Title and Escrow - The Game Isn't Over Yet

What is the Escrow Process?
Escrow is an arrangement in which an escrow holder (a neutral third party) holds legal documents and disburses funds on behalf of a buyer and seller and distributes them according to the buyer and seller’s instructions.

What Does a Title Company Do?
The title company will research the title to your property through a title abstract, which provides a history of the property and its ownership. It will also identify any liens, defects or encumbrances on title. They will examine the title and clear any liens or claims on the property so that the new buyer receives clear and marketable title to their new property.

The title company will also verify with the local or state taxing authority that the property taxes have been paid then prepare the insurance commitment for the lender’s title insurance policy and issue both owner’s and lender’s coverage.

They coordinate with the mortgage lender to receive the loan documents for closing. And finally, it is the title company’s responsibility to make sure all documents are properly recorded in the courthouse such as the new deed, mortgage and release of any existing liens on the property.

In Oregon, the title and escrow process are combined. My advice is to establish a relationship with a title company prior to putting your home on the market so you can get what is known as a trio. A trio is a legal description of the property, a map showing the specific parcel (tax lot) involved and a copy of the last page of the deed showing who has legal ownership. The seller can also arrange for the title company to hold the earnest money deposit in escrow. Once an offer is accepted by the seller, he can then ask the title company to provide a preliminary report to the buyer showing the seller does have the right to sell the home and the title company will issue a title insurance policy to the buyer which the seller will pay for.

Preliminary Title and CC&R Reports
A preliminary title report is made by a title company stating whether there are any other claims to ownership of a property. It is a necessary step before a mortgage loan can be approved. Typically, the title company will perform the preliminary title search for free in hopes of obtaining your business during the real estate transaction process.
CC&R is an acronym used in the homeowner association (HOA) industry. It means "Covenants, Conditions & Restrictions." They are used to detail HOA rules or policies.
Once the transaction is ready to close and transfer the deed, the title company receives the loan documents from the buyer’s lender, brings each party to the office separately and gets all the loan and closing documents signed and completed.

Closing Documents and Signatures
Recording and Transfer of Deed

What if the Sale looks like it is falling apart?
Commonly called a "Sale Fail", these happen more often than even real estate agents like to admit, and the more of a Buyer's Market, the more likely it will happen to you. Do everything you can to keep it from actually happening if you become aware of a sudden problem during the escrow period but the time to avoid it is before it happens, if possible. Personally, I think the two leading reasons for sale fails are:

a. Buyer's Remorse - After having their offer accepted by you it is not unusual for the Buyer to progress quickly from 'Yea!" to 'What have I DONE?" Making sure the buyer understands they have a legal period of time to further consider the property (the property disclosure period) and/or if they have included an 'Inspection period", they do not have to make a fast decision, can often overcome that situation.

b. Buyer Financing Problems - Please see the section below for a discussion of that possibility and a good way to prevent it.

(Read More - includes "Saving the Sale")