|
Purchase and Sale Agreement
Upon mutual acceptance by Buyer and Seller, of the Purchase and Sale Agreement (sometimes called an Earnest Money Agreement), the Real Estate Agent deposits the earnest money in their Brokers trust account or the earnest money is deposited with the escrow company, which is a more common practice today and he/she also delivers a full copy of the Purchase and Sale Agreement to Escrow.
Escrow
Escrow is arranged by the Lender, Real Estate Agent, Seller or Buyer, according to the instructions given in the Purchase and Sale Agreement. The Escrow Agent is a neutral party who holds and disburses the parties’ funds, prepares an accounting of the transaction, prepares certain documents to affect transfer under written instructions; all in accordance with the items of the Purchase and Sale Agreement. The Purchase and Sale Agreement and Title Insurance commitment is reviewed for necessary information to comply with the parties’ requirements for closing. Through Escrow, orders are made for payoffs on underlying mortgages and/or contracts and any other monetary liens encumbering the property. The Escrow Agent sends opening letters to the Buyer and Seller requesting information relative to the underlying encumbrances and other pertinent information not disclosed by the Purchase and Sale Agreement.
Title Insurance
Title Insurance is ordered by the Lender, Real Estate Agent, Seller, Buyer or Escrow Agent. The Seller provides an owner Title Insurance policy to the Buyer. The Buyer provides a Lenders title policy to their Lender. The title company searches the records of the County Auditor, County Assessor, and other government agencies to locate any documents that might affect title to the subject property. A search of the general index (county clerk) will disclose bankruptcies, divorce, name changes, judgments, probates and other cases entered into the public records of the court. A preliminary commitment or report is then issued revealing all matters of public record affecting the subject property and involved parties. A copy of the commitment will be distributed to all parties involved in the transaction.
Financing and Processing
Financing is arranged by the Buyer. The Lender processes (underwrites) the loan to include a review of the Buyers: verification of funds to close, employment history, credit report and appraisal of the property. Upon loan approval, the Lenders closing department prepares the loan package (loan documents) with specific instructions to Escrow. The loan package is delivered to the Escrow Agent to prepare final statements, escrow instructions and transfer documents for closing.
Signing
After the Escrow Agent has reviewed the loan package, prepared the closing statements and transfer documents, appointments will be made with the Buyer and Seller to sign. Each Buyer and Seller will have the opportunity to review the documents and ask questions of the Escrow Agent. Once each party is satisfied, they will sign the documents. The Escrow Agent notarizes the signatures. The Buyers closing funds are deposited with Escrow at this time, in the form of a wire transfer or cashiers check drawn on a Washington State Bank. Due to Washington State’s Collected Funds Law, a cashier’s check must be deposited with Escrow, 24 hours prior to disbursement.
Lender Review
After all documents are signed, the Escrow Agent returns the loan documents to the Lender for a final review. Lenders usually take 24 – 48 hours to complete this process. The Escrow Agent will request loan funds from the Lender at this time, usually in the form of a wire transfer.
Closing
Upon approval by the Lender, the Deed and Deed of Trust (mortgage) are delivered to the title company for recording with the county Auditor. The verification of recording is given to the Escrow Agent. The Escrow Agent “closes” the transaction, confirms receipt of the Lenders funds into the escrow account and disburses all escrow funds in accordance with all parties’ instructions. All underlying debt or encumbrances on the property and all the bills submitted to escrow (pest inspections, septic pumping, chimney cleaning, roof repairs, etc.) will be paid off. The Real Estate commission will be paid to the participating Broker’s. The Seller is paid the net proceeds of the sale. The Escrow Agent will notify the Seller, the Buyer and their respective Real Estate Agents that the transaction is “closed”, usually by a phone call. The Buyer is now allowed possession of the property (unless otherwise agreed upon).
|