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WHAT ABOUT
CANCELLATIONS?
No escrow is opened with the intention that it will cancel, but there
are occasions when a contingency cannot be met or when the parties disagree
during the pendency of the escrow. Some escrow holders provide for such
an event by incorporating an instruction in the typed or printed General
Provisions.
Ordinarily, an escrow holder will take the position that no funds on deposit
can be refunded until the escrow holder is in receipt of mutual cancellation
instructions signed by the principals. The escrow holder cannot normally
make a determination as to who is the "rightful" party in a
dispute on a cancellation and therefore will not return the funds or documents
until the principals agree; the escrow holder is not a judge.
Do expect to be charged a cancellation fee, as this is
a charge for professional services rendered and quite often for several
"out of pocket" expenses that have been incurred on the client's
behalf. These fees can vary from company to company depending upon their
policies.
Sometimes, when a dispute exists, the escrow holder may be forced to allow
a court to decide which party is entitled to what documents or funds;
this is called an Interpleader Action. Fortunately, most disputes are
resolved before the Interpleader is filed, as the costs for such legal
actions are extreme. Those costs, incidentally, are normally paid out
of the funds on deposit in the escrow.
WHAT ABOUT TITLE INSURANCE?
Title insurance is usually obtained when real property is purchased. The
policy of title insurance insures the owner and/or the lender of ownership
of the property. There are various coverages afforded, but a basic policy
insures that the buyer is the owner and that any lender shown on the policy
is an "insured" lender. Many different types of extended coverages
are available; for example, an ALTA policy is quite often required by
institutional lenders to afford them additional protection under the title
insurance policy. The title policy is written after an extensive examination
of the public records is made and the recording of the required documents
as called for in the escrow.
The title insurance policy fee is a one time fee, paid at the close of
escrow. The determination of who pays for the policy is not uniform from
county to county in California. In some counties, the buyer will pay while
in others the seller will pay. In other counties the seller will pay for
the owner's policy and the buyer will pay for the lender's title policy.
But in almost every case, the question of who pays closing costs is a
matter of agreement between the parties. Usually this agreement is based
on the customary practice in your county or area In the case of some FHA
or VA transactions, the escrow officer must follow the guidelines as required
by the lender and/ or government.
WHAT ABOUT PROPERTY TAXES?
The terms of your transaction and the resultant escrow instructions determine
how the property taxes will be handled. If there is no mention of the
proration of taxes, your escrow officer will not deal with any credits
or charges for prorated taxes. However, if your escrow calls for a proration
of taxes, there will be an item in your closing statement that will reflect
either a credit or charge to your account If the taxes are not paid (even
though there has been a credit or charge against your account), the buyer
is obligated to obtain a tax bill and pay the taxes. If the buyer does
not have a tax bill with which to pay the taxes, you can request a bill
from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another concern of the buyer. Upon transfer
of real property, a supplemental tax bill is generated. This is accomplished
in cooperation with the County Assessor and the County Tax Collector.
Shortly after the close of an escrow involving the conveyance of real
property, the County Assessor will request information about the property
from the buyer. This information assists the Assessor in determining the
value of the property for taxation purposes. Some of the information may
have previously been supplied by the escrow holder at the time of the
closing of the escrow, via Preliminary Change of Ownership form that should
accompany each deed when it is recorded. |
