Unit 8: Escrow & Closing

Bounds

(Blank) are measures of boundaries, both natural and man-made: e.g., rivers and roads

Metes

(Blank) are measures of length: feet, yards, etc.

Title Insurance

(Blank) was created in response to the need for reliable assurance of title combined with an insurance against loss caused by errors in searching records and reporting the status of title.

A Neutral Escrow Officer Must Observe Certain Rules

1. Escrow instructions must be understood by the principals to the escrow and must be mutually binding. Carefully written instructions or the offer to purchase are very clear about the agreement between the buyer and seller. Each party must understand his or her obligation to carry out the terms of the contract without assuming the escrow holder has any power to force compliance. The escrow holder may not act unless directed by the principals .2. The escrow holder does not get personally involved in disagreements between the buyer and seller, nor act as a negotiator for the principals. Escrow instructions make each party's obligations and agreements clear, and it is up to the buyer and seller to keep the promises they each made in their agreement with the other.

Steps in a TAX SALE

1. June 8 Delinquent Tax List Published 2. Tax-Delinquent Property Status 3. Five-Year Redemption Period (Owner has Possession) 4. Unredeemed Property Deeded to State 5. Tax Collector Publishes Notice of Intent to Sell 6. Public Auction Tax Sale 7. Tax Deed to Buyer

A Neutral Escrow Officer Must Observe Certain Rules

10. Information regarding any transaction is held in trust by the escrow officer and may not be released to anyone without written permission of the principals. 11. An escrow holder has a duty to disclose to the principals any previously undisclosed informationthat might affect them. An amendment would be drawn at the direction of the buyer and seller to reflect any change as a result of new disclosures. 12. A high degree of trust and good customer service must be provided by an escrow holder. 13. An escrow holder must remain strictly neutral regarding the buyer's and the seller's interests

A Neutral Escrow Officer Must Observe Certain Rules

14. Escrow records and files must be maintained daily. A systematic review of open escrow files will make sure no procedure has been overlooked, or time limit ignored .15. Before closing an escrow, all files must be audited carefully. 16. All checks or drafts must have cleared before any funds may be released to the seller .17. Escrow must close in a timely manner, according to the agreement between buyer and seller. A prompt settlement must be made to all principals.

A Neutral Escrow Officer Must Observe Certain Rules

3. An escrow agent usually is not an attorney. The escrow agent must advise anyone seeking legal advice to get counsel from a lawyer .4. An escrow agent has a limited capacity as agent for buyer and seller and may only perform acts described in the contents of escrow instructions. While acting as a dual agent, the escrow officer must operate in the best interests of both parties, without special preference to either. The escrow agent may serve each principal after escrow closes, in dealing with his or her separate interests. 5. All parties must sign escrow instructions or the offer to purchase as escrow instructions for the contract to be binding. An escrow is officially open when both buyer and seller have signed the instructions and delivered them to escrow.

A Neutral Escrow Officer Must Observe Certain Rules

6. If separate escrow instructions are written, they must be clear and certain in their language. When there is a conflict between the signed instructions and the original agreement of the principals, the signed instructions will prevail as long as they reflect the intent of the parties. 7. All documents to be recorded must be sent to the title company in a timely manner (as quickly as possible), and all interested parties should receive copies of recorded documents. 8. Escrow instructions should specify which documents or funds the escrow holder might accept. 9. Overdrawn escrow trust accounts (debit balances) are prohibited by law.

Metes and Bounds

A (blank) description of land delineates boundaries and measures distances between landmarks to identify property This is a method of land description in which the dimensions of the property are measured by distance and direction. Land that is irregular in shape or cannot be described using either of the two other methods may have a metes and bounds description..

