Chicago Title recognizes that there is no such thing as an easy commercial transaction. Each transaction is fraught with unique problems that must be solved. The main role of the escrow officer becomes that of coordinator and problem solver. Often a transaction will become so complex that the escrow officer is the only person who has a grasp of the entire transaction and what is required to complete the closing. Handling commercial escrows requires unique skills on the part of the escrow officer, a good commercial escrow officer will develop a very loyal clientele.

by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Exhibit Book Index
  1. Types of Documents That May Be Required
  2. Reasons For Waiver of Documentary Transfer Tax
  3. Sample Amendment for Assignment of Buyer's Position
  4. Sample of Outline of a Sale Agreement
  5. Sample New Escrow Set-up Sheet
  6. Sample New Escrow Preliminary Settlement
  7. Sample New Escrow Cash Disbursements Sheet
  8. Sample New Escrow Need to Close List
  9. Sample First Amendment to Attorney Contract
  10. Sample Commercial Escrow Instructions
  11. List of Authority Documents Required
  12. Information for Replacement Property in an LLC Name Different Than the Taxpayer
  13. Sample Complex Amendment
  14. Information on Excel Formulas
  15. Sample Closing Package Cover Sheets
  16. Common Reasons Recordings are Pulled
Running a Commercial Escrow Unit
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201


Intellectually Challenging
Running a commercial escrow unit can be intellectually rewarding. A commercial escrow officer will be continually challenged. When a very complex transaction finally closes there is a great sense of accomplishment.

Coordinator & Problem Solver
There is no such thing as an easy commercial transaction. Each transaction is fraught with unique problems that must be solved. The main role of the escrow officer becomes that of coordinator and problem solver. Often a transaction will become so complex that the escrow officer is the only person who has a grasp of the entire transaction and what is required to complete the closing. Handling commercial escrows requires unique skills on the part of the escrow officer, a good commercial escrow officer will develop a very loyal clientele.

Job Security
The number of good commercial escrow officers is limited. A good commercial escrow officer is always in high demand. Due to the volume of fees that can be generated on a large commercial unit, commercial escrow officers with top skills and an existing clientele can command top salaries.


Very Stressful
Commercial transaction can be very complex and very time critical. Handling a commercial unit can be very stressful and can involve long working hours. Clients in commercial transactions want "everything now". Meeting the needs of all the clients in these situations, simulataneously, can sometimes seem overwhelming.

Time Intensive
When large commercial transactions approach closing (2-3 days), it is not uncommon for the escrow officer to devote several days to working on that file. It is also not uncommon that items such as amendments may be so complex they may take several hours to prepare. Often nights and weekends will need to be devoted to working on escrow files. An escrow officer on a large commercial unit may often work 60-80 hours per week. Without sufficient skilled backup, vacations and planned days off may have to be canceled and rescheduled around the whims of clients.

Skills Needed

Good Basic Escrow Foundation
A commercial escrow officer needs to equip themselves with the skills that are needed to meet the demands of a commercial unit. A good foundation in basic escrow skills is an essential starting point; but additional skills will allow the commercial escrow officer to meet the challenging demands of a commercial unit.

Real Estate or Business Law Class A commercial escrow officer is not an attorney, and does not practice law, but understanding the basics of contract law is essential. A course in business law and real estate law will give the commercial escrow officer a basic understanding of the law of contracts.

Basic Accounting Class A commercial escrow officer will be dealing with millions of dollars in receipts and disbursements when preparing settlements. Some settlements can become quite complex. A basic understanding of accounting principles is essential and can be achieved by taking an accounting class at a local junior college.

Computer Literacy An essential skill is computer literacy. You cannot efficiently operate a large commercial unit without a good understanding of computers. It is not sufficient to simply learn the basics of some standard program that your company has. You need to have a PC on your desk and you need to know how to use it.

