Our Services

Escrow of the West is one of the leading independent escrow companies in Southern California. We are licensed by the Department of Corporations and a member of the Escrow Agents Fidelity Corporation. Our principals bring with them more than 70 years of real estate experience in both the residential and commercial sectors. This is why top brokerages, lenders, real estate agents, and corporate clients continue to choose Escrow of the West as their trusted escrow provider. At Escrow of the West, we view each transaction as a partnership. Adhering to the “customer comes first” philosophy, we employ the most dedicated and highly qualified team of senior escrow officers, sales professionals and support staff. We pride ourselves in upholding the highest ethical standards, utilizing cutting-edge technology, and expediently closing each transaction.
At Escrow of the West, we constantly strive to perform at the highest level of service in a consistent effort to surpass our customers' expectations.

• Independent Advantage


• Trust Sale


• Technology


• Experience & Knowledge


• Residential Re-Sale


• Commercial & Industrial


• Investment Properties


• New Home Sales


• Refinance


• Short Sales


• R.E.O.


• Holding Escrows


• Probate/Estate Sales


• Trust Sales

Trust Sale

When a trustee is directed to sell a property as a condition of a trust, such transactions often require the prolonged holding of sale proceeds for the benefit of the beneficiaries. By working with Escrow of the West, you can rest assured in knowing that we have the expertise to adhere to the trust document and disburse according to those terms.

Holding Title

How You Take Title

Advantages and Limitations
Title to real property in California may be held by individuals, either in Sole Ownership or in Co-Ownership. Co-Ownership of real property occurs when title is held by two or more persons. There are several variations as to how title may be held in each type of ownership. The following brief summaries reference eight of the more common examples of Sole Ownership and Co-Ownership.

Sole Ownership

A Single Man/Woman
A man or woman who is not legally married. Example: John Doe, a single man.

An Unmarried Man/Woman
A man or woman, who having been married is legally divorced or, a man or woman, having been in a registered domestic partnership that has been legally dissolved. Example: John Doe, an unmarried man.

A Married Man/Woman or Registered Domestic Partner,
As His/Her Sole And Separate Property
When a married man, woman or a registered domestic partner wishes to acquire title in his or her name alone, the spouse/partner must consent, by quitclaim deed or otherwise, to transfer thereby relinquishing all right, title and interest in the property. Example: John Doe, a married man, as his sole and separate property; or Jane Smith, a domestic partner, as her sole and separate property.

Co-Ownership

Community Property
The California Civil code defines community property as property acquired by husband and wife, or by either. Real property conveyed to a married man or woman is presumed to be community property, unless otherwise stated. Under community property, both spouses have the right to dispose of one half of the community property. If a spouse does not exercise his/her right to dispose of one-half to someone other than his/her spouse, then the one-half will go to the surviving spouse without administration. If a spouse exercises his/her right to dispose of one-half, that half is subject to administration in the estate. Example: John Doe & Mary Doe, husband and wife as community property. Example: John Doe & Mary Doe, husband and wife. Example: John Doe, a married man. Registered domestic partners shall have the same rights and protections.

Joint Tenancy
A joint tenancy estate is defined in the Civil Code as follows: A joint interest is owned by two or more persons in equal shares, by title created by a single will or transfer, when expressly declared in the will or transfer to be joint tenancy. A chief characteristic of joint tenancy property is the right of survivorship. When a joint tenant dies, title to the property immediately vests in the surviving joint tenant(s). As a consequence, joint tenancy property is not subject to disposition by will. Example: John Doe and Mary Doe, husband and wife, as joint tenants; or John Doe and Jane Smith, registered domestic partners, as joint tenants.

Tenancy In Common
Under tenancy in common, the co-owners own undivided interests; but unlike joint tenancy, these interests need not be equal in quantity or duration, and may arise at different times. There is no right of survivorship; each tenant owns an interest which, on his or her death, vests in his or her heirs or Devisee. Example: John Doe, a single man, as to an undivided 3/4ths interest, and Jane Smith, a single woman, as to an undivided 1/4th interest, as tenants in common.

