Escrow is defined as the deposit of money and documents by two or more parties to a neutral third party. The third party (escrow company) holds the deposit until certain conditions are met. As a dual agent representing both sides of the agreement, the Escrow Settlement Agent acts in a fiduciary role.
The Escrow Agent:
- Does not favor any of the parties, but acts impartially towards all parties.
- Assures that all conditions will be met before the deeds are recorded.
- Holds all money and documents, therefore providing a form of consumer protection.
- Provides expertise in the preparation of documents and in understanding the title insurance process.
- Provides a clear, concise accounting of all funds involving the transfer process. Their statements can be used for tax purposes.
- Arranges for safe delivery of all funds and documents to the proper recipient.
The following is for informational purposes only. We recommend consulting an tax attorney or C.P.A in order to receive the best advice on how you should vest a title.
The manner in which title or ownership to real property is held is generally referred to as "vesting." Who holds title is referred to as the "entity." The entity is either a living person or persons OR a legally created entity such as a corporation, or partnership.
A single person is one who is defined as never been married. An unmarried person is one who has been married but now is legally divorced. Since California is a "community property state," marital status of principals is critical to obtain the proper documents necessary to transfer title for the seller, or for the buyer to acquire title properly.
TENANCY IN COMMON
Any number of persons can hold title as joint tenants. Each joint tenant has an equal interest in the property and an equal right to possession. Any co-owners interest may be conveyed separately by its owner. The conveyance by one owner, without the other owners' consent, breaks the joint tenancy and results in all owners becoming tenants in common. Upon a co-owner’s death, his/her interest cannot be disposed of by will. The surviving joint tenants automatically own the property by rights of survivorship.
Only husband and wife can hold title as community property and their ownership interests are equal. Both husband and wife have equal right of possession. Both husband and wife must join in conveyance of real property, as separate interests cannot be conveyed.
Upon the death of the husband or wife, one-half (1/2) of the property remains in the survivor and one-half (1/2) goes by will to the decedent’s devisees or by succession to the survivor.
As of January 1, 2005, persons registered with the State of California as domestic partners will be allowed to hold title as community property.
COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP
The only difference between community property and community property with right of survivorship is upon death of the spouse, the entire property remains with the surviving spouse.
VESTING IN A TRUST
A trust is a written agreement whereby trustees appointed in the agreement hold title to property for the benefit of the beneficiaries named therein. However, it is the trustees who hold title to the property and not the trust. A proper vesting would be: John Smith and Sally Smith, Trustees of the John Smith and Sally Smith Trust dated March 16, 2002.
There are other forms of vesting such as corporations, partnerships, and limited liability companies.
IMPORTANT CALIFORNIA REAL PROPERTY TAX DATES
||Real property taxes become a lien
First day to file statement of separate ownership
||Second installment real property taxes due
||Second installment taxes delinquent
||First installment real property taxes due
||First installment real property taxes delinquent, if not paid
IMPORTANT NOTES REGARDING TAXES
- In California, the tax year runs from July 1st of one year through June 30th (or to July 1st) of the next year. Be sure to verify this information if you process escrows on properties in other states.
- The first installment of taxes covers the period from July 1st through December 31st (or to January 1st). It is due November 1st and delinquent December 10th.
- The second installment of taxes covers the period from January 1st through June 30th (or to July 1st). It is due February 1st and delinquent April 10th.
- Each installment of taxes covers 6 months or 180 days. To prorate taxes, take the total amount of the bill being paid and divide by the number of days in the billing period.
- California property taxes may only be paid in full installments.
- Since taxes are due in the middle of the tax periods, they are sometimes paid in advance, and sometimes paid in arrears.
- The amount of each installment of taxes and the fact that the current taxes have or have not been paid, will be determined from the preliminary report for the subject property.
Thorough financial vetting and extensive personal background checks ensures that our clients get the professional service they expect and the dependable escrow company that a lender requires.