Word-Processing & Spreadsheet Programs Expertise with a good word processing program and a spreadsheet program are critical. I use Word & Excel, so I will refer to these programs, but there are other similar programs. Document preparation and complex settlement issues are one of the major time consuming components of a commercial escrow officer's day. To minimize the time needed for these items, you must become a computer whiz. It is also important to be able to set up custom applications. The time put into learning these programs will provide enormous benefits.

E-Mail and the Internet E-Mail is becoming what faxes were a few years ago. More and more you will deal with clients via e-mail. It is not sufficient to just know how to send a note. It is important to learn how to attach files to your e-mail and how to convert files into other formats so the recipient can read them. You also need to know how to handle files that are attached to e-mail you receive. As technology progresses, you will need to know how to upload and download files from the Internet. The reality is that if you do not become computer literate, in a few years you will become obsolete .

Writing Skills Good writing skills are critical. A commercial escrow officer will often have to prepare very complex amendments, often taking several hours to prepare. Amendments will be discussed further in this presentation. Taking a business writing class can provide the skills to prepare amendments that are clear and concise. It can also reduce the amount of time it takes to prepare complex amendments.

Organizational Skills
It is critical to make a commitment to staying organized. Files must be kept in order, escrow check lists must be kept current. The philosophy for a successful commercial escrow unit is "do not leave until tomorrow what can be done today ". With the complexity of a commercial unit, a few phone calls can often generate many hours of work.

A Good Staff
Properly staffing a commercial unit is very important. The commercial escrow officer, no matter how skilled, cannot do it alone. A large commercial unit may need 5-6 assistants to operate efficiently. Assistants on a commercial unit will often be fully qualified escrow officers. It is important to critically evaluate the skills of the support staff and to make time for training, including computer classes.

Sales Skills
It is not sufficient to simply develop technical expertise, developing "people skills" is also important. Being the best technicial in the world is immaterial, if you do not have clients. Clients want to see a positive attitude and want quick response to their needs. Clients need to feel this transaction is the only one you have, and it is as important to you, as it is to them. Regardless of how stressful the day may be, the stress must be laid aside when dealing with clients. If a client asks for something by tomorrow morning that is a 3-4 hour project, you must keep any sense of irritation out of your voice. It is also important the client feels you truly understand their transaction.


Pre-Opening Issues
In General
It is common to have contact with the Buyer, Seller, attorney or brokers prior to the actual opening of escrow and prior to receiving a signed agreement.

Fee Quotes
The most common pre-opening request is an escrow fee quote. Escrow fees for commercial transactions can vary greatly depending on the transaction. Beware, once you quote a fee, you will have to honor it. If asked for a fee quote, try to get as much information as possible. When you quote a fee, clarify the fee is based on information they have provided you. Clarify that if you later discover the transaction requires extraordinary services, not contemplated when you provided the quote, there may be additional fees for these services.

Ordering a Preliminary Report/Dealing with Title Issues
In the past, title reports were not ordered until after escrow opened. This is no longer true for commercial properties. It is quite common the title report is ordered, often by the listing broker or the attorney, before a Buyer has been located. You may be called on to order a title report months before you open escrow. When pre-ordering a title report, assign an escrow number, coordinate getting the title report, copies of underlying items and plotted easements. When the title report comes, review it. If there are any critical title issues, bring this to the attention of the parties.

Supply Wording or Problem Solving
You may be called upon to help with wording to be incorporated into the agreement, especially with broker drawn agreements. The broker will call to discuss the handling of a specific issue or problem. Attorneys may also call to request a copy of your general provisions or to ask questions about your company procedures.

Receving Deposit Funds
Sometimes deposits will be received days and even weeks before an agreement is deposited. Sometimes the check will just "show up" or you receive a call to fax wire transfer instructions. When deposits are received prior to an agreement, it is important to do several things. You need to assign an escrow number, receipt in the funds and get a minimum amount of information on the transaction. You should also prepare investment instructions and fax them to the party who deposited the money. Often you receive large deposits that need to be placed in interest bearing accounts as soon as possible. Finally, notice all parties informing them of the conditions under which you are holding the funds. The notice should include the amount of the funds, the form of the funds (e.g. a wire transfer or a personal check ) and a clear statement that you do not have a signed agreement, therefore, the funds are simply being held on behalf of the part depositing them. Also, make it clear at any time prior to your receipt of signed escrow instructions, the party who deposited the funds can also unilaterally withdraw them.