Short Rate Cancellation Fee

A (blank) is a fee (or penalty) charged to the person who cancels the insurance policy before it expires.

escrow holder

A (blank), otherwise known as an escrow company, or some other eligible person, acts as a neutral agent of both buyer and seller.The escrow holder follows the directions of the principals, collects, and distributes documents and money as agreed upon in the purchase agreement

Tax Calendar

A FISCAL YEAR, or tax year, is used for tax purposes as compared to a Calendar Year. The fiscal or tax year starts on July 1 and goes through June 30 of the following year.

Rights and Obligations of the Parties to an Escrow

A buyer and a seller are known as principals in an escrow. The escrow holder is a neutral third party who is a dual agent for buyer and seller. A real estate agent is not a party to an escrow unless he or she is the buyer or the seller. A buyer is the party purchasing the property and who will receive a deed conveying the title. A seller is the owner of record who must deliver the title agreed upon in the contract. An escrow agent is an impartial third party who collects all documents and money through the escrow and transfers them to the proper parties at the close of escrow.

Point of Beginning

A metes and bounds description starts at a well-marked (Blank), and—following the boundaries of the land—measures the distances between landmarks, then returns to the beginning. Example: Here is a description of an uneven, hilly parcel of land with an avocado grove in Vista, California: Beginning at the intersection of the east line of Buena Creek Road and the south line of Cleveland Trail; thence east along the south line of Cleveland Trail 300 feet; thence south 657.5 feet to the center line of Buena Creek; thence northwesterly along the center line of Buena Creek to its intersection with the east line of Buena Creek Road; thence north 325 feet along the east line of Buena Creek road to the place of beginning.

Homeowners exemption

A property owner may claim a (blank) in California on a residence that is both owned and occupied at 12:01 a.m. on January 1. Claims must be filed by February 15 following the change of ownership. If the prior owner claimed the homeowners' exemption, claim forms are mailed in the beginning of January for filing by February 15. The exemption reduces the assessed value by $7,000 and reduces the tax bill by at least $70. It is the homeowner's responsibility to apply for the exemption. To receive the full exemption, the claim must be filed with the Assessor's office between January 1 and February 15, or within 30 days of a Notice of Supplemental Assessment. (A late filing is accepted from February 16 to December 10 for 80% of the exemption.) Your exemption automatically continues each year as long as you continue to own and occupy the property as your primary residence. It is the homeowner's responsibility to terminate the exemption when no longer eligible

Settlement Statement

A settlement statement is a complete breakdown of all cash received, all charges and credits made, and all costs involved in the transaction. The statement shows how all closing costs and prepaid expenses are allocated between the buyer and seller

Range Lines/ Ranges

After establishing a starting point at the intersection of a chosen principal meridian and baseline, the government surveyors drew imaginary vertical lines called RANGE LINES every six miles east and west of the meridian to form columns called RANGES. Each range was numbered either east or west of the principal meridian.

Extended Coverage Title Insurance Policy

All risks covered by a standard title insurance policy are covered by an (blank), as well as other insurance risks. These risks include unrecorded hazards such as outstanding mechanic's liens, unrecorded physical easements, facts a correct survey would show, certain water claims, and rights of parties in possession—including tenants and owners under unrecorded deeds

Abstract of Title

An (blank) is a written summary of all useful documents discovered in a title search. The (blank) together with an attorney's opinion of the documents appearing in the abstractor's chain of title was the source of our earliest basis for establishing marketable title.

Agency

An escrow agent holds a limited agency, or authority. Any duties to be conducted must be mentioned specifically in escrow instructions or they are not authorized by the buyer and seller. The escrow holder must remain neutral, as the agent of both the buyer and seller, during the course of the escrow. After all conditions of the escrow have been met, the escrow officer is the agent of each of the parties in dealing with their individual needs

Audit

An escrow company must keep accounts and records that can be examined by the Commissioner of Business Oversight. A yearly inspection prepared by an independent certified public accountant, describing operations, must be delivered to the Commissioner.

Veterans Exemption

Another exemption available to some homeowners is the (blank). A resident of California who has been in the military during wartime is eligible to take a $4,000 tax exemption. If the resident takes the regular homeowners exemption, the veterans' exemption may not be taken on the same dwelling, but may be used for another property owned by the veteran.

