What Do Title and Escrow Companies Do When Buying or Selling A Home In Phoenix Arizona?
The Role of the Escrow Company ‘When Buying or Selling A Home In Phoenix, AZ
In the Phoenix Arizona area, an escrow company is a neutral third party that represents all parties in a transaction, including the home buyers, sellers and any mortgage lenders. In most residential real estate transactions they use the AAR Purchase Contract as their guild since it includes the full language of the contract, including Title & Escrow instructions.
One of the main functions of the escrow company is to hold and dispersed money to and from the various players. A buyer’s earnest money is held by the escrow company in a trust account. Additional funds from the lender and home buyer (down payments or cash if there is no lender) are held in a trust account and divvied out to the various parties such as home seller, HOAs, home insurance company, title insurance company and real estate brokerages. Just to be clear, the funds are not disbursed until the buyers and sellers have completed all necessary documents, the lender has approved said documents and the sale is recorded with the Maricopa County Recorder’s office.
What does an Arizona Title Company Do?
In Arizona, a title company provide title insurance policies, which guarantee a buyer buying a property and/or lender making the loan is given clean and clear title.
The Title company will do what is called a title search to determine if there are any encumbrances on the property that make would make it impossible to provide title insurance and a clear, clean title when the property changes hands.
After completing the title search the title company will provide a preliminary title report that notifies all parties as to the record of ownership on the property, as well as any liens of record that may encumber the property. If there are problems they will work with the necessary parties to try and clean-up the issues so the sale can move forward.
The Closing Process
A few days out from the scheduled close of escrow date (COE), the lender will send loan documents to the escrow company who will combine them with other documents to create a closing packet. The closing packet will be signed by the buyers and sellers prior to COE. In most cases, the lender must approve the final signed documents prior to releasing their funds for closing. As we mentioned near the beginning of this article, once all funds and documents are in place, the transaction will be recorded with the Maricopa County Recorder’s office. When that is done, the real estate agent can legally give the keys to the buyer.
Why do you hear the term title and escrow used together?
In Phoenix Arizona, most escrow companies are owned by title companies, and therefore the transaction is handled by one company, operating as separate entities. The Arizona State Banking Department acts as a watch dog over escrow companies… so if you have a problem it is the ASBD you can turn to.
We truly home this information has been helpful. If you have more questions about selling or buying a home in the Phoenix area, know we are here to help. We’ve been helping people with their real estate questions and needs for over 20 years. We’d be honored to help you.
A Short List of Arizona Title and Escrow Companies We’ve Enjoyed Working With During the Past 20 Years
The Urban Team at Realty Executives
7600 N. 16th Street, Suite 100
Phoenix, AZ 85020