Opening the Transaction
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Type of Agreements Received
The types of agreements you will receive vary greatly

Attorney Drawn Agreement
Attorney drawn agreements are the most common type of agreement for larger transactions (over 5 million), but are becoming more common for all commercial transactions. An attorney drawn agreement can be anywhere from 5-50 pages and will usually include a number of exhibits.

Brokerage Agreements
The larger brokerage firms have their own forms of agreement, usually 3-10 pages. These agreements may or may not include counter-offers or exhibits.

CAR Contracts
Some brokerage firms use standard CAR (California Association of Realtors ) or other types of agreements, usually 3-10 pages. These agreements may or may not include counteroffers. These agreements usually do not have exhibits, but often have supplemental forms attached.

Letter Agreements/Letter's of Intent
Sometimes the parties will provide a sequence of letters back and forth, which contain their agreement. Sometimes the letter will indicate it is only a letter of intent, and not a binding agreement, other times it may specifically state that the letter constitutes an agreement of the parties.

No Agreement
On rare occasion a client may come to your office, or call you, wanting to open a transaction where there is no form of written agreement between the parties.

Initial Review of the Agreement
Regardless of the form of the agreement receive (2 pages or 50 pages), it must be read entirely and must be understood. It is also important to do the following:

    Log Date Received
    Note the date the agreement was received. You may have to sign a receipt or some date calculations may commence from the date you received the agreement. It is embarassing if you cannot remember when you received the agreement.

    Compare Copies and Versions
    You may receive one copy from the Seller and one copy from the Buyer. Even with an attorney drawn agreement, make sure they are the same version. Also make sure one party has not made changes or cross outs. If you have different versions, or changes have been made, immediately notify all parties.

    Verify Signatures and Initials
    Check that all parties have signed and that any required sections are initialed.

    Check Exhibits and Addendum
    If exhibits are referred to, make sure they are attached. If not attached, notify all parties.
    If an addendum is referenced, make sure you have copies.

Complete Review of Agreement
When reviewing agreements, especially attorney drawn agreements, there will be certain key items that will be set forth and that you will be looking for:

    There will be various dates you need to be concerned with. Making note of the dates and making sure they are clear is very important. Sometimes one date will refer to another. For example, a contingency period may be 30 days from the effective date and the effective date is described as the date the last person signed the Agreement. You examine the agreement and the signature page does not show any dates by the signatures. You are unable to determine any of these dates so clarification will be needed.

Date of Agreement
Usually the date on the face page of the agreement, however, some broker agreements do not have a date.

Effective Date
Often the date on the face page will be defined as the effective date, however other times the Effective Date may be defined in another section of the agreement.

Acceptance Date
Often the agreement will contain a provision that it must be accepted by a certain date, or a fully signed copy must be deposited into escrow by a certain date, or the agreement is null and void. When you examine the agreement you discover that the conditions of the acceptance date were not satisfied. For example, the agreement provides that the Buyer must sign the agreement by 7/1/98 and the signature page shows the Buyer signed on 7/10/98. The acceptance date condition of the agreement was not satisfied and the agreement became null and void. This will need to be resolved with a reinstatement amendment. Often large law firms may even overlook this.

Contingency Dates/Performance Dates
The agreement will usually provide for time periods within which contingencies must be satisfied or items must be performed. Make sure these time periods are clear. If there is ambiguity in dates, they need to be cleared up immediately to avoid a later dispute.

Close of Escrow
Check that the date for close of escrow is clear. Beware, some agreements provide you cannot close prior to or after a specific date, without the written consent of all parties.


Type of Instructions to be Prepared
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Type of Instructions to be Prepared
The type of instruction you will prepare is not standard. It is going to depend on the type of agreement you received. Determing what type of instruction to prepare is a matter of experience.