Linear Feet

Another important number for you to know is 5,280—the number of feet in a mile. You may be asked to calculate an answer on the state exam regarding linear feet around a section. (Linear feet refer to length rather than area.)

Proposition 13

As of June 1978, (blank) became the measure to use in assessing property in California. If there had been no change in ownership since March 1, 1975, the value of the property at that time was used as a starting point to assess the property (the initial full cash value). Under the new law, the maximum annual tax was limited to 1% of full cash value (market value). After that, a maximum increase of no more than 2% per year was allowed.

Cash Reconciliation Statement

At the close of escrow, the escrow officer must examine each file to make sure all accounting has been accurate, and that escrow instructions have been followed. A (Blank) is completed by the escrow holder and closing statements are prepared for all principals.

Matters of Record

Buyer and seller may agree on some matter of record or, in other words, some matter that is recorded, affecting the property. It may be an easement, an existing street bond or a trust deed. An agreement may be made about who will be responsible for whatever exists as a recorded encumbrance on the title at the time of the sale.

Closing

Buyer and seller will agree on how long they want the escrow to last. They will mention a specific length of time for the escrow and instruct the escrow holder accordingly.

Inspections

Buyer and seller will agree on whether to have certain inspections of the property before the close of escrow, such as a pest control inspection, property inspection to identify any plumbing, electrical, or structural problems, and a soil inspection to check for slippage or unstable compaction. The buyer's approval of the reports will be a contingency of the sale and must be mentioned in the escrow instructions.

Rectangular Survey System (U.S. Public Land Survey System) (PLSS)

By the late 19th century, the U.S. government had established a system of land description for new territories, states, and other public lands. The (blank), also known as the (blank), uses imaginary lines to form a grid to locate land

New Loan Instructions and Documents

Escrow accepts loan documents or instructions about financing the subject property and completes them as directed. The escrow agent gets the buyer's approval of and signature on loan documents, and receives and disburses loan funds as instructed.

Escrow Procedures

Escrow procedures vary according to local custom. For example, in Northern California title companies handle closings through escrow, whereas in Southern California escrow companies or banks conduct escrows. It is typical in Southern California for sellers to pay the title insurance premium and transfer tax and to split the escrow costs with the buyer. Not only do escrow procedures differ between Northern and Southern California, they also vary somewhat from county to county. In spite of the differences, there are certain procedures that are followed during the regular course of all escrows

Basic Requirements for a Valid Escrow

Every sale escrow has two basic requirements to be valid: a binding contract between the buyer and seller and conditional delivery of transfer documents and funds to a neutral third party, e.g., escrow. The binding contract can be a purchase agreement, agreement of sale, exchange agreement, option, or mutual escrow instructions of the buyer and seller.

Proposition 60

Homeowners who are at least 55 years of age may sell their homes and transfer their present base-year property tax value to another home of equal or lesser value. Under Proposition 60, the new home must be in the same county. The base-year property value is whatever the value of the home was on March 1, 1975, or in the year they purchased the property after that time. Thus, they are allowed to continue with the original figure as their tax base, adding a maximum of 2% every year, to arrive at their tax bill, rather than be required to step up to 1% of the value of their new purchase. Example: Mary and Mark bought their home in 1985 for $80,000 and it is currently valued at $310,000. Now that the kids are grown, the house is too big for them. They sold their home for $300,000 and purchased a smaller home in the same town for $250,000. The tax assessment on their original home was $102,400 at the time of the sale, and they were allowed to carry that to the new property because of Proposition 60. Instead of being taxed at 1% of the price of the new house ($250,000), their new tax bill was based on the assessed value of the one they sold. Comparison of Mary and Mark's Tax Bills• $250,000 x 1%= $2,500 tax bill• $102,400 x 1%= $1,024 tax bill

