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The Escrow Process
An escrow is a process where the Buyer and Seller deposit written instructions, documents, and funds with a neutral third party until certain conditions are fulfilled. In a real estate transaction, the Buyer does not pay the Seller directly for the property. The Buyer gives the funds to an escrow company who, acting as an intermediary, verifies that title to the property is clear and written instructions in the contract have been met. Then the escrow company transfers the ownership of the property to the Buyer through recordation and pays the Seller. This process protects all parties involved.
The State of Arizona licenses and regulates all escrow companies. The Insurance Commissioner and the State Banking Department can inspect a company’s records at any time, providing further oversight of the company’s management and position as an impartial third party to the transaction.
In Arizona, escrow services are generally provided by a title insurance company instead of an attorney. The stability, reliability, and performance of your title and escrow company are vital to protect the interests of all parties to the transaction.
Escrow Services
- Open escrow and deposit your “good faith” funds in a separate escrow account.
- Conduct a title search to determine ownership and status of the subject property
- Issue a title commitment and begin a process to delete or record items to provide clear title to the property.
- Per contract, confirm that the lender has determined that the Buyer is qualified for a new loan
- Ask th Buyer to complete a beneficiary statement if the Buyer is assuming the Seller’s loan
- Meet all deadlines as specified in the contract
- Request payoff information for the Seller’s loans, other liens, homeowner’s association fees, etc.
- Pro-rate fees, such as property taxes, per the contract, and prepare the settlement statement.
- Set separate appointments: Seller will sign documents; Buyer will sign documents and deposit funds
- Review documents ensuring all conditions and legal requirements are fulfilled; request funds from the lender.
- When all funds are deposited, record documents at the County Recorder to transfer the subject property to the Buyer
- After recordation is confirmed, close escrow and disburse funds including Seller’s proceeds, loan payoffs, Realtor’s commissions, related fees for recording, etc.
- Prepare and send final documents to all parties involved.
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