The most anxious part of the process is over when we get word that the seller has accepted your offer. Oh, there’s still work to be done and time constraints, but at least at this point we know you’re ever closer to owning that house.
Since there is so much to do from the time the seller accepts to closing we’re going to break it down into bit-sized chunks for you.
Open Escrow
When the seller accepts your offer, we open escrow. What is escrow? Escrow is a word to the neutral third party that holds all of the buyer’s funds, such as the earnest money deposit, and secures the deed from the seller. The contract acts as instructions to the escrow officer and when all of the terms of the contract have been fulfilled, he or she releases the funds to the seller and transfers the deed to the buyer.
Title Insurance
Shortly after escrow opens we will order title insurance. This type of insurance ensures that the seller is the sole legal owner of the property and that no one else has any claims, liens, restrictions or easements (known as “clouds”) on it. Some of the more common clouds on a property’s title include:
- Forgery
- Fraud
- Liens
- Undisclosed heir of a previous owner
- Unpaid taxes
If you’re getting a loan to purchase the house you’ll be required to buy a lender’s title insurance policy to protect the lender in the event the title search missed something. Whether you want to buy a policy that covers your interests is voluntary.
If you decide to purchase one there will be a one-time fee and the policy is valid for as long as you or your heirs own the property. An owner’s title insurance policy protects you from problems with the title.
After the title company checks the title, they will submit a Preliminary Title Report, which is a summary of everything found during the search. We’ll go over this carefully. It is the seller’s responsibility to resolve claims against the title.
In part 2, we’ll take a look at the contract deadlines, also known as contingencies.
