Escrow Tips for a Trouble Free Closing

Posted by on Dec 27, 2012 in Memos | Comments Off on Escrow Tips for a Trouble Free Closing

Insert the mailing address, email address and phone number on the first page of the purchase and sale agreement for both buyer and seller or email it to us if confidentiality is an issue. With this information, we can send out the initial escrow paperwork which provides our contact numbers for questions and detailed information regarding the closing process. (This typically relives you of escrow related questions.) In addition, if they live out of state, we can work with your client to coordinate their document signing via express mail or assist in arranging an out-of-state signing.

Provide escrow with the marital status of both the buyer and seller to ensure we prepare a QCD for the buyer if they are purchasing alone and that we clear the homestead right of the spouse of the seller. In most cases, the title company will require the spouse of the seller to sign at closing if they ever lived in the home.

Provide escrow with the HOA contact information since we do not receive a copy of the resale certificate. We need this information in order to prepare settlement statements for both parties, as it outlines not only the dues but also the transfer fees and deposits.

Send us the 35r once completed even if you think the other agent sent it. This is the most commonly missed document and typically involves a credit or a change in sales price.

The buyer and seller should be advised that they need to be prepared to sign their documents one to three days prior to closing or (in many cases) the morning of closing. If they are not able to leave work or they will be out of town, they need to advise you or escrow that they have only certain times available, as we have to work around the funding schedule of the lender in order to close on time. If necessary, a power of attorney can be prepared to allow one party to sign on behalf of the other, but this document must be approved by the lender if it is to be used in conjunction with loan documents.

The buyer should always bring two forms of identification to the signing given that some lenders require two. Acceptable forms are:

  • Driver’s license
  • Passport
  • Utility Bill
  • Car Registration or insurance
  • Social Security Card
  • Military, company or student ID

Closing funds must be in the form of a Washington State Cashier’s Check or a wire. Please remind them to have these funds accessible one to three days prior to closing.

If the seller would like to have their proceeds wired, they will need to bring their wire information to the signing and be prepared to receive their wire late in the afternoon on the day of closing or the following business morning. While some sellers do not want to release the keys without their proceeds, Paragraph F of Form 21 defines closing as the combination of the recordation of the deed and the availability of the funds to the seller not when the seller receives them. If they are having their funds wired to an investment account, they will need to obtain wire instructions from customer service rather than bring in a check from the account.

Property taxes are paid and/or prorated at closing as follows: 1st half – January 1st through June 30th paid in April. 2nd half – July 1st through December 31st paid in October. This is very confusing for the most sellers, as they think they have paid their taxes through October after making the April payment. Please advise them prior to signing of these proration dates, as they often want the settlement statement redrawn at signing.

Estimated Final Utilities are paid per the 22k in the file and in compliance with the Washington State Statute 60.80. Per the statue, we are required the pay the amount provided to us from the lienable utilities regardless of the current outstanding balance. More often than not, the seller will bring in the final bills to the signing appt. and request that the settlement statement be changed to reflect their billing statement. The only way to avoid this issue is to waive the 22k and have the seller pay the utilities post-closing. If the 22k is waived, the seller is still obligated to transfer marketable title free and clear of liens which include the final payment of lienable utilities.

Cancellation of utilities is done by the seller on the day of closing and should not be done ahead of time. If the seller calls in advance to have them changed on a specific day and it closes a week late, the utility company will have already transferred the billing and they (typically) will not correct it to reflect the actual closing date.

Cancellation of Homeowner’s Insurance is most commonly transferred the day after closing rather than on the day of closing to avoid a lapse in coverage. If there is damage or left on the day of closing, it may be difficult to determine who owned the home during the time of damage given that the deed can record at any point during county hours.

Signing of the documents must be in the name typed on the loan documents or the deed. Please advise your buyers to provide their loan officer with the name they’d like on title during the time of loan application rather than assume we can change it at the time of signing.

The following articles are published for informational purposes and not for the purposes of providing legal advice. Please contact Galvin Realty Law Group at 425.248.2163 for a consultation about your specific needs and circumstances.