Trust
Title to real property in California may be held in a title holding trust. The trust holds legal and equitable title to the real estate. The trustee holds title for the trustor/beneficiary who retains all management rights and responsibilities.

Community Property With Right Of Survivorship
Community Property of a husband and wife, when expressly declared in the transfer document to be community property with the right of survivorship, and which may be accepted in writing on the face of the document by a statement signed or initialed by the grantees, shall, upon the death of one of the spouses, pass to the survivor, without administration, subject to the same procedures as property held in joint tenancy. Registered domestic partners shall have the same rights and protections.



The preceding summaries are a few of the more common ways to take title to real property in California and are provided for informational purposes only. For a more comprehensive understanding of the legal and tax consequences, appropriate consultation is recommended. There are significant tax and legal consequences on how you hold title. We strongly suggest contacting an attorney and/or CPA for specific advice on how you should actually vest your title.

Con-Current Co-Ownership Interest

The comparison below is provided for information only. It should not be used to determine how you hold title. We strongly recommend that you seek professional counsel from an attorney and/or CPA to determine the legal and tax consequences of how title is vested.

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Property Tax Segregation

Property Tax Dates: The following are important property tax dates that will be useful in determining how to handle the proration of unsegregated taxes for a subdivision.

January 1st: Assessment Date. Taxes become a lien not yet due and payable for the Fiscal Tax Year starting July 1st. This is also the valuation date for new construction. If a subdivision map or condominium plan has not been recorded by this date, the tax bill will not be segregated when issued in October and estimation will be required.

February 1st: 2nd installment regular taxes are due.

April 10th: 2nd installment regular taxes last day to pay without penalty.

June 30th: Any unpaid property taxes become defaulted. (Property may be sold at public auction after five years of delinquency.)

July 1st: Fiscal tax year begins. Taxes are due after this date, but not yet known or payable. Even if taxes will be segregated for this new fiscal year, an estimate will be required for closings from now to when the bill is issued in October. If an estimate has been used to collect future unsegregated taxes from the buyer, the estimated amount will now be prorated between buyer and seller. The Assessor can now advise if the taxes will be segregated and provide the valuations being used for the upcoming bill(s). This will be helpful for determining your estimate or confirming the estimate you are using.

October: Sometime during the month, regular tax bills will be issued.

November: 1st installment regular taxes are due.

December 10th: 1st installment regular taxes last day to pay without penalty. Both installments of the unsegregated taxes for a subdivision should be paid.

How Property Taxes are Determined

Property taxes are governed by California State law and collected by the county. The County Assessor must first assess the value of your property to determine the amount of property tax. Generally, the assessed value is the cash or market value at the time of purchase. This value increases not more than two percent per year until the property is sold or new construction is completed. The County Auditor-Controller applies the appropriate tax rates, which include the general tax levy, locally voted special taxes and city or district direct assessments. The Tax Collector prepares property tax bills based on the Auditor-Controller’s calculations, distributes the bills, and then collects the taxes.

With a subdivision, an increase in the assessed value due to a change in ownership and new construction can be under review with the Assessor during sales to individual buyers, causing a change in assessed value after bills have been issued and resulting in additional bills issued after sales.

How Property Taxes are Segregated

Segregation is a word commonly used by the development industry to refer to what the Assessor calls a “parcel change.” A parcel change occurs when a property is divided by a new subdivision map, condominium plan or lot line adjustment. Segregation is the term the Assessor and Tax Collector use to describe the separation of a single tax bill which then becomes prorated among individual owners. So the segregation is the separation of the tax amounts after the parcel change has occurred. The first event to cause a parcel change is the recording of the tract or parcel map. In a condominium development, a second parcel change will occur after the condominium plan records. In each case, a new Assessor’s parcel number is assigned to each new lot or unit. In general, a subdivision map or plan recorded prior to December 31st will have a parcel change in the following year. A new tax bill or bills reflecting this parcel change can be expected by October of the year following the recordation of the map or plan.

The important date to remember is January 1st. The status of the property, i.e. what maps or plans have recorded, the status of construction and the status of the ownership, as of this date will determine what the bill will be and who it will be sent to in October.

