The Magic that is Escrow

I want to take a moment to explain not only what escrow is, but also to give a shout out to the amazing title companies that we have in the Portland area.

Escrow is the time that happens between an offer being accepted and the title being recorded for the new owner of the property. The Realtors involved submit a copy of the agreed upon paperwork to the title company that has been chosen. The buyer or the seller can select the title company, if they have a preference. By practice though, I’d say 90% of the time the seller’s agent will choose the title company. This is because prior to and during the course of the listing being marketed, it’s pretty common for the listing side Realtor to ask for information and favors from a title company. This can be things like obtaining a plat map, getting a copy of the deed, all sorts of favors. The title company will do these services at no charge. They do them, because they are hoping to be selected to handle a transaction. Just like Realtors, they don’t get paid until the transaction closes.

Upon receiving the new sale agreement, the “escrow officer”, which is what the person at the title company is usually called, will order a preliminary title report. It takes about a week to receive it and it is sent out to all parties involved: the buyer and their Realtor, the seller and their Realtor, and the lender if there is a lender involved. The title report shows what legal liens and encumbrances, such as easements, Home Owner Association documents, and mortgages are attached to the property. Once received, the buyer needs to review the prelim and they have 2 days to notify the seller if there is an issue that needs to be cleared up. The seller then has 5 days to fix the issue. If the seller can’t fix it, then the buyer can terminate and get their earnest money back. The sort of issue that might create this situation would be something like a judgement for alimony that must be proven to be current. That sort of thing.

Escrow lasts 30 to 45 days, typically. During this time the escrow officer will collect the needed information to close on the sale. They are the people who receive the lenders wire of funds from the new mortgage, and who contact the buyer to let them know how much money to bring to closing. They make appointments with the buyer and the seller and are in charge of everyone signing all of the documents correctly. They use the money that they have received to pay off any current liens and then they are the ones who take the new deed to the county and have it recorded, along with the new mortgage. Today this is done electronically.

On the day of closing they do the final title report to confirm that no knew encumbrances have been recorded on the property. With this in hand they issue a title insurance policy. This insurances benefits the buyer and is the title companies evidence that all of the seller encumbrances have been removed and the buyer is receiving the property with clear title and only the encumbrances that they place upon it, such as their new mortgage.

To a person, every single escrow officer I have ever met or worked with has been the utmost professional, competent and friendly person. In addition, the title companies perform these services for a very reasonable charge. Combining title and escrow charges, the average transaction earns the title company, perhaps, $3500. The charge for the title insurance is regulated by the state of Oregon. Escrow charges are pretty uniform between companies. The charges are split approximately 60/40, with the seller paying the larger amount because seller paid title insurance to benefit the buyer is more expensive than buyer paid title insurance to benefit the buyer’s lender.

If you ask any Realtor who their favorite title company is, every single one of them will have an immediate answer. For me, it’s Roni Winters at Fidelity National Title in Lake Oswego. But I would trust any of the companies and escrow officers in the metro area. They are all that good.

Stay cool in this heat, and as always, thank you for reading the blotter.

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