– The Title and Escrow Process in Arizona –
When you buy or sell property in Arizona, a major part of the process involves a title company. This post will give an overview of how the title and escrow process works from the various players’ perspectives.
Overview:
The title company in a real estate transaction does many things on behalf of the buyer and seller. Some highlights include:
- Holding escrow money funds in a trust account
- Constant communication with the buyer and seller to ensure all necessary paperwork is submitted and completed
- Title searches on the property to ensure it is able to be sold
- Prepare the paperwork that outlines what must occur prior to the sale
- Receive the loan documents (if applicable) from the lender and return signed documents
- Prepare the closing package and manage the signing process for the buyer and seller
- Prepare and send the information needed in order to record the sale
- Act as an intermediary in the event of a dispute
Unlike your real estate agent who is working directly on your behalf, the title company is a neutral third party in that it does not favor either the buyer or seller in the transaction.
Your point person will be the Escrow Officer and you will most likely also work with their support staff.
From the Real Estate Agent’s Standpoint
When a buyer submits an offer to a seller, there is a section in the contract that asks for the Title Company. The buyers are free to select any company they choose, but if they are unfamiliar with these types of companies they are free to ask around and most agents have a list of title companies they can share. (Note: The seller has an option to counter with another title company suggestion. If that is the case, the buyer and seller will need to come to an agreement prior to escrow.)
Once there is a contract, the real estate agents will make sure that all of the contract paperwork and buyer/seller information gets submitted and that the title company has everything it needs to get started. The real estate agents will also stay in touch with the title representatives throughout the transaction and assist if/when needed.
From the Seller’s Standpoint
If you are selling your home and the escrow is underway, the title company will request information from you like your loan payoff (if applicable), trust documents (if the home is held in a trust,) and so on.
Once they have the information they need from you, you will receive a document that outlines what needs to be taken care of prior to closing. This could be paying off Homeowners Association dues or outstanding taxes, any additional documentation they need and so on.
When it is close to the close of escrow, you will make an appointment to sign documents to close out your side of the transaction. And, once the sale has closed, the title company will ensure you receive your proceeds from the sale.
From the Buyer’s Standpoint
Similarly to the seller, you will need to submit some documentation up front. However, where you will be putting in most of your effort is with your lender for your home loan, (if applicable.) When you have been approved for the loan, your lender will send the documents to title.
Title will then compile your loan documents along with any titled documents and you will make an appointment to sign off on those documents. You will also need to wire any funds you are required to pay to title, such as your down payment. Once this is all taken care of and the deed records, the home is yours!
Did You Know? You do not have to be present in Arizona to sign your documents or for the actual close. Any documents can be sent to you to be signed via a notary. However, if you are not going to be physically present to sign, you need to let title, your agent and your lender know so that they can add additional time for the documents to be sent each way.
Disclaimer: This is just a broad overview of the title and escrow process for residential real estate purchases in Arizona. It is not intended as legal advice. For title and escrow questions, please consult your title company professional.
Be aware that there are different ways of securing Title Insurance. Basically, the Buyer’s Agent leads in helping to choose and secure this coverage, although the Seller and his Agent may weigh in on this choice. Most often the Buyer’s Agent, ideally offers his client a choice of several Underwriters, although, and this is where it can get tricky and more expensive, some Agents will ‘steer’ their client to a Title Agency, who acts as a broker for the policy….adding an extra layer of charges.
The bottom line is NEVER go with an Agency, example, Magnus Title Agency, when you can open escrow directly with and through the underwriter.