Supplemental Property Taxes

A supplemental property tax bill will be issued to reflect the increase in value due to a change in ownership. Because the Assessor cannot reflect an increase immediately, the Supplemental Bill is issued after the transfer and will automatically be prorated from the date of transfer to the end of the tax year.

Depending on when the transfer occurred, two Supplemental Bills can be issued to cover more than one tax year. With a subdivision, a developer’s supplemental bill that is issued for the tax year in which there are sales can be included in the tax proration with the buyers. Normally though, a supplemental bill is issued to the correct property owner and is their responsibility to pay.

Filing a Builder’s Exclusion (or Conex)

With the exception of condominium conversions, commercial condominiums and condominiums or four units or less, the Assessor no longer requires the filing of an exclusion to exempt a subdivision from reassessment due to the recording of a Notice of Completion. However, the Assessor has the right to reassess a property that is under construction as of January 1st. An adjusted bill can be issued to capture this increase in valuation. The possibility of an adjusted bill should be taken into consideration in preparing an estimate for future unsegregated taxes.

If your project is not exempt, you can obtain the Construction Exclusion (ConEx) form from the Assessor’s website. The form must be filed within 30 days from the start of construction in order to qualify for the exclusion.

Need For Estimating Future Unsegregated Taxes

Often the property taxes are not segregated at the time of sales to new buyers. This occurs most often with condominium developments. January 1st is the assessment date for the Fiscal tax Year, starting July 1st. The property owner as of January 1st will likely receive the bill that is issued in October, even if a subsequent sale or subdivision has occurred. Because of this, if the first sale of a subdivision interest occurs between January 1st and when the bill is issued in October, an estimate will be necessary to prorate and collect from buyers their portion of this estimated unsegregated bill.

It is important that the payment of any unsegregated property tax bill be made on time. Therefore, a buyer may be required to pay through escrow their estimated portion of the unsegregated taxes for the full year.

This estimated future payment is either made to the seller, who will be receiving the bill, or is put in a holding account for payment by the Homeowners Association or chosen Title Company.

If the payment of future unsegregated property taxes is not handled in escrow, it may be necessary for the individual owners to get together to pay the bill. Condominium CC&R’s usually cover this possibility and outline the penalties against owners who do not pay the proportionate share. In the case of small condominium projects of four units or less, the Assessor will assist with this segregation. In all other cases, the homeowners, through the Condominium Owners Association, will need to pay their share of the bill to the Association in time for payment to be sent by the Association to the Tax Collector. It is important to note that, except in cases of four units or less, the Assessor/Tax Collector will not segregate a second installment; therefore, whatever method is used for payment of the first will have to be done again for the second installment. Therefore, it is recommended that both installments be paid with the first installment.

Buyers who qualify for Prop 60 or Prop 90 Base Value Transfer will not be able to complete their exemptions until after the segregation is complete. If a credit is due because they paid their portion of an unsegregated bill which was larger than it would have been with the exemption, the credit will appear on their supplemental bill.

Conclusion

Knowing the status of your project on January 1st, having a plan in place for estimating future taxes and being in contact with the District Office of the Assessor for your project will assure a smooth transition from an undeveloped single parcel property to a fully segregated and successfully sold development.

Escrow of the West is here to help. Contact your Escrow Officer for updates and specific information for your area

Your Escrow

Opening Statement: Escrow of the West is an independent escrow company, licensed by the Department of Corporations and a member of the Escrow Agents Fidelity Corporation.

Our principals bring with them over 70 years of real estate understanding and experience in both residential and commercial real estate. Our professional escrow officers are determined, dedicated and produce the desired results for you. We constantly strive to perform at the highest level of service in a continual attempt to surpass our customers' expectations.

The combined knowledge and professionalism of our team allows us to offer the highest level of professional service in the industry.

What is Escrow: Simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law - Section 17003 - provides the complete legal requirements.

