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esCrow Holder’s responsibiliTies, ConT.
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 Condominium Plan, which make up the legal description, have not recorded. This means that 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:
• 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)
• Escrow must close within 12 months.
• Subordination of any existing loan to the CC&Rs
• 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 encumbrance (developer’s loan).
In addition to the above, the escrow holder will request demands from lenders, order 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 Chicago Title 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 holder 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. Whether Chicago Title Escrow Division is handling your escrows or we are coordinating with an independent escrow company, Chicago Title will do its part to assure a successful escrow closing for you and your buyers.
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