Title Company as Commercial Escrow Agent 2013 CLE Seminar Getting It Done, Doing it Right Types of Escrow Earnest Money Deposit Commercial Closing Disbursing Agent/Document Receipt Secured Indemnity Title Matters Post Closing Escrows 2
Earnest Money Deposit Agreement In Writing Approved in advance Conditions of Escrow Required terms Acknowledgment of bank risks Indemnity Interpleader Can be in Agreement or our form Interest Earned (Iack thereof) 3 Earnest Money Deposit Chicago Title Procedures Internal Audits 3 people to move $ Release of Funds What triggers release Closing Due Diligence/Inspection period Defined? What if there is a Dispute What if seller demands post inspection period What if buyer demands during inspection period 4
Commercial Closing Disbursing Agent What we can do Receive/disburse documents and funds Coordinate recording/delivery of documents Provide CPL for NC approved attorney What we cannot do Prepare settlement statements Prepare deeds, deeds of trust Obtain Payoffs Update and Record (Recording Agent) Provide CPL for non NC approved attorney 5 Commercial Closing Disbursing Agent Closing Instructions Clear instructions/requirements Coordinate multiple instructions (lender/buyer/seller) Coordinate with issuance of title policy Other Issues 6
Closing Instructions Conditions to Closing Funds: adequate amount received per settlement statement Documents to be recorded: received, executed and dated Other documents: necessary to satisfy requirements Settlement statement Payoff letters, invoices Releases Owner and lien affidavits Title Policy Company committed to issue Authorization of Counsel Lender, Seller and Borrower Verbal, Email, Fax 7 Closing Instructions Closing Upon satisfaction of conditions to close Record Documents Register of Deeds Secretary of State Release Funds Existing Liens Recording costs, escrow fees, counsel fees, broker, title premium Seller proceeds Buyer amounts Issue Policy Mark up or Original 8
Commercial Closing Disbursing Agent Role of Local Counsel Title Opinion Update and Record Review of Documents?? Certification of Recorded Documents Other closing documents Collation of signature pages, finalization of documents for recording 9 Commercial Closing Disbursing Agent Gap issues Created by Closing Instructions Seller and lender will not authorize release of funds until insured. Out of state parties do not trust the NC system (Borrower s counsel controlling funds) Need prior approval Recent Update Gap Indemnity 10
Gap Issues Sample Language: By Escrowee s signature below, Escrowee thereby absolutely, irrevocably and unconditionally commits to issue the Policy subject only to the exceptions listed and agreed to by Lender in the pro forma, with any exceptions arising during the period between the date of Commitment and recording of documents and issuing of Policy being at Escrowee s sole risk. 11 Commercial Closing Disbursing Agent Post closing documents Title policy 1099 Signed settlement statements Recorded documents, sometimes certified 12
Secured Indemnity Title Matters Affirmative Coverage/No exception Judgments Uncancelled Deeds of Trust Taxes Mechanics liens Form Escrow and Indemnity Release trigger =Title Company friendly 13 Secured Indemnity Title Matters Approval prior to closing Need clear description of title policy and title issue being insured over Holding period Need end date Clear release provision Contact Information Interest Earned W9 1099 14
Post Closing Escrows Environmental Clean Up, Completion of construction, Minor repairs Approval prior to closing Agreement clear instructions on disbursing Not just upon completion who determines Number of disbursements (Affects fee) 15 Post Closing Escrow Deeds in Escrow Seller places deed into escrow Funds now or later Event to complete closing Zoning Release of restrictive covenant Extension of water or sewer by county Need clear language Why Secure deed prior to investing in desired change 16
Problem Areas Responsibilities Assumptions from out of state Same Page for closing Ex. California call: We need to open escrow Obtaining payoffs No Drafting settlement statement No Update and record documents to correct party Yes Cancellation Documents No Disbursements Timing Authority 17 Interest Earned Very little Other Banks Gap Issues Problem Areas Addressed prior to closing Non Real Property Matters Need Real Estate involved Lack of statutory guidance 18
Forms in Materials Chicago Title Earnest Money Agreement Chicago Title Secured Indemnity Chicago Title Conditions of Escrow 19