Why Do I Need Escrow: Whether you are a buyer, seller, lender or borrower, you want assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation, to safeguard the funds and or document while they are in the possession of the escrow holder, and to disburse funds, and/or convey title only when all provision of the escrow have been complied with.

How Does It Work: The principals to escrow – buyer, seller, lender, borrower – cause escrow instruction, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he or she will normally provide the escrow officer with the information necessary for the preparation of you escrow instruction and document.

The escrow officer will create escrow instruction and process the escrow, in accordance with the escrow instruction, and then all condition required in the escrow can or have been met or achieved, the escrow will be “closed”. Each escrow, although following a similar pattern, will be different in some respects, as it seals with YOUR property and the transaction at hand.

The duties of an escrow holder include: following instruction given but he principles and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bill as authorized; responding to the authorized requests form the principals; closing the escrow only then all terms and conditions have been met; and distributing the funds in accordance with the instruction and providing an accounting for the same – the Closing or Settlement Statement.

Choosing Escrow: The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend and escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment or referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.

During Escrow: The key to any transaction is to read and understand your escrow instructions. If you do not understand them, you should as your escrow officer to explain the instructions.

Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a good deal” or are doing the things the right way. The officer is there to follow the instruction given by the principals in the escrow.

In order to expedite the closing off the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question” What can I do to expedite the closing of this escrow?” Respond quickly to correspondence. This will assist in the timely closing of the transaction.

If you are required to deliver funds into the escrow, make sure that you provide “good” funds in the form required by the escrow officer. Company procedures differ in this regard and there are ways that you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.

When the escrow officer closes the escrow, some of you may want the closing papers, check, title policies, statements, etc. made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing they may take several days. If you have a special need, for example a cashier’s check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.

Your New Loan: If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and closing of escrow, the escrow holder is obligates to comply with the lender’s instructions.

It has become a practice of some lenders to forward their loan documents to escrow for signing. The escrow officer/loan document-signing specialist will go through your loan documents with you. However, you should be aware that these papers are the lenders document. You have the option of requesting a representative from the lenders office to be available at loan signing for any question you may have.

Closing Statement: A closing statement is an accounting, in writing, prepared at the close of escrow, which sets forth the charges, and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and determination of the funds due you at the close of the escrow. When you receive you closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask you r escrow officer for an explanation.

When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid die to irregular or missing endorsement.

Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes. Your accountant will need the information about the sale or purchase of property. The IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.

Do not rely on your escrow holder always retaining the escrow file so that you can call and get copies of the closing statement. Most escrow holders will destroy the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charge by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage. Escrow fees are not regulated by the state. Escrow holders, like any other business, will charge fees that are commensurate with the cost of producing service, the liability undertaken, and the overhead expenses in which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction. The escrow holder has no control over the costs of the other services that are obtained, such as the title insurance policy, the lenders charges, insurance, recording charges, etc.

Cancellation: 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 transactions. 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 instruction, 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 few will not return the funds or documents until the principals agree the escrow holder is not a judge. Do not expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often several ‘out of pocket” expenses that have been incurred on the client’s behalf. These fees vary 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 Interpleaded is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the duns on deposit in the 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 instruction, 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 few will not return the funds or documents until the principals agree the escrow holder is not a judge. Do not expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often several ‘out of pocket” expenses that have been incurred on the client’s behalf. These fees vary 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 Interpleaded is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the duns on deposit in the escrow.

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 coverage’s 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 coverage are available; for example ALTA policy is quite often required by the title insurance policy. The title policy is written after an extensive examination of the public record 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 countries the seller will pay for the owner’s policy and the buyer will pay for the lenders title policy. But in almost every case, the question of who pays the closing costs is a matter of agreement between the parties. Usually this agreement is bases 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.

Property taxes: The terms of your transaction and the result escrow instruction determine how the property taxes will be handled. If there is no mention of the proration of taxes, your escrow holder will not deal with any credits or charges for prorated taxes.

However, if you escrow calls for a proration of taxes, there will be an item in your closing statement that will reflect with 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 buyers obligates to obtain a tax bill and pay the taxes If the buyer does not have a tax bill which to pay the taxes, you can request a bill from the Tax Collector: send a photocopy for the deed.

