Marty and Max: Escrow, the blind side of real estate

“Now y'all would guess that the highest-paid player on an NFL team is the quarterback. And you'd be right. What you probably don't know is that more often than not, the second-highest-paid player is, thanks to Lawrence Taylor, a left tackle. Because as every housewife knows, the first check you write is for the mortgage, but the second is for the insurance and the left tackle’s job is to protect the quarterback from what he can't see coming. To protect his blind side.” — Leigh Anne Tuohy

In real estate, there too is a blind side, and this is where things can get a little scary and you too need insurance. Title Insurance. I visited with subject matter expert Jacquelyn Scappini with North Idaho Title to help navigate the nuances of title insurance. 

- What is escrow?   

It is an independent neutral account by which the interests of all parties to the transaction are protected.

- What is the role of the escrow officer? 

They serve as the communication link to all parties in the transaction. Prepares escrow instructions. Requests a preliminary title search to determine the basis upon which a title insurance policy may be issued. Requests a beneficiary’s statement or pay-off demand relating to existing financing. Complies with lender’s requirements, specified in lender’s instructions. Receives purchase funds from the buyer and loan funds from lender. Orders evidence of homeowners insurance from the insurance agent. Prepares or secures the deed or other documents related to escrow. Prorates taxes, interest, insurance and rents according to instructions. Records deeds and any other documents as instructed and required to close the escrow. Requests issuance of the title insurance policy. Closes escrow when all instructions from the buyer and seller are done. Disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions, homeowners insurance, and loan payoffs. Prepares final statements for the parties accounting for the disposition of all funds deposited in escrow

- What are the basic escrow timelines? 

This process can take anywhere from 1 to 5 weeks depending on the terms of the contract and if there is a loan.

- What are the top 10 things escrow officers need to know?  

Your escrow officer will need to know:

1) How do the new owners want to hold title?  

2) Has there been a change in marital status of the selling party?

3) Will any parties be using a power of attorney?  

4) Is the seller of the property an Idaho resident or not?

5) Will any signing parties need to use a remote notary?   

6) Have any of the principals recently filed for bankruptcy?

7) Is there construction work in progress or any unfinished construction on the home?

8) Are any of the principals on title deceased?

9) Are any of the principals subject to any liens or judgments like child support, medical or tax liens, or credit judgments?

10). Will the real estate transaction be a part of an exchange in another purchase?

- What are the most common costly mistakes?   

Parties should always call the escrow company to verify wire transfer instructions before transferring money.  

- Who typically pays the different fees?  

It is most common that the seller will pay for half of the escrow fees, the buyer's Title Insurance Policy, commissions, misc. recording fees, and their portion of any loans, taxes, dues, and utilities still outstanding on the property.  The buyer typically pays half of the escrow fees, any inspections or appraisals, and their portion of any taxes or dues that go with the property.  If a loan is involved, the buyer will pay for a Lenders Title Insurance Policy and any lender fees.

- Are there any questions you wish clients would ask through the escrow process?  

Open and thorough communication is always best.  A signed addendum any time there is a change made to the contract.

For information, contact Marty Walker at marty@21goldchoice.com or call (208) 518-6636. This article was not written by and does not necessarily reflect the opinions of Coeur d'Alene Regional REALTORS® Source, The Blind Side.