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RED FLAGS IN THE ESCROW/TITLE PROCESS
CHICAGO TITLE CALIFORNIA BUYER & SELLER GUIDE
The escrow officer will need some basic information in order to open and proceed with the escrow:
• Correct street address, and parcel # if available • Sales price
• Full names of all parties involved and marital
status
• Contact information for all parties
• Existing lender name, loan number, contact
information, and approximate unpaid balance. • HOA (Homeowner’s association) information,
such as address and dues
• HOA management company information (if any) • Commission amount and additional conditions
In general, the first item to enter the escrow is the buyer’s initial deposit. The escrow file will grow, item by item, until all of the conditions have been met and the escrow is ready to close.
Red Flags in the Escrow/Title Process
A “red flag” is a signal to pay attention! Below are some of the items which may cause delays or other problems within a transaction and must be addressed well before the closing.
• Bankruptcies
• Business trusts
• Liens and judgments, including child or spousal
support liens
• Encroachment or off record easements • Establishing fact of death
• Foreclosures
• Physical inspection results such as
encroachment, off record easements
• Probates
• Power of Attorney
• Proper execution of documents
• Recent construction
• Transfers or loans involving corporations or
partnerships
• Last minute change in buyers
• Last minute change in type of title insurance
coverage
Red Flag Examples
TAXES: These are usually standard, showing the status of the current tax year.
RED FLAG: Postponed property taxes is a program put on by the state for senior citizens. It allows the owner to postpone the taxes until the property is sold or refinanced. The owner applies to the state, and the state provides “checks” that the owner uses to pay the taxes. The reason this is a red flag is because a demand will need to be ordered from the state by escrow in order to pay off the postponed taxes. It may take up to two weeks to get a demand.
Covenant Conditions & Restrictions (CC&Rs):
These are standard. The CC&Rs should be requested by the buyer. The buyer should read these thoroughly, especially if improvements to the property are contemplated.
RED FLAG: Some CC&Rs prohibit certain types of improvements.
EASEMENTS: These are also standard. Most easements in newer subdivisions (20 years
or less) are contained in the street. Some subdivisions have nonexclusive easements over portions of the property for such things as maintenance of side yards, access to common areas (like golf courses), etc.
RED FLAG: If improvements are contemplated (such as construction of a pool or spa), then the buyer should request the easements be plotted on a map to determine there will not be any interference to contemplated improvements.
AGREEMENTS: These commonly take the form
of road maintenance agreements, mutual easement agreements (like a shared driveway) or
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