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Obtaining Public Report

Introduction

Escrow of the West understands how important it is to obtain a Public Report in a timely manner. We will coordinate with an experienced DRE Consultant to assist you in obtaining a Public Report.

What exactly is a Public Report? A Public Report is a disclosure statement which provides consumer protection in the sale of subdivided land, including air space subdivisions. It is issued by the Department of Real Estate (DRE) after the submission of a filing package, their initial review, deficiency submission, the recording of certain documents and their final review.

Projects requiring a Public Report:

• A Standard Subdivision of five or more lots to be sold with completed homes (residential houses within a subdivision with public streets and no common area) located within an Unincorporated Area of the County

• A Standard Subdivision of five or more lots when all or some lots are to be sold as vacant lots

• Residential common interest subdivision of five or more units or lots, such as a Condominium or planned development. Stock Cooperatives and Community Apartment Projects (Own-Your Owns) are also considered common interest subdivisions but are rare except in their conversion to condominiums.

Projects that DO NOT require a Public Report are:

• Commercial Condominiums

• Any subdivision of four or less lots or units

• Standard Subdivisions within the City limits to be sold with completed homes
  

Types of Reports

There are seven types of Public Reports, but the ultimate one obtained for a new subdivision is a Final Public Report (called a WHITE).

1. Preliminary Public Report, called a PINK. A PINK will allow you to advertise the project “For Sale” and take refundable deposits to secure a reservation of a unit or lot. Escrow must hold buyer’s deposits, but you cannot sign a binding contract or escrow instructions. Either party can cancel and all monies must be returned. A PINK is good for one year and can be renewed and/or amended as often as needed. A PINK requires a very short application and in most cases can be issued in one to two weeks of submittal to the DRE. The requirements for a PINK are that the developer be in title or be an “owner-in-escrow” and the project have a tentative tract map approved.

2. Conditional Public Report, called A YELLOW. A YELLOW will allow you to enter into a binding contract and open escrow, subject to the completion of specified conditions. Only when these conditions are satisfied and a Final Public Report is issued can escrow close. A YELLOW can only be issued after a completed filing package has been submitted, a request letter has been filed with an additional filing fee, the DRE Deputy has completed their review and any corrections have been satisfied. Timing for the issuance ranges from 2 ½ to 3 ½ months from the initial submittal, but is not guaranteed. A YELLOW is good for six months and can be extended only once for an additional six months.* This makes it possible to get a YELLOW too early with the potential for it to expire before you can obtain a WHITE. In addition, because one of the conditions to be satisfied is most often the recording of the subdivision map and/or Condominium Plan, title reports cannot be issued, making buyer’s loan approval not possible until the Final Report is issued.

3. Final Public Report, called a WHITE. The WHITE is the Report, which allows you to enter into binding contracts and open and close escrows (provided the project is completed). A WHITE requires the same filing package as the YELLOW with the addition of final DRE approval and recordation of the final documents. Once submitted to the DRE, it usually takes between four to six months to obtain a WHITE, provided the subdivision map records within that time. A WHITE is good for five years, after which it can be renewed at five-year intervals.

4. Amended Public Report. This is obtained when an existing Public Report has a material change. Consult your DRE Consultant or your attorney to determine if the change in your offering is material. A short form application, explaining the nature of the amendment, is required with a filing fee, along with back up documentation relative to the change.

5. Renewed Public Report. This is obtained when the existing Public Report has expired. A Public Report must be renewed even if the number of unsold lots or units falls below five. The renewal process should begin several months before the Public Report is due to expire, as budgets will need to be re-reviewed and approved.

6. Interim Public Report. This is similar to a PINK on a project that is under DRE review for an Amended or Renewed Public Report

7. HUD Limited-Term Final Public Report. This is a fairly new report, which is subject to change and discontinuance. It is similar to a YELLOW on a high-rise project of more than 100 units which is subject to HUD jurisdiction, has a lender pre-sale requirement and where construction cannot be completed within two years. This Limited-Term WHITE must be renewed every six months. Your DRE Consultant or your attorney can help determine if this report is still available or applicable to your project.