Escrow Instructions

If (blank) are drawn, they must reflect the understanding and agreement of the principals, who may not always be a buyer and seller, since transactions involving the sale of real estate are not the only kind that require the use of an escrow. Any time a neutral third party is needed to handle documents or money, such as leases, sales of personal property, sales of securities, loans, or mobile home sales, an escrow might be required

Tax Sale

If a property owner does not pay the tax when it is due, the property is declared tax-defaulted and is then listed as a delinquent account by the tax collector. The property owner (or any interested party) may redeem the property from the tax collector by paying the total amount of all defaulted taxes. While the property is in a tax-defaulted status, the owner does not actually lose title and keeps possession for five years. If the taxes are not paid within that five-year period, a tax sale takes place, and the property may be sold at public auction to the highest bidder for cash. At that time, the owner loses possession and the buyer receives a TAX DEED.

Beneficiary Statement

If an existing loan is going to be assumed, or taken subject to, a beneficiary statement is requested by the escrow holder from the lender. A (blank) is a statement of the unpaid condition of a loan and describes the condition of the debt.

Township Lines

Imaginary township lines were drawn every six miles north and south of the baseline to form a horizontal row or tier of townships. These rows were numbered according to their distance from the baseline.

California Rectangular Survey System

In California, there are three such starting points: the Humboldt Baseline and Meridian (Northwestern California), the Mt. Diablo Baseline and Meridian (Northeastern and Central California), and the San Bernardino Baseline and Meridian (Southern California)

Escrow Agent

In California, when ownership transfers from one person to another there is usually a neutral third party, called an (blank), handling the details of the sale. After the principals of a sale make an agreement, an agent normally opens escrow on their behalf.

Monuments

Landmarks (trees, boulders, creeks, fences, etc.) are called (blank).

Methods of Land Description

Method: Section and Township Survey/ Lot Block, and Tract System/ Metes and Bounds Use: Rural/ undeveloped areas/ Urban areas, cities/ Irregular parcels of land

Termination of an Escrow

Neither party may end the escrow without the agreement of the other, in writing. Also, the escrow officer may not return any funds or documents to either party without agreement from all parties. During escrow, the escrow officer is an agent for both buyer and seller, and must operate from the original escrow instructions. When they instruct the escrow agent to prepare an amendment canceling the escrow, a buyer and seller mutually end their agreement after they have both signed the amendment.

Relationship of the Escrow Holder and the Real Estate Agent

No transaction can be completed without a good relationship between a broker and an escrow agent. The goodwill, positive guidance, and technical knowledge of an escrow officer have helped many brokers to get through an escrow, especially those new to the business.After the real estate broker negotiates the sale, it is the job of the escrow agent to see that the agreements made by the parties are carried out. The broker and the escrow agent must check with each other regularly to make sure information is correct and to inform each other of how the escrow is progressing.

Meridians

North-south longitude lines, called (blank)

Close the Escrow

Once all the terms and conditions of the instructions of both parties have been fulfilled, the last job of the escrow holder is to close the escrow. The escrow officer gives closing statements to buyer and seller, disburses all money, and delivers all documents to the proper parties after making sure all documents have been recorded by the title company. The seller gets a check for the proceeds of the sale minus escrow fees, real estate commissions, loan payoffs and all other costs of selling, and any pertinent documents; and the buyer gets a grant deed.

Lot, Block, and Tract System

Other names for the lot, block, and tract system are lot and block system, subdivision system, or recorded map system. It is the most convenient and easily understood method of land description. When developers divide parcels of land into lots, they are required by the California Subdivision Map Act to prepare and record a subdivision map or plat map.

California Land Title Association (CLTA) American Land Title Association (ALTA)

Policies of title insurance are commonly used throughout California, usually in the standardized forms prepared by the (blank) or the (blank).The main benefit of title insurance is that it extends protection against matters of record and many non-recorded types of risks, depending on the type of policy purchased. Two types of title insurance policies are normally used: Standard Policy of Title Insurance and Extended Coverage Policy.