No Instructions Sometimes, but very seldom, you will receive an agreement that is so complete you do not do anything. The agreement includes your general provisions, it includes your licensing requirements, it sets out the amounts of the commission and all other items you need. The only thing you need to prepare is a Deposit Investment Instruction and a W-9 form. I usually send out a notice of opening of escrow if there was not a separate acceptance page.

Minimal Instructions
The agreement is almost, but not quite, complete. Prepare an escrow instruction or a first amendment. Incorporate your general provisions, your licensing disclosure, a Cal-Firpta disclosure and a fax provision. If the amount of the commission was not set out in the agreement, prepare a commission order. Usually you will need to prepare a Deposit Investment Instruction and W-9 form.

Expanded Instructions
The agreement is almost complete, but the agreement has items that need to be clarified. You will then either prepare an escrow instruction or a first amendment incorporating your general provisions, your licensing disclosure, a Cal-Firpta disclosure and a fax provision. In addition, you will include the items that need to be clarified. As examples, the dates in the agreement were ambigous and you are now going to clarify them. The agreement became null and void because it was not deposited in time, and your are going to reinstate it; or a different escrow holder was referenced in the agreement, and you are now appointed as the escrow holder. If the amount of the commission was not set out in the agreement, you will prepare a commission order. Usually you will need to prepare a deposit investment instruction and a W-9 form.

Escrow Agreement
If there was not agreement, or there was simply some informal letters back and forth, you may
need to prepare an escrow agreement which will include all of the agreements of the Buyer and
Seller and will become their only contract. While sometimes we are put into this situation, it is
not one that we prefer to be in. In these situations you want disclaimers that you are not a
licensed broker or an attorney and that there may be many requirements in the sale of real property which you are unfamiliar with and which are not set out in the escrow instructions.

Initial Processing - Pre-Contingencies
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

In General
From the time the escrow is opened until contingencies are satisfied, there are usually a minimal amount of duties placed on the escrow holder. There are, however, a number of things the escrow holder can do to facilitate the transaction and to prepare for items that need to be done when contingencies are satisfied.

Coordinating Title Issues
Make sure all parties have an updated title report along with copies of items and plotted easemenets. When the title report is received, the escrow holder should carefully check it and coordinate any problems with the parties. Update the Need to Close List for title issues including inspection items, surveys requirements, owner's affidavit requirements, laundry leases, and unrecorded leases.

Deposits/Contingencies/Releases of Funds
Make sure the initial deposit is received in the form provided in the agreement and that the deposit is invested in an interest bearing account. If the deposit is not in when due, immediately notify all parties. Clients may presume you have a deposit if you have not advised them otherwise. Track the contingency date and remind the parties when specific contingencies periods are approaching. Coordinate with brokers and attorneys as to who will prepare the form for signing off contingencies. If the agreement provides for release of funds after certain events, make sure the parties are clear on what will be required to release funds. Make sure all parties understand you must have good funds to complete a release. Find out if the Seller wants a check or if funds are to be wire transferred. If the Seller reserves an option to exchange, discuss the issue of the release of the funds with them relative to the exchange.

Information Gathering
During the contingency period, gather the information you will need to move quickly when contingencies are satisfied:

Seller Authority Documents
If the Seller is an artificial entity, you need the appropriate authority documents. It is also important to have these prior to a release of funds. When you actually get authority documents you may discover the person signing for the Seller was not authorized, or that you have an incorrect signature block. As an example, you may discover a limited partnership. Seller must have consent of a majority of the limited partners.

Demand/Lien Information
Obtain information from the Seller for all existing liens which will have to be satisfied or removed through escrow. This includes infomration on trust deeds to be paid off, but also includes tax liens, judgments, defects in title or unrecorded leases. If a Seller is deceased, you may need prorate documents, or, a Seller in bankruptcy may need a court order.

