The Escrow Checklist

The escrow process involves multiple steps, deadlines, and documentation that ensure the successful transfer of property ownership. To keep the transaction on track, it’s essential to have a clear guide outlining the required and optional documents needed to finalize the deal. This lesson introduces the Escrow Checklist, a comprehensive tool designed to help you and your clients navigate the process efficiently.

By the end of this lesson, you’ll know how to use the checklist to stay organized, track progress, and ensure no critical steps are missed. A downloadable PDF version of the checklist is provided for easy reference.

Why Use an Escrow Checklist?

1. Stay Organized: Manage multiple tasks and deadlines efficiently.
2. Ensure Compliance: Verify that all legal and contractual requirements are met.
3. Provide Clarity: Keep your clients informed of their responsibilities during escrow.
4. Avoid Delays: Identify missing documents or incomplete steps early to prevent last-minute issues.

How to Use the Escrow Checklist

The checklist is divided into Required Documentation and Optional Documentation, along with a section to track important Escrow Deadlines. Use it to:

• Confirm that all necessary paperwork is submitted.
• Monitor the status of inspections, contingencies, and funding.
• Communicate next steps to your client clearly and confidently.

Key Sections of the Escrow Checklist

1. Required Documentation

The following documents are essential to completing the escrow process:

• Purchase Agreement: Signed by both parties and submitted to escrow.
• Earnest Money Deposit (EMD): Proof of deposit into the escrow account.
• Preliminary Title Report: Issued by the title company to confirm ownership and reveal any liens or encumbrances.
• Loan Approval Letter: Final loan approval from the buyer’s lender (if applicable).
• Property Disclosures:
  • Seller-provided disclosures about the property’s condition (e.g., structural issues, environmental concerns).
• Inspection Reports:
  • General property inspection.
  • Additional inspections as needed (e.g., pest, roof, HVAC).
• Appraisal Report: Required by the lender to confirm the property’s value matches the purchase price.
• Contingency Removal Forms: Signed forms to release contingencies (e.g., inspection, financing).
• Final Walkthrough Confirmation: Document signed by the buyer confirming the property is in the agreed-upon condition.

2. Optional Documentation

While not always required, these documents can be helpful or necessary in certain transactions:

• Proof of Repairs: If the seller agreed to make repairs during escrow, include invoices or receipts.
• Tenant Lease Agreements: For income properties, copies of existing lease agreements to verify rental terms.
• Rent Roll: Summary of rental income for the property.
• Estoppel Certificates: Signed statements from tenants confirming lease terms and conditions.
• Home Warranty Agreement: If applicable, include proof of a home warranty provided by the seller.
• HOA Documents: For properties in a homeowner’s association, include bylaws, CC&Rs (Covenants, Conditions, and Restrictions), and financial statements.

3. Escrow Deadlines

Tracking deadlines ensures all tasks are completed on time:

Pro Tip: Use the WE ARE REALTY platform to set reminders for key deadlines and track document submissions.

Using the Downloadable Checklist

The Escrow Checklist PDF provides a ready-to-use guide that you can print, share with your client, or upload to your digital tools for easy access.

How to Access and Use the Checklist:

1. Download the PDF from the link provided in this lesson.
2. Review the checklist at the start of escrow and update it regularly as tasks are completed.
3. Share the checklist with your client to keep them informed and involved.

Case Study: Using the Escrow Checklist

Scenario: A buyer purchasing a 4-unit residential income property encounters delays during escrow due to missing documentation.

Solution:

1. The agent introduces the Escrow Checklist, identifying missing inspection reports and estoppel certificates.
2. Tasks are assigned to the appropriate parties (buyer, seller, and escrow officer).
3. Using the checklist, the agent ensures all documents are submitted within the agreed timelines.

Result: Escrow closes on schedule, with the buyer fully informed and satisfied.

Conclusion

The escrow process involves many moving parts, but the Escrow Checklist simplifies the journey by keeping everyone organized and on track. By ensuring all required and optional documents are submitted and monitoring deadlines, you can provide a seamless experience for your clients.

Next Steps:

1. Download the Escrow Checklist PDF and review its components.
2. Practice using the checklist with a hypothetical transaction to familiarize yourself with its structure.
3. Introduce the checklist to your clients during their next escrow to enhance communication and transparency.

In the next lesson, we’ll explore navigating property inspections, including how to prepare for common issues and negotiate repairs.