YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
(Real questions sent to us – verbatim!)
QUESTION:
This question came in via email from the RE Agent at 9:00 p.m. the night before the closing of the transaction:
“As I review the closing estimate, one thing needs to be removed – “Security Deposit credit to Buyer. The Seller just told me that he approved the tenant to use their security deposit as the last month’s rent.”
ANSWER:
Oh no! You are changing my closing figures! Here is our email answer:
“Hello, we are closing the escrow tomorrow morning and it is now 9:00 p.m. the night before. Unfortunately, it is much too late to stop the closing and too late to change figures on my closing statement. Here are two immediate concerns: First of all, when we close escrow tomorrow, that tenant becomes the Buyer’s responsibility. Has the Buyer agreed that the tenant is allowed to use this deposit as his last month’s rent?
Secondly, the Buyer relied on this deposit credit to bring in the final amount of funds needed to close. If we remove the credit then the Buyer will be short to close by that amount. To go forward with the closing we will need the Buyer to immediately wire the shortage 8:00 the next morning!
The Seller approved the same closing estimate this morning and he did not say anything about the security deposit. It is much too late to stop the recording, but, unless the issue is resolved or Buyer’s additional money comes in, we will hold off disbursing any checks for this closing, particularly the Seller’s proceeds.”
I guess that last sentence hit home. Everyone wants to get paid at closing but how can we pay if we don’t have sufficient funds and balance the file? The next morning we found out the Buyer and Seller resolved the matter between themselves and no changes were demanded of our figures. Closing was successful with no further midnight drama. Bullet averted, thank goodness!
EDUCATIONAL MOMENT:
The closing process varies from state to state and even within the state, but in general, in California, the standard practice is that escrow officers set up the closing no later than 3:00 p.m. the day before. By that time, all Buyer and Lender funds are in, all documents have been signed, reviewed and queued for recording. If any issues arise after this deadline, particularly if it concerns money, escrow may call off the recording and closing, if it is not too late. The fundamental Escrow Law is that escrow cannot close if not all the money is in or there is a monetary dispute. So, here is our tip for the day: If there are any last minute complications, resolve them BEFORE we set up the recording and closing. No desperate phone calls or emails at the twelfth hour!
This would be a good time to mention that some California County Recorder offices will allow recordings anytime during the day, up to about 4:00 p.m. We call these “special recordings”. If you are contemplating a “special recording” that window period for last minute issues got even tighter. A “normal recording” is one that is set up for 8:00 a.m. Los Angeles County Recorder, by the way, with their huge volume of recordings, does not allow “special recordings”. Their recordings are all scheduled once a day for 8:00 a.m., hence the “must set up by 3:00 the day before” deadline. So, in LA County, you snooze on last minute issues, you lose on the closing!.
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~ Video of the Month ~
What do you use your cell phone for?
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~ Quotes of the Month ~
“OLD” IS WHEN….
You don’t care where your spouse goes,
just as long as you don’t have to go along.
You are cautioned to slow down by the doctor, instead of by the police.
“Getting a little action” means you don’t need to take any fiber today.
“Getting lucky” means you find your car in the parking lot.
An “all-nighter” means not getting up to use the bathroom.
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When you pay off that loan out of pocket…
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You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
Advance Disclosure:
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
Info @ VivaEscrow.com