Completed Escrow

Properly drawn and executed escrow instructions become an enforceable contract. An escrow is termed a "(blank)" when all terms of the instructions have been met. After the escrow has been completed and recorded, the buyer gets a grant deed, and the seller gets the money. The escrow closes shortly thereafter

Ad Valorem

Real property is taxed at the local level through (blank) property taxes, special assessments and transfer taxes. Ad valorem means according to value.Taxes are imposed on real or personal property to raise money so the government can carry out its general duties. All property within the locality of the taxing authority, whether it is the state or local government, will be taxed unless specifically exempt.

Binding Contract

The (blank) can be any legal agreement, such as a residential purchase agreement, exchange agreements, option agreements, or jointly executed bilateral or individually executed unilateral escrow instructions evidencing a mutual agreement of the buyer and the seller.

Purchase Price

The (blank) is the amount of consideration the buyer and seller have agreed upon for the sale of the property.

Chain of Title

The (blank) is the public record of prior transfers and encumbrances affecting the title of a parcel of land.

Rebate Law

The (blank) requires title insurance companies to charge for preliminary reports and to make sincere efforts to collect for them

Subdivision Map

The (blank) shows the location and boundaries of each separate new lot in the subdivision, and the map must be recorded in the county recorder's office. After the (blank) has been filed or recorded, it is public knowledge and is available to anyone. Each lot in a subdivision is identified by number, as is the block in which it is located; each lot and block is in a referenced tract.

Escrow Companies Must be Incorporated

The Commissioner of Business Oversight only licenses qualified corporations as escrow companies. An individual cannot be licensed as an escrow holder/agent. A bond based upon predicted yearly average transactions and trust fund use must be furnished by an applicant for an escrow office license. A bond must be posted by all parties (officers, directors, trustees, and employees) having access to money or securities being held by the escrow company as safety against loss. Banks, savings and loans, title insurance companies, attorneys, and real estate brokers are exempt from Commissioner of Business Oversight licensing requirements.

Certificate of Title

The abstract company used these title plants to supply interested parties with a (blank). This stated that the property was found to be properly vested in the present owner, subject to noted encumbrances.

Terms:

The buyer and seller agree on how the buyer will purchase the property: cash, new loan, loan assumption, VA, or FHA loan, seller to carry a trust deed, trade, or any other special agreements provided in the contract between buyer and seller. This section describes the amount of the down payment and the terms of any loans for which the buyer will apply.

Possession

The buyer and seller will have agreed on when the buyer can move into the house, and the escrow instructions must reflect their agreement on the date the buyer will take possession of the property. The close of escrow could be the date of possession, or sometimes the seller will rent the property back from the buyer after the close of escrow. In that case, a lease agreement should be signed and deposited in escrow

Prorations

The division of expenses and income between the buyer and seller as of the date of closing is known as (blank). Some items that are prorated are taxes, rental deposits or income, and insurance premiums. The reason for prorations is that some payments may have been made by the seller for a time period beyond the agreed-upon date of closing of escrow, or the seller may be in arrears on taxes or insurance. The escrow holder debits or credits the seller or buyer, depending on the escrow closing date. Normally, proration is based on a 30-day month and a 360-day year.

Designating the Escrow Holder

The escrow holder may be any disinterested third party and the choice of an escrow agent is always that of the buyer and seller. However, they probably do not have a relationship with an escrow agent and may rely on the advice of their real estate broker.

Disbursements

The escrow holder must settle the accounts of the buyer and seller according to the escrow instructions. At the close of escrow, each party receives a closing statement of costs and charges along with a final distribution of funds

Recording

The escrow holder records all transaction documents as instructed by the buyer and seller after a final check of the title company records to be sure nothing has changed since the preliminary title search was done. Then the title company will issue a policy of title insurance to insure the buyer's title. Documents that might require recording are the grant deed, trust deed, contract of sale, or option.