* In certain high-rise condominium developments of 25 units of more, a YELLOW can be issued for up to 30 months with one six-month extension. This additional time is granted on a case-by-case basis with special approval required by the DRE.

Getting Started on the DRE Process

The DRE process should be started after the City or County approves the tentative map and before construction commences. Assembling your processing team early will help you determine the timing that works best for you.

Your processing team should consist of:

• Escrow of the West Sales Representative and Escrow Officer

• DRE Consultant from a qualified title company or other DRE processor, such as your attorney’s office or an independent DRE processor

• Engineer

• Attorney

• Title

• Budget Preparer, if the project is a condominium or
  planned development

If this is the first time this team has worked together, it is a good idea to have a DRE “kick-off ’ meeting of all of the team members. This can expedite the process when everyone receives the information they need at the same time and can discuss aspects of the project that make it unique.

The following documents should be brought to your “kick-off ” meeting:

• Developer’s entity documents, such as LLC-1 and Operating
  Agreement, or LP-1 and Partnership Agreement or Corporate
  Resolution, if a corporation. The purpose of these documents
  is to provide the DRE with evidence of the signing authority
  of the person signing the application and other documents.
  A signature block will be generated from this and given to the
  engineer, attorney and DRE consultant.

• Site Plan (five copies) showing the building layout and common area facilities

• Architectural Plans (one set) for the Budget Preparer

• Tentative Tract Map (five copies)

• City or County signed Conditions of Approval

From this meeting, your team members will receive the information they need to complete their part of the DRE filing package.

The following is a summary of responsibilities for each member of your processing team:

Attorney - Management documents (CC&R’s, Bylaws, Articles) and possibly the Purchase Agreement/Escrow Instructions, sample Grant Deed and Deed and Irrevocable Escrow Instructions for Association Property

Budget Preparer - Budget and Common Facilities Sheet

Engineer - Tentative Tract Map, signed Conditions of Approval and preliminary Condominium Plan (if a condominium)

Escrow - Purchase Agreement/Escrow Instructions

DRE Consultant - All other DRE forms including the Questionnaire

You should carefully review the documents prepared by each of your team members to make sure your project is being correctly represented and your preferences covered.

The DRE Process

Once your DRE Consultant receives all of the documents and information for the filing, including the filing fee, they will assemble to DRE filing package and Duplicate Budget package. Once filed, they will become your “Single Responsible Party.” The DRE will send you copies of the Deputy Assignment Notice and future Deficiency Notices, but the originals will go to the Single Responsible Party with the expectation that they will assemble and submit future documents.

You will receive a request by the DRE to complete an on-line survey. The request will have your individual project code. This can be completed anytime during the filing process, but MUST be completed before the WHITE is issued. Only you can complete the survey.

To expedite your DRE process, once a filing has been made, you should work closely with your engineer to get the Map recorded. This will involve complying with all of your tracts conditions of approval, posting of subdivision and tax bonds and paying many fees. It is important to remember that every time your engineer submits a copy of the final map for checking to the City or County, they need to send a copy to the chosen title company’s Subdivision Title Officer for checking.

Another final document to complete your DRE filing is the Maintenance Assessment Bond or other security device, which amount is approved by the DRE. Your DRE Consultant will notify you when your budget has been approved and it is time to deposit this security with escrow. The Maintenance Assessment Bond is the most commonly used security device. The purpose is to guarantee your payment of assessments on unsold units. It is deposited with escrow and can be in the form of a Surety Bond, Cash Deposit, Letter of Credit or Set Aside Letter. Your filing may have included an optional Subsidy Agreement or Start-Up fund. Both of these arrangements also require the posting of a bond or other security to guarantee your obligation. Your DRE Consultant will let you know if these bonds are required.

Choosing Escrow of the West

Escrow of the West’s Responsibilities

By electing to work with Escrow of the West, you will find that we play a key role in the successful completion of your project’s sale-outs.

As the liaison with the developer, or their escrow coordinator, the buyer and the buyers’ lender, and all sales agents, our communication and organizational skills will be vital to the success of your development.

