Closing

What you’ll need to know to close on your new home

What is Escrow?

For the protection of the seller and the buyer, a person or company that has no connection with you or the seller holds the money and papers involved in the purchase. This procedure is called “escrow.” The escrow holder:

Makes sure that all of the terms and conditions of the agreement are met

Coordinates what happens with the broker, the lender and the title insurance company

Delivers the deed to the county for recording when it can pay the seller the money.

Escrow services can be provided by:

Title companies

Banks

Savings and loan associations

Independent escrow companies

REALTORS®

Lawyers.

The escrow holder is not a mediator, lawyer or an advisor. The law requires an escrow holder to remain neutral. Its only job is to carry out the terms of the escrow instructions.

Make sure your Purchase Agreement does not conflict with your escrow instructions. If they do conflict, the escrow instructions may be considered your final agreement as to the terms of the purchase. If you’re not sure you understand the instructions, discuss them with your REALTOR®, your lawyer and the escrow holder.

After the close of escrow, the escrow holder will provide you with a Settlement Statement.

This document shows you, the buyer, all costs when purchasing the property

You should review this document carefully and save this statement. Many of these costs may be deductible from either your state or federal taxes

If you have any questions or concerns about your expenses make sure you contact the escrow holder immediately and ask for an explanation.

Title Insurance

Title insurance protects you when you buy a home. It is, however, not a guarantee that problems will not arise after the close of escrow. When you make an offer to buy a home you have the right to choose the title company.

Once you have chosen a company, you should make one of the conditions of the close of escrow clear title to the property.

"Clear title" means that when the sale to you is completed, the title to the property will be free from liens, judgments and other claims that you have not agreed to accept.

You should also discuss with your REALTOR® the need for a survey of the property and title insurance coverage for boundary line disputes. In many instances, especially in rural areas, boundary lines are not where they should be. A survey and survey coverage can help eliminate future disputes with your new neighbors.

Before a title company issues an insurance policy,

It will find out if anyone besides the seller claims to own the property.

Search the public records for claims against the property.

The title company will provide a report for you called a preliminary report:

Carefully review this report to determine if it describes all of the property you are interested in buying.

Determine what you are willing to accept when you purchase the property and what you wish removed or taken care of as a condition of the close of escrow.

If you don’t understand the report, you should discuss it with your REALTOR®, the escrow holder and/or your attorney.