Proration

The escrow holder will be instructed by the buyer and seller about (blank) and other accounting to be done at the close of escrow. (Blank) is the adjustment of interest, taxes, insurance, etc., on a pro-rata basis as of the closing or agreed-upon date.

Prepare Escrow Instructions

The escrow is officially opened when the escrow holder accepts the purchase agreement that has been signed by all parties to the escrow. When escrow instructions are drawn, the escrow holder prepares them on a computer-generated form, with details of the particular transaction completed in the blank spaces on the form. All parties sign identical instructions, with the exception of the commission agreement that is prepared for the seller to sign—if the seller in fact is paying the commission

Demand for Payoff

The escrow officer requests a (blank) of a loan from the lender who holds a loan against the subject property. The exact amount of loans that are to be paid off must be known so the escrow officer's accounting will be correct at the close of escrow

Marketable Title

The goal of title insurance companies is to ensure the clear, (blank) of property. (Blank) is one that a reasonable person would accept as clear and free from likely challenge. Over the years, determining marketable title has gone through several phases: abstract of title, certificate of title, guarantee of title, and finally title insurance.

Property Taxes

The idea of land taxation began in 1086 in England with the compilation of all land and resources into the Doomsday Book commissioned by William the Conqueror. Taxation was based on the notion that taxes should be assessed according to an owner's ability to pay. At that time, such an ability was reliably determined by how much and how good the owner's agricultural holdings were—since most people's income came almost entirely from products of their land. Therefore, land became the basis for determining the amount of tax imposed.

Guarantee of Title

The next step was the (blank) under which the title insurance company provided written assurances (not insurance) about the title to real property, insuring against loss

Accept Reports

The parties to an escrow may request any number of reports about the condition of the property. The escrow holder is asked in the instructions to accept any reports submitted into escrow. These may include a structural pest control report (termite report), property inspection report, soil condition report, or environmental report. Any approval from the buyer or seller about a report is held in escrow until needed or given to the appropriate party at the close of escrow

Fire Insurance Policies

The parties to an escrow will have agreed on fire insurance policies and will instruct the escrow officer accordingly. The escrow holder will accept, hold, and deliver any policies and will follow instructions about transferring them. A lender will require fire insurance, and will expect the escrow holder and the buyer to be accountable for either a new policy or the transfer of an existing one.

Open Escrow

The person who usually opens escrow, if there is a real estate agent involved, is the selling agent. That person usually has an earnest money check that must be deposited into escrow or some other trust account no more than three business days after buyer and seller have signed the deposit receipt.

Title Plant

The title insurance company uses the (blank) to conduct the most accurate search of the public records (county recorder, county assessor, county clerk and the federal land office) as possible to make sure the chain of title is correct. If there is a missing connection in a property's history or ownership, if a deed was recorded in error or is incomplete, it clouds the title

Vesting

The way title will be taken is called vesting. The buyer will take title in one of the following ways: sole ownership, joint tenancy, tenants in common, or tenancy in partnership. How the buyer will take title may be important for tax or inheritance purposes and the escrow holder must be directed how to draw the deed to reflect the wishes of the buyer.

Townships

Thus, a grid of squares, called (blank)—each six miles by six miles (36 square miles)—appears. Townships run east-west in ranges and north-south in tiers.

Transfer of Ownership

Upon a change in ownership of real property unless the change is between spouses, a new assessment is made based on 1% of market value, which typically is the new purchase price. For example, if the sale price is $350,000, the new property tax would be $3,500. Any person buying real property is required to file a change-in-ownership statement with the county recorder or assessor. The change-in-ownership statement must be filed within 45 days of the change date.

Lenders Title Policy

Usually borrowers pay for an extended coverage title insurance policy for their lenders (typically called a (Blank)). This policy insures lenders that they are receiving a lien, which will take priority over various interest and claims to the subject property.