If your project requires a Public Report from the Department of Real Estate (DRE), you will need to connect with us prior to submission of your application to the DRE. The DRE requires that the Escrow Holder be under the jurisdiction of the Department of Corporations (DOC) or under the Department of Insurance (DOI). Escrow companies that are under the jurisdiction of the DRE, such as a broker owned escrow, are not acceptable for subdivision sale-out escrows.


The following are the documents provided by Escrow for submission to the DRE:

• Completion of the units and common facilities prior to the close of escrow and recordation of a Notice of Completion, unless the completion is the subject of a bond which has been approved by the DRE (this includes conversion projects with renovation).
• Sample Grant Deed, if not provided by the project attorney.
• If a Preliminary Public Report (PINK) is being obtained, we will sign an agreement to hold buyers’ deposits (form RE 612A).
• Once the Maintenance Bond is obtained, the original will be held by escrow with an agreement (form RE 643) submitted to the DRE.

The DRE will review and approve your purchase agreement and escrow instructions and you will certify that the form submitted to the DRE is the form you will use. Changes in your purchase agreement/escrow instructions should be discussed with us or the project attorney to determine if they are material and should be resubmitted to the DRE for approval.

If you will be obtaining a Preliminary Public Report (PINK) before the Final Public Report (WHITE) is issued, Escrow of the West will be named in the Report and will hold any buyer deposits. All deposits received under a PINK are refundable.

If you will be opening escrows under a Conditional Public Report (YELLOW), the purchase agreement/escrow instructions will have additional wording outlining the requirements for closing. It is important to note that individual title reports cannot be issued under a YELLOW because the subdivision map and/or Condominium Plan, which make up the legal description, have not recorded. This means that the buyer’s loan approval will not be able to be completed until the WHITE is issued. Any deposits received under a YELLOW must be held in escrow.

The following is a summary of the clauses that the DRE looks for in approving Escrow Instructions:

• Certified sample escrow instructions. Most often these are a joint purchase agreement/escrow instruction form and are provided by the project attorney, the California Association of Realtors® (CAR), or Escrow of the West can create these for your use.
• Escrow must close within 12 months.
• Subordination of any existing loan to the CC&R’s
• Escrow must hold the required maintenance bond until the appropriate release after 80% of the units have closed and escrow receives a letter from the Association that the developer is current in the payment of dues for which are owed.
• Escrow must hold any subsidy or completion bond, if required.
• Buyer’s funds must be held until escrow closes, unless a bond for funds released to the developer is posted with the DRE. (This type of bond cannot be used under a PINK or YELLOW.)
• Transfer is to be free of any existing blanket encumbrances (developer’s loan).

In addition to the above, Escrow of the West will request demands from lenders, coordinate the ordering of Natural Hazard Disclosure Reports and other reports required by the local jurisdiction, provide buyer’s lender with requested documents, communicate with the buyer for vesting information, receive and prepare loan documents for buyer’s signature, prepare estimated and final closing statements, prorate association dues and taxes, authorize the closing with the chosen title company and notify the buyer and seller of the close.

As the developer, you will need to provide escrow with contact information of your construction lender, your project’s preferred lender for buyer’s loans and the Association’s management company. In addition, you will need to purchase insurance for the common areas, which in the case of a condominium will often include the units. Escrow of the West will discuss with you how you want to handle the payment of future unsegregated property taxes which may be billed to you after you have closed units. By choosing Escrow of the West, you can be assured that we will coordinate a successful closing for you and your buyers.

http://www.escrowofthewest.org/

Technical Mortgage Monthly - July 2010: Mortgage Rates Continue to Decline in the Summer Heat

2010 started with hopes that the US would move out the Great Recession with little more than a few bumps along the way. However, as many leading economists predicted, the year started strong, and then began to fade. While there have been discussions about a double-dip recession, most analysts believe the US is simply moving through an anticipated slowing, on the way to returning to a healthier growth rate. As we move toward the halfway mark of summer, mortgage rates have continued to slowly slide downward, giving those with excellent credit and resources another historic chance at buying or refinancing a home with cheap money.

