A number of things happen this week: 1) The Purchase Agreement will generally
provide you with the opportunity for what is known technically as the
“Final Verification of Condition,” and more informally as a “Walk-Through.”
This is where we go to the property to check that the Seller has maintained
the property as required, and has completed agreed-upon work, if any (rare,
these days). The timing on this is typically within the five days prior
2) The Lender will send the Loan Documents (“Loan Docs”) to the Title
Company. The Escrow Officer there will prepare these and other documents
for your signature.
3) We (I always accompany clients) go to the Title Company to sign closing
papers. The Escrow Officer will guide you through this, explaining the
purpose of each document. (I pretty much just sit and watch and answer
the occasional question.) Where there is more than one Buyer, the Escrow
Officer will ask how title to the property should be vested. Here is
a discussion of the various manners of holding title. While it is
not required, it is convenient if all parties sign at the same appointment.
Signing can take anywhere from twenty-five minutes to over an hour, depending
on the volume of paper the particular Lender requires, and on how much
you read of what you sign. There are two documents that it is important
to go over very carefully. The first is the “Settlement Statement,” which
itemizes the various Closing Costs (Title Company fees, Bank charges,
etc.), and the credits (your deposit, your loan, etc.). The second is
the “Note,” which shows the interest rate and other terms of your loan.
The rest of the paperwork is required boilerplate and is essentially non-negotiable.
Also, more often than not, I will have a document or two relating to the
purchase for you to sign. At least one of the loan documents will require
that your signature be notarized, so it is important that you bring
a photo ID. The Lender also requires that you sign your name exactly as
it is typed below the signature line. This can be hard to remember if
there is a middle name or initial shown that you typically omit from your
signature. You do not need to bring in the balance of your down payment
and closing costs at this time. These funds are due a couple of
days later. The Settlement Statement will show the dollar amount needed
4) After you sign, the Escrow Officer will prepare the paperwork and send
it back to the Lender. The Lender will then carefully go over the paperwork
to make sure that everything was properly signed. Depending on the particular
Lender, this can take a day or two. When the Lender is satisfied, they
notify the Title Company that they are ready to “fund the loan,” i.e.,
wire your loan proceeds to the Title Company. This is timed to occur the
business day before close of escrow, and this is the day you begin
to pay interest on your loan. This is also the last day for you to
get the balance of your funds to the Title Company, this by mid-day.
(As I am a careful sort, I like to see my clients get their funds to the
Title Company one day earlier than this, particularly if there is a wire
transfer involved. See “Good Funds,” below) I check with the Title
Company to confirm their receipt of the loan proceeds from the Lender
and then call you with the news.
5) As stated, the Close of Escrow occurs the first business day after
the Lender funds the loan. What happens is this. The Title Company sends
a representative to the County Recorder’s Office to record a Deed showing
the transfer of title to you, the Buyer. Each recording generates a “series
number” from the County Recorder’s Office. After having all the day’s
deeds recorded, the Title Company’s representative faxes the list of series
numbers to the Title Company, confirming the recordings. At this point,
someone from the Title Company calls me to say that we are “on record.”
I then call to tell you that you are now officially the owner of the property.
This usually occurs sometime from late morning to mid-afternoon. We also
make an arrangement for me to get you the keys. As you can see, there
is nothing for you to actually do on the day of COE except receive
a phone call and receive the keys. Depending on the provisions of
the Purchase Agreement with regard to your occupancy, you can either begin
to move in immediately, or wait until the date specified date for the
Seller to “deliver possession.”
6) Another thing you should deal do this week is to set up your utility
accounts: PG&E, phone, refuse service, etc., specifying a starting date.
Here is a link to contact phone numbers.
If the Purchase Agreement provides for the Sellers to retain possession
for a period, the normal arrangement is that they continue to pay the
utilities until they vacate.
Monday: Loan Documents arrive at the Title Company. You sign and the Documents are sent back to the Lender via an overnight delivery service.
Tuesday: The Lender receives the Documents and begins the review process.
Wednesday: The review process concludes and the Lender notifies the Title Company that they will be wiring the loan funds the following day.
Thursday: The Lender wires the loan funds to the Title Company.
Friday: The change of title is recorded with the County Recorder. Escrow is closed.
The above assumes a Friday close. Escrow can close any day of the week. Also, some lenders have a quicker review process. This can shorten the process by one day.
There are specific requirements as to the form in which you deliver the
balance of your down payment and closing costs to the Title Company. On
the day of COE, the Title Company is required to have on hand “good funds”
to disperse. The forms acceptable to them are: 1) Wire transfer from
your bank or other institution. If you will be using this method,
I will provide you with printed instructions from the Title Company showing
the bank wire-routing numbers. Using printed instructions, rather than
reciting the numbers verbally, makes for fewer mistakes.
2) Cashier’s or “Official” Bank Check, made payable to the Title Company.
This must be delivered to the Title Company no later than mid-day, on
the day before COE.
3) Personal Check, made payable to the Title Company, but only
if presented to the Title Company a least ten days prior to COE.
There are a couple of other points to note. The balance of your down payment
and closing costs do not need to be delivered as a single wire transfer
or check. You can deliver any number and combination of checks and wires,
as long as they add up to the correct amount.
If a portion of your funds is in a Brokerage Account you should try to
deal with one person whose name you know and who you can dependably contact.
First, well ahead of time, check as to whether the Brokerage can wire
the funds to the Title Company. If so, I can fax your Brokerage contact
person the printed wiring instructions. If the Brokerage can’t wire funds,
you need to know whether they can give you a Cashiers Check or only a
regular business check. If they will only provide regular business check,
you will need to deposit it with your bank and have them issue a Cashiers
Check. Note that your bank will probably put a hold on the Brokerage
business check, possibly for as long as ten days. Don’t get caught unprepared
on this. You don’t need any avoidable aggravation at COE.