Understanding Escrow

UNDERSTANDING ESCROW

In an escrow transaction, a third party carries out the written instructions relating to the sale or transfer of property for the principal individuals. The escrow holder acts as a stakeholder for both the buyer and seller, makes the requests for titles and documents, completes the required forms and delivers them to all parties at closing. If new financing is to be arranged, it is the responsibility of the buyer and the buyer's agent to make necessary arrangements and provide real estate transaction documentation to the escrow holder before property can be transferred. The agent, lender and escrow holder work closely together to make sure that the buyer is taken care of and all elements of the escrow are satisfied. Common Forms of Ownership

TITLE INSURANCE POLICIES

A Title Insurance Policy protects the purchase property, mortgage holder or others against losses. Standard coverage policies (CLTA, CLTA Owners Insurance and CLTA Lenders Insurance) and ALTA Residential Owners Policies are available. These protect against some but not all possible losses and should be researched carefully with a professional.

WAYS OF HOLDING TITLE

It is very important to consider the implications and options for holding title to property before buying. Because of the legal implications, your real estate professional is prohibited from advising you directly on this issue, so it's especially important for you to become aware of these options and to consult an attorney if need be to determine the best form of ownership for you. The method of vesting property obviously has significant implications in the event of the death of one of the owners.

Sole Ownership describes ownership by a single individual or married individual who acquires title in his/her name alone.

Community Property means equal interest ownership by only a husband and wife. Upon a co-owner's death, 1/2 goes to the survivor and 1/2 goes by will or succession to others (Consult an attorney for complete information.)

Tenancy in Common can describe any number of persons, including a husband and wife. Each co-owner has a separate legal title to their interests and upon a co-owner's death there is no right of survivorship. The interest in the property passes by will to his/her designees or heirs.

Joint Tenancy can include any number of persons, but there is only one jointly-held title to the property. The last survivor owns property in severalty in the event of death(s). Additional ways of vesting title include a Corporation, a legal entity of one or more shareholders), a Partnership, an association of co-owners in a for profit business, and a Trust, an arrangement in which legal title is granted to a trustee to manage for the trust beneficiaries.

Check out the graph below to consider the differences between Joint Tenancy, Tenancy in Common and Community Property.

Common Forms of Ownership

	TENANCY IN COMMON	JOINT TENANCY	COMMUNITY PROPERTY
Parties	Any number of persons (can be husband and wife)	Any number of persons (can be husband and wife)	Only husband and wife
Division	Ownership can be divided into any number of interests, equal or unequal	Ownership interests cannot be divided	Title is in the "community" (Similar to title being in a partnership)
Title	Each co-ower has a separate legal title to his undivided interests	There is only one title to the whole property	Equal right of possession
Possession	Equal right of possession	Equal right of posession	Both co-owners must join in conveyance of real property. Separate interests cannot be conveyed
Conveyance	Each co-owner's interests may be conveyed separately by its owner	Conveyance by one co-owner without the others breaks the joint tenancy	Purchaser can only acquire whole title of community; cannot acquire a part of it
Purchaser's Status	Purchaser becomes a tenant in common with the oter co-owners	Purchaser's becomes tenant in common with the other co-owners	On co-owner's death, 1/2 goes to survivor in severalty. Up to 1/2 goes by will or succession to others (consult attorney with specific questions)
Death	On co-owner's death, his interest passes by will to his devises or heirs. No survivorship right	On co-owner's death, his interest ends and cannot be willed. Survior owns the property by survivorship	On co-owner's death, 1/2 Goes to survivor in severalty. Up to 1/2 goes by will or succession to others (consult attorney with specific questions)
Successor's Status	Devises or heirs become tenants in common	Last survivor owns property in severalty	If passing by will, tenancy in common between devisee and survivor results
Creditor's	Co-owner's interest may be sold on execution sale to satisfy his creditor. Creditor becomes a tenant in common	Co-owner's interest may be sold on execution sale to satisfy his credtior. Joint tenancy is broken, creditor becomes a tenant in common	Co-owner's interests cannot be seized and sold separately. The whole property may be sold tosatisfy debts of either husband or wife, depending on the debt(consult attorney with specific questions)
Presumption	Favored in doubtful cases except husband and wife (see Community Property)	Must be expressly stated and properly formed. Not favored	Strong presumption thatproperty acquired by husbandand wife is community

This form is provided for information purposes only. Specific questions regarding actual real estate transactions should be directed to your C.P.A.

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