Assumption by the Buyer is a Credit ( ABC )

When a buyer assumes an existing loan, the assumption is shown on the closing statement as a debit to the seller and a credit to the buyer.

Preliminary Report (Prelim)

When escrow is opened, the escrow officer requests a (blank) from a title company. A (blank) is not a policy of title insurance but is only an offer to issue a policy of title insurance in the future for a specific fee. It shows encumbrances, liens or any other items of record that might affect ownership and it is used as the basis for the final title insurance policy. Since the prelim lists any liens affecting the property, it would show the existing seller's current loan or loans against the property.

Formation of TOWNSHIP

When ranges and tiers of townships intersect, a township is formed. Townships are further divided into 36 sections, each measuring one square mile or 640 acres. Sections may then be divided into any number of smaller parcels.

Escrow

a (blank) is a small and short-lived trust arrangement

Impound Account

a (blank) is a trust account set up for funds set aside for future, recurring costs relating to a property. After the escrow agent completes the accounting, the agent tells the buyer to deliver the down payment (usually a cashier's check is required), plus other escrow costs, to the escrow office

Legal Description

a (blank) is required before a deed may be recorded to transfer title to a new owner.

Conditional Delivery

a (blank) of transfer documents and funds, the second requirement for a valid escrow, means the seller will deliver a signed instrument of conveyance (e.g., grant deed) and the buyer and/or the lender will deliver to escrow whatever funds are required for the sale, per the contract. In addition, the escrow agent will hold the security for any loan (trust deed) conditionally until directed by the terms of the escrow.

The Lender (during the Escrow Process)

deposit proceeds of the loan to the purchaser. •direct the escrow holder on the conditions under which the loan funds may be used.

Baselines

east-west latitude lines called (blank), intersect to form a starting point from which distances are measured

Documents

the escrow holder will need to know which documents to prepare, have signed by the proper party, and record at the close of escrow. Usually, these will be a grant deed and a trust deed.

Preliminary Report

the title company prepares a (blank). The (blank) is an offer to issue a policy of title insurance covering a particular estate or interest in land subject to stated exceptions. The buyer is allowed a certain number of days to approve this preliminary title report. Buyer approval is important to eliminate surprises regarding the title as the escrow progresses. The escrow holder should notify the buyer and seller if there is any difference in the (blank) and the escrow instructions, by way of an addendum for information only.

Standard Policy of Title Insurance -Losses Covered by Standard Title Policies

• Defects in the title known to the holder to exist at the date of the policy but not previously disclosed to the title insurance company • Easements and liens that are not shown by public records • Rights or claims of persons in physical possession of the land but whose claims are not shown by the public records • Rights or claims not shown by public records but which can be discovered by physical inspection of the land • Mining claims • Reservations in patents or water rights • Zoning ordinances

U.S. Public Land Survey SystemBaseline and Meridians in California

• Humboldt Baseline and Meridian • Mt. Diablo Baseline and Meridian • San Bernardino Baseline and Meridian

Proration Normally Include

• Interest • Premiums on hazard (fire) insurance • Security deposits and rents (if the property is a rental) • Seller's current property taxes

Methods of Legal Descriptions

• Lot, Block, and Tract System • Public Land Survey System • Metes and Bounds

Standard Policy of Title Insurance -Losses Covered by Standard Title Policies

• Matters of record • Off-record hazards, such as forgery, impersonation, or failure of a party to be legally competent to make a contract • The possibility that a deed of record was not delivered with intent to convey title • Losses that might arise from the lien of federal estate taxes, which becomes effective without notice upon death • Expenses incurred in defending the title

Facts About Townships and Sections

• Meridians run north and south • Baselines run east and west • Range lines run north and south, parallel to the principal meridian, every six miles • Township lines run east and west, parallel to the baseline, every six miles • Townships are six miles by six miles, 36 square miles • Sections are one mile by one mile, 36 in each township and contain 640 acres • 5,280 feet = one mile • 43,560 square feet = one acre • 640 acres = one square mile • 16.5 feet = one rod • Four miles = distance around a section/square mile

Townships and Range

• Range Lines - every six miles east and west of meridian • Township Lines - every six miles north and south of baseline

Prohibitions

• Referral fees may not be paid by an escrow company to anyone as a reward for sending business to them. • Commissions may not be paid to a real estate broker until the closing of an escrow. • Blank escrow instructions to be filled in after signing are not acceptable. Initials must be placed wherever there is a change or deletion. • Information regarding an escrow may only be provided to parties of the escrow. • Copies of escrow instructions must be provided to anyone signing them.

