.

Life of an Escrow

1. Opening the Escrow- Items needed to Open Escrow

Fully executed Purchase Contract
Earnest money check
Copy of listing
New lender information
Existing loan payoff/assumption information
-Cost estimate sheet

2. Processing the Escrow

Escrow deposits earnest money check
Escrow orders Preliminary Title Report from Title Department
Escrow requests payoff or assumption information, homeowner’s association information, etc.

3. Title Examination

Property is searched
Property and parties are researched by the Title Examiner
Preliminary Title Report is typed and sent to Escrow Officer, Agents, Sellers & Buyer

4. Escrow Closing Preparation

Preliminary Title Report received by Escrow Officer and is reviewed for any surprises, I.e. tax liens, judgments, unknown liens of record, discrepancies in legal description, delinquent taxes, access problems, etc.
Escrow advises Agents if additional information is needed to clear any surprises revealed by the Preliminary Title Report
Escrow prepares for closing
Escrow follows-up on receipt of the following if needed, per Purchase Contract:
- Termite Report
- Home Protection Plan
- Buyer’s Hazard Insurance
- New Loan Package
- Payoff Information
- Assumption Information

Repair Bills

Warranties
Time for closing– loan documents are received and Escrow Officer ‘works’ the file to reflect closing and advises agents of funds (if any) that are needed for closing
Closing appointment times are set for Seller and Buyer with Escrow Officer
Advise all parties executing document to bring a valid government issued picture, I.e. license, passport, etc

Advise Buyer to bring in a cashier’s check or wired funds for closing

Advise seller that pursuant to the Purchase Contract, they shall supply escrow with their Social Security No.

5. Execution of Documents

Buyer & Seller meet with Escrow Officer and execute all documents

6. Lenders Funds

After all parties have executed the necessary documents, escrow returns loan package to new lender for review and funding
Lender funds the loan and lenders check or wired funds are sent to escrow for processing

7. Recordation

After escrow receives all funds needed and have ascertained that all funds are ‘Collected”, original documents are sent to the Recorder’s office for recordation
Once documents are recorded, escrow notifies Agents

8. Disbursement of Funds

All Disbursements are made in accordance with the Settlement Statement

9. Policies Issued

Purchaser receives Owner’s Title Insurance Policy
New Lender receives ALTA Loan Policy

Title Insurance

What is title insurance?

DEFINITION: A contract where by the Insurer for valuable consideration agrees to indemnify the Insured in a specified amount against loss through defect of title to real estate wherein the latter has an interest either as a purchaser or otherwise.

PURPOSE: Title Insurance services are designed to afford real property owners, lenders, and others with interest in real estate, the maximum degree of protection from adverse title claims or risks. The financial assurance offered by a Title Insurance Policy from the Title Company is, of course, the primary aspect of title protection. The Policy affords protection both in satisfying valid claims against the title as insured and in defraying the expenses incurred in defending such claims.

The Title Search

Title companies work to eliminate risks by performing a search of the public records or through the title company’s own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record which could affect the title to the property. When a title search is complete, The Title Company issues a Commitment for Title Insurance (pre-lim) detailing the current status of title.

When you buy Real Estate

What you don't know can hurt you!

When you buy an ordinary article like a coat, a radio, or a watch, you do not need to know whether the former owner is married, single, or divorced. You may buy stocks or bonds without caring whether the seller has a tax bill due.

You may buy an automobile without worrying about whether there are any suits or judgments against the owner. But when you buy real estate, all of these things and many, many others can cause you untold trouble.

Why is buy real estate different?

No other property has a useful life that compares with the life of land. Owners die, new ones succeed, but land goes on forever. Owners of goods may change their location at will, but land is immovable.

Being both permanent and immovable, land lends itself to the absorption of innumerable rights. Over the ages, this so impressed lawyers and jurists that they formed a separate body of laws for land. These laws, creating many types of rights in land, are so numerous and so complex that it is impossible in the very nature of things for there to be a mathematical certainly of ownership.

For example, every lawyer is aware that there may be hidden defects in titles to land of which they cannot take cognizance in their opinion: defects arising from fraud, forgery, insufficiency of deeds, persons of unsound mind, demands of missing heirs, widow’s/ widower’s dower, rights of divorced persons, rights of a child born after the making of a will, and many other circumstances that are liable to cause serious financial loss to the buyer of real estate

It can happen!!!!

Tom Rowe was amazed to learn that his title examiner had missed a substantial sum in old taxes which had to be paid.

Sam White had to move his garage because it was partly built on his neighbor’s property. The surveyor had made a mistake.

Bob Smith saw a small fortune spent defending the title to his home when a man who only thought he had a better title carried his fight to the Supreme Court.

Art Green was shocked to hear that there was an old mortgage outstanding on his home. A clerk had indexed it improperly.

Fred Page handed over a substantial check because the man from whom he bought his home said he was single; however, when he died, it was discovered he was secretly married.

The Security of your home is no better thna the title to the property

There are many title troubles that can arise to cause the loss of your home. . . or your business property. . . or your mortgage investment.

Title troubles not disclosed by the most careful search of the public records — called hidden hazards — are most dangerous. Because of them, your abstract may be perfect, but your title worthless.

Owner’s title insurance protects you as well as your heirs from financial loss caused by title troubles. And the title insurer, without expense to you, will defend you against any attack on the title to your property as insured.