Six Steps to a Successful Escrow

The Arizona Association of Realtors® (AAR) created a contract that is used in place of our escrow instructions and it is important to ensure the following is fulfilled:

• Copy of contract signed and dated by all parties
• Legible copy
• Addendums (including Loan Status Report, HOA/PUD Addendum, etc. upon opening escrow)
• Counter offers
  • Complete addresses for Seller and Buyer
  • Current addresses
• Work addresses as well as home (mailing)
• Addresses that will be used for buyers and sellers after close of escrow
  • Correct legal description
  • Lot number
  • Subdivision
  • Parcel number
  • Street address
• Mobile Home
  • Affidavit of Affixture
  • Certificates of Title
• Check for Earnest Money deposit

• Where do we get information on commissions?
  • Copy of Listing Agreement
  • Percentage of commission and how it is to be split
  • Name, address and phone number of cooperating Broker/Agent
• Existing lender information
  • Company name, address and phone number
  • Account number
  • Contact phone number
• New lender information
  • Company name, address and phone number
  • Name and number of loan representative
• Type of loan
  • Assumption
    • Assumptions – if balance to be assumed is different than contract, other figures will adjust accordingly
    • Prorations
      • Impound account assumed by buyer?
      • Lender has the account
      • Is it with or without prorations?
  • FHA
  • VA
  • Conventional
  • Carryback
    • Length of term
    • Amount of payment
    • Interest rate
    • Due on sale?
    • Unusual terms
      • Balloon payments
      • All upon principal
      • Interest first, balance on principal
  • Late charges
    • Percentage of payment
    • Flat dollar amount
    • How many days?
  • Release provisions
    • A portion of the property released upon certain provisions
  • Deed of Trust
    • Concurrent payments
    • Wrap
      • Underlying lender name
      • Loan number
  • Additional payoff
    • Name and address of creditor
    • Account information
  • Insurance information
    • Name and phone number of current agent, if being assumed
    • Name and phone number of buyer’s agent
  • Homeowners Association
    • Name of company
    • Contact name and phone number
    • How much and how are dues to be paid?
    • Blanket policy of insurance
    • Disclosure fee and transfer fee – who pays?
  • Home Warranty
    • Copy of contract
    • Amount of premium
  • Inspections
    • Under new contract, part of the ten (10) day inspection period

• Buyer
  • Impending marriage
    • About to become married?
    • Additional documentation may be needed
  • Is a Trust involved?
    • Most Lenders will not loan to a trust
  • Buyer using a Power of Attorney?
  • Must be witnessed
    • Provide Original to Escrow ASAP; Title Dept. must approve & will need to be recorded unless previously recorded
  • Make sure spelling of all names is correct
• Seller
  • Double check vesting deed
    • Are any of the sellers deceased?
      • Has probate been completed, if needed
  • Additional documents may be needed
  • Death Certificate
  • Are Sellers divorced?
    • Already divorced?
    • In the process of a divorce?
  • Additional documentation may be needed
    • Quit Claim Deed and Authorization to Record from disclaiming spouse
  • Was Seller single when property was purchased?
    • Additional documentation may be needed
  • Is Seller vested in a Trust?
    • Copy of trust may be required by title
      • Front page showing name of trust
      • Pages showing Powers of Trustee
        • Transferring
        • Encumbering
      • Signature pages with notary acknowledgment
      • Amendments, if any
• Seller using a Power of Attorney?
  • Must be witnessed
  • Provide Original to Escrow ASAP; Title Dept. must approve
    • Will need to be recorded unless previously recorded
  • Make sure spelling of all names is correct
• 1031 Exchange
  • Seller – provide Escrow with name and contact information for Exchange company
  • Buyer– provide Escrow with name and contact information for Exchange company

• Make sure all “additional instructions” are clearly explained.
• Earnest Money
  • Early Release Provisions prior to close of escrow
  • “Down Payment” versus “Earnest Money”
    • Be consistent with language
• Buyer Inspection Notice and Seller Response
  • Buyer only gets “one chance” to list everything under “Buyer elects to provide
  • Seller an opportunity to correct the disapproved items”
• Communication with Your Escrow Officer
  • Any Addendums created after escrow is opened, promptly deliver to Escrow Agent
  • Reply to inquiries from your Escrow Officer
    • E-mail
    • Fax
    • Phone

• Will your clients be coming to the escrow office for signature?
  • Appointment should be made
  • Do you wish to be present?
• Mailing documents
  • Correct mailing addresses are essential!
  • Overnight?
    • No P.O. Boxes
    • Physical Address

• Know your officer
• Keep Escrow Officer informed of your expectations and progress throughout escrow
• Build a team