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The Search
The Purchase Agreement
Frequently Asked Questions
A Glossary
During Escrow
     Ways of Holding Title
     The Week before Close of Escrow (COE)
     Utility Set-Up Phone Numbers

Ways of Holding Title

There are several options here, particularly where more than one person is to be on title to the property (“co-ownership interests”). The Escrow Officer will ask you when you sign papers just before the close of escrow which manner of holding title you would like the recorded deed to specify. With co-ownership interests the primary considerations are what happens in the event of the death of one party, 1) with respect to inheritance and probate matters, and 2) with respect to tax matters. Be aware that, except where one of original parties on title has died, it is generally possible to switch to a different manner of holding title later by having the appropriate deed recorded.

Here are links to discussions of the matter:

From the University of California Office of Loan Programs
From California Land Title of Marin

Added June 2002

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The Week before Close of Escrow (COE)

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 to COE.

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 to close.

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.

To Summarize:

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.

Good Funds
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.

Nacio Brown

Added June 2002


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