Exchange and FIRPTA Information
If your Seller is doing a 1031 exchange, is not a California resident, or is not a US Taxpayer (for purposes of FIRPTA ), advise all parties that will be required to satisfy the particular situation.

Closing Figures
Start gathering closing figures such as tax prorate amounts (from the title report) and title premiums (get quotes directly from the title officer). You will probably not order demands or lien releases yet, but you can update your settlement sheet to indicate that these items are needed.

Buyer's Vesting Information
Make sure that Buyer, Buyer's agent and Buyer's attorney are advised. You need to know exactly how Buyer will take title and, if Buyer takes title as an artificial entity and you need appropriate authority documents. Make sure you get the correct signature block for the artificial entity. Verify if you are to prepare the assignment amendment or if the attorney will prepare it. Once contingencies are satisfied, you will also need the name and phone number of the Buyer's insurance agent.

Update Your Need to Close List
Keep your Need to Close List updated with notes as to when you requested certain items. Keep your set up sheet updated with the demand information.


Initial Processing - Post Contingencies
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Document Preparation
Coordinate with the attorney who prepared the agreement, when it is time to prepare documents. If a document was an exhibit to an agreemtn, usually the attorney who drew the agreement will provide the document. I tis preferable that all documents be given to escrow holder and escrow holder send them out for signature. Occasionally attorneys request 3 copies of all documents signed. Have a comprehensive list of all required documents, know who is to prepare each document and know who is responsible for sending out the document for signature. Make sure your Need to Close List incorporates checking in documents as they are returned to you.

Coordinate with Lender
Dealing with lenders in smaller commercial transactions is similar to most sales. Larger commercial transactions are quite different. In larger transactions escrow holder may have not contact with lender until 1-2 weeks prior to close. Lenders in large transactions often assign outside attorneys to handle the transaction. You may only have contact with the attorney. Sometimes there are two attorneys, one out of state, usually where the lender is located, and another in California, hired as local counsel. Try to get the following information from the attorney as soon as possible:

Lenders Title Requirements
Large lenders may have unusual title requirements. Lenders often want a proforma title policy ahead of time and may require unique endorsements. Lenders may submit sample wording for custom endorsements, which must be approved by the title company. Try to get the lender's requirements as soon as possible and confirm the title company can meet the lender's requirements.

Lender's Attorney Closing Instructions
The lender's attorney usually issues a final closing instruction letter, anywhere from 3 to 20 pages. You must comply with all of the requirements in this letter. Try to get a draft of the letter as soon as possible. If you receive a lengthy closing letter, make an outline. An outline will avoid having to continually re-read a lengthy letter and will help your assistants complete the closings.

Insurance Issues

Lender's Insurance Requirements
Sometimes the lender's attorney will deal directly with the insurance company. Make sure the lender and insurance agent are in contact with each other and the insurance company can meet the needs of the lender. The lender may provide you with its requirements, and you may coordinate with the insurance agent. Do not wait until the week of close to deal with insurance, it can delay the transaction.

Buyer Insurance Issues
If a Buyer is paying cash, they may handle insurance entirety outside of escrow. If insurance is handled outside of escrow, you want some acknowledgment of this from the Buyer. If you have nothing else in writing, make a notation on the estimated closing statement that Buyer signs.

Premiums in Escrow
Depending on the type of property, and the Buyer, the method of paying insurance premiums can vary. A large client may have master policies and no premiums will be paid in escrow. A Buyer may set up an installment and only a portion of the premium will be paid through escrow. Make sure the estimated closing statement is clear on what is being paid in escrow.

If Buyer or Seller are doing a 1031 exchange, make sure the intermediary has provided you the required documents. Know the requirements of Buyer's intermediary before you request that funds be wired. Reflect the name of the intermediary on the applicable closing statement and indicate that they are acting as intermediary.

Order demand statements from existing lenders approximately 2-3 weekes prior to close. On large transactions, you may deal with demand statements issued by an attorney. You may encounter issues such as large prepayment penalties, unusual interest calculations, partial reconveyances when the trust deed also encumbers other propert or "locked" loans, which are only discovered when you receive the demand statement. The demand should always be approved by the Seller. Do not wait until just prior to closing to order demands or these issues may hold up the closing.