While many analysts did predict a mid-year slowing, the impact of the Euro-zone debt crises was not fully anticipated. The actual economic impact is not expected to be sizable, but for interest rates, the international “flight-to-quality,” did flood the US bond market, especially Treasuries, with an unexpected inflow of cash. This, combined with some slowing in manufacturing, which so far has lead the current recovery, has help drive mortgage rates downward again. Additionally, the US housing market has lost some of its direct support, in the form of tax credits, which has pushed sales of both new and existing homes downward. Of course, the economy will continue to struggle until we begin to see some recovery in the labor market.

As we move through summer, there is a high probability that mortgage rates will continue to remain depressed. With the Euro-zone debt crisis, there is little appetite in the US to try to finance too much more stimulus for the economy. We’re likely in a situation where we’ll wait to see if the stimulus packages of the past were enough to push the economy forward in the near future. However, even if the economy does begin showing greater signs of life, we could see mortgage rates remain very low until consumer attitudes brighten significantly. That, of course, will require a sizeable drop in unemployment, and a huge gain in new jobs.

The A-Z of Escrow: V

Vesting: The names, status and manner in which title of ownership is held with a fixed or determinable interest in a particular parcel of real property.

Voidable Contract: A contract that may seem to be valid, but can be rejected by either one of the parties.

Voluntary Lien: A lien that a homeowner willingly gives to a lender.

The A-Z of Escrow: T

Tax Search: Search to determine the present status of real estate taxes against the property.

Tenants in Common: Property owned by two or more persons at the same time. The proportionate interests and right to possess and enjoy the property between the tenants in common do not have to be equal.

Termite Letter: Letter from licensed pest exterminating company stating that there is no active infestation of termites and that there is no damage from prior infestation.

Title Insurance: Protects a lender or owner against loss in the event of a property ownership dispute.

Title Search: The process of examining all relevant records to confirm that the seller is the legal owner of a property and that there are no liens or other claims outstanding.

The A-Z of Escrow: S

Septic Tank: When public sewers are not available, a property is required to utilize a septic tank system. The system includes hooking up the property's sewage system to a tank that is buried deep in the ground away from the house. The solid organic sewage is collected in the tank where it is decomposed and purified by anaerobic bacteria.

Subdivision: An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.

Subordination Agreement: An agreement by which one encumbrance ( a mortgage) is made subject to another encumbrance (a mortgage) is made subject to another encumbrance (possibly a lease).

Survey: Graphical drawing that locates improvements on the land in relation to the property lines, easements, etc.

The A-Z of Escrow: P & R

Reconveyance: An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed.

Recording: Filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statute and often requires the witnessing and notarizing of an instrument to be recorded.

Report on Possession: Supplement information learned from the title search. Inspectors verify lot size, location of improvements, evidence verifying recorded easements.

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Purchase Agreement: A written contract between the buyer and the seller of an asset stating the terms and conditions under which the asset will be sold.

Prelim or Preliminary Report: A written report commonly issued by a title company, issued prior to issuing title insurance, which shows the recorded condition of property title.

The A-Z of Escrow: N & O

Offset Statement: A statement furnished to an escrow from an owner of land subject to an encumbrance (note) as to the balance due.

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Needs-Based Pricing: An asking price based on factors such as the funds required to pay off the seller's mortgage, the cost of remodeling, or the purchase of another house.

Neutral Third Party: Escrow Officer or Holder of Escrow and the Title Company are considered a "neutral third party". These third parties will not provide any advice about the fair or un-fair value of the transaction, they would encourage you to consult legal or other professional counsel if you have any such questions.

The A-Z of Escrow: L & M

Metes and Bounds: A term used in describing the boundary lines, terminal points and angles of a specific piece of land.

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Lender's Policy: Protection for the mortgage holder, so that if there is a fault in title that results in a loss, the mortgage company will be paid back.

Lis Pendens: A notice recorded in the official records of a county to indicate that a lawsuit is pending affecting the lands described in the notice.