Buying a Home in California
Buyer's Inspections, Title Reports and Title Insurance, Loan Approval, Close of Escrow
By Rick CampbellBuyer's Inspections
Most contracts provide that the buyer may, at his own expense, have the house inspected by professionals. Typical inspections include pest (termite) inspection, contractor inspection (includes electrical, plumbing, heating systems), roof inspection, swimming pool inspection, foundation and soil inspection.
These inspections may reveal defects which were not evident to the buyer, and which were not disclosed in the seller's disclosure statement. Depending upon the terms of the Deposit Receipt, the buyer may request the seller to either fix the defect, or provide funds so that the buyer can correct the defect after close of escrow.
Your agent can assist you in choosing competent inspectors and will arrange their appointments and be present while the inspections are being conducted.
Some inspections become mandatory by the lending company. Most lending companies require, at least, a termite and a roof inspection before they will loan on the property.
Title Report and Title Insurance
In California the title of the property is searched by a title company and a preliminary report is issued on the condition of the title, for the buyer's approval. The report would include such information as present ownership, legal description of the property, any existing liens or unpaid taxes, any easements, and other covenants, conditions, or restrictions. A policy of title insurance will usually be issued at close of escrow. A title insurance policy insures the buyer's interest in his purchase, and the priority and validity of any loan. It is a contract to indemnify against loss through defects in the title.
Loan Approval
The buyer is responsible for applying for his loan. When the buyer's loan is approved and documents are ready for signature, the lender delivers the documents to the escrow holder, usually a week before the closing date. The buyer signs all loan documents ahead of the closing date, and the seller signs the deed a few days before closing. One or two days before closing the buyer delivers the remainder of the down payment to the escrow holder. To avoid delaying the closing, the buyer should transfer his down payment funds to a local bank well ahead of close of escrow.
Close of Escrow
After both the buyer and seller have complied with all agreed-upon terms, the escrow is "closed," and the deed is recorded with the County Recorder. The escrow company notifies the agents that the title is recorded and on that day the property belongs to the buyer. There is no need for a final meeting of the parties, since all documents had been signed prior to the close of escrow, and had been delivered to the escrow holder. Sometimes the seller needs to remain in the property after the close of escrow; this holding over is handled by a separate agreement. After the close of escrow the parties will be given a settlement statement, showing the charges and credits for each party.
Your title insurance officer can answer many of the frequently asked questions about title insurance, preliminary reports, and alternative ways of holding title to property in California. In a simple transaction, the buyer delivers the agreed upon funds to the escrow holder. The buyer also instructs the escrow holder to deliver to the seller the stated sum only after all conditions have been met, and title is vested in the buyer. Concurrently, the seller deposits his deed and other documents with the escrow holder, authorizing their delivery when the buyer has deposited the agreed purchase price. The contracting parties deposit funds or documents with the escrow holder, for delivery to the respective parties upon performance of all conditions of the agreement.