The Escrow Holder (during the Escrow Process)

• opens the order for title insurance. •obtains approvals from the buyer on title insurance report, pest, and other inspections. •receives funds from the buyer and/or any lender. •prorates insurance, taxes, rents, etc. •disburses funds for title insurance, recordation fees, real estate commissions, lien clearance, etc. •prepares a final statement for each party indicating amount to be disbursed for services and any further amounts necessary to close escrow. •records deed and loan documents, and delivers the deed to the buyer, loan documents to the lender and funds to the seller, thereby closing the escrow.

Implementing the Job of Taxation

•County Board of Supervisors: determines the tax rate (limited to 1% of fair market value) plus any county bond debt or other assessments. •City or County Auditor: maintains tax rolls (public records identifying parcels of land to be taxed, the owner and the assessed value.) •City or County Assessor: assesses the value of all taxable property in the county yearly to establish the tax base and then mails out the tax bills. The annual assessments appear in the Assessment Roll or Ta x Rol l, a public record. Real property is assessed at 100% of fair market value. The tax bill identifies a property by an assessor's parcel number, which is not a legal description but is used for taxation purposes only. •City or County Tax Collector: decides how much tax is to be paid by each property owner, depending on individual assessments. Land and improvements are assessed separately, but taxed at one rate. •City Councils: sets property tax rates for cities. •Assessment Appeals Board: appeals board for taxpayers' complaints about unfair taxation.

The Buyer (during the Escrow Process)

•escrow instructions signed by all purchasers. •deposit the funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder. •arrange for any borrowed funds to be delivered to the escrow holder. • deposit funds sufficient for escrow and closing costs. •review and approve the preliminary report for the subject property to make sure that there are no items of record affecting the property that have not already been approved by the buyer. •review and approve any Conditions, Covenants, and Restrictions affecting the property, whether of record or not. • review and approve structural pest control and other reports to be delivered through escrow. • confirm the terms of any mortgages or deeds of trust to be assumed by the buyer or those that will remain an encumbrance on the property • carefully review all new loan documents prior to signing. • compare the terms of the purchase contract, escrow instructions, title report, and deed to make sure there are no discrepancies in the transaction documents. • fulfill any other conditions specified in the escrow instructions. • review and approve any items to be prorated in escrow. • reinspect the property to determine that it is in the same condition as it was when the buyer made the purchase offer. Recheck for any undisclosed items that might affect the use of the property, such as: party walls, access roads to other properties, irrigation canals or ditches, common drives, or persons in occupancy or possession of the property, which the county records would not disclose.

The Seller (During the escrow process)

•escrow instructions signed by the seller(s). •executed deed to the buyer with the escrow holder .•evidence of pest inspection and any required repair work. •latest available tax and assessment bills and any other statements or bills which are to be prorated through escrow. •other required documents, such as tax receipts, addresses of mortgage holders, insurance policies, equipment warranties, or home warranty contracts, etc. •fire insurance policies, if they are to be assigned to the buyer. •certificates or releases showing satisfaction of mechanic's liens, security agreements (chattel mortgages), judgments, or mortgages that are to be paid off through escrow. •executed bill of sale covering any personal property to be conveyed to the buyer, together with an inventory of the items for the buyer's approval. •assignment to buyer of all leases affecting the property. •subordination or other agreement required by the purchase contract, to be approved by the parties through escrow.