Tip of the Month - October 2006 #1

Escrow 101 - Getting Started

Managing the Homeowners' Association Documents

One of the first critical steps after your escrow is opened is obtaining a complete package of Homeowners' Association (HOA) documents for the Buyer's review. The Purchase Agreement places this duty on the Seller; however it is customary for the escrow company to assist with this.

As the Seller, you should be aware of the importance of obtaining association documents so that the Buyer's time for review can begin. As the Buyer, your duty is to review the documents and to indicate approval or disapproval within a specified time period. Complying with these dates not only keeps the escrow moving smoothly; it may prevent one of the parties from being in default under the terms of the real estate contract. Such a default might create a reason for one of the parties to request cancellation of the escrow.

Here are some guidelines which will help both parties meet their timelines and stay on track with their escrow process.

• The Seller or his agent can help the escrow officer by providing complete and accurate HOA and management company information.
  
• Be mindful of the time periods expressed in the Purchase Contract for Seller's delivery of the documents to the Buyer and for Buyer's approval of the package after receipt. Your real estate agent can assist you with this and explain the requirements of the contract.
  
• The association or its management company will charge fees for the documents package. Even if the Seller thinks he has a set of the association's documents, the Purchase Contract provides that the Seller will order a new document package from the association to be sure that it is complete and complies with current law. Some required documents, such as Minutes of recent association meetings, are not likely to be in the Seller's possession.
  
• The escrow officer will require your signatures and funds sufficient to pay the document fees. Whether the seller deposits funds for the document fees or arrangements are made to advance funds from the Buyer's deposit, providing clear funds (such as a cashier's check) for the deposit into escrow allows the escrow officer to order the documents immediately rather than waiting for a personal check to clear. This saves valuable time, especially if you are hoping for a rapid closing.

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