Preparing Amendments
Even when both parties are represented by counsel, you will often need to prepare complex amendments. When preparing complex amendments, consider the following:

Think Before you Type
Before you type the amendment think about what you wan to say. If you have difficulty drafting an amendment, make an outline of the issues to be covered. Put the outline in a logical sequential order and use the outline as the basis for drafting the assignment.

Use Recitals
Incorporate recitals. Use the recitals to "tell the story". Telling the story first, makes it easier to set forth clear agreements.

Be Clear & Concise
Use short sentences and simple words. It is usually not necessary to use "legalese".

Have Reviewed
Have a colleague read the amendment and have them tell you what they think it says.


Final Processing (1 week before close)
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Very Hectic Time
The week prior to close can be very hectic. The escrow officer may spend 2-3 days working on just this transaction. During the last few days prior to close, it is not uncommon to receive 30-40 phone calls per day.

Many Last Minute Issues
Despite best efforts to coordinate items in advance, many issues will arise just prior to close. Be prepared for the closing, do as much as posible ahead of time, have a comprehensive, updated Need to Close List. At any time you must know what documents you have, what documents you need and what other items are required for closing. Make sure you have started your estimated closing statements with all available information.

Coordinate with Your Title Officer
You may not receive documents to be recorded until the day before, or the morning of closing. When you know closing is eminent, call your title officer and advise the estimated closing date. Review yoru list of items you will provide to title and make sure there is nothing else title will need.

Authority Documents
Submit Buyer and Seller authority documents to title as soon as possible. This will allow title to review these items and advise further requirements.

Closing Instruction Letters
Quickly get copies of attorney closing instructions to title, even if only in draft form. This includes closing instruction letters from Buyer, Seller and Lender's attorneys. The closing letters will usually include requirements for the title policy and special endorsements. Review the cost of title premiums and endorsements with title.

Discuss Special Recordings
When sending documents to title, include photocopies, especially when sending final recording documents at the last minute.

Escrow Documents
You will be receiving a large number of documents from multiple sources, often in counterpart and often with multiple copies of a specific document. Many of the final documents may not arrive until the morning of close.

Examine Carefully
Examine the documents carefully when received. Check to make sure the documents are signed properly; there are not changes, the document is the correct version (not a prior version), the notary has signed the acknowledgment and the notary seal is clear.

Use Document Numbers and Document Check List
In a transaction involving a large number of documents, assign document numbers. Prepare a separate document check list, which is numbered; then as you receive documents, write the document number in the upper right corner, in pencil, and put in numerical order. Have a separate document folder.

Separate Documents to be Recorded
As you receive documents requiring recording, make a copy of the document and in the upper right corner, in pencil, write "copy". Put the copy in your document folder, and place the original in a separate folder designated for documents to be sent to title.

Unexpected Documents
You may receive documents you did not expect, including documents to be recorded. When you receive documents not covered in the agreement, make sure the attorney closing letter instructs you specifically what you are to do with the document. Never presume a document in recordable form is to be recorded, it amy be intended the document be delivered unrecorded. Always have instructions for each document. If you receive a document from someone who is not a party to your escrow, you must have written authorization to use the document.

Lender's Documents
Loan documents for many commercial transactions will be signed outside of escrow. Whether signed outside of escrow, or in your office, often signing will happen at the last minute. The large the transaction, the greater the chance documents will arrive at the last minute.

Escrow Officer Does the Loan Sign-Up
Loan documents can consist of anything from just a note and trust deed, to a large carton with multitudes of documents. As in any loan sign-up make sure all documents are properly signed, and initialed, and all documents requiring notary are properly acknowledged. The loan package will almost always include instructions to escrow. Read these instructions carefully and comply with all requirements.

Returning the Documents to the Lender
If the lender requires documents be returned prior to funding, make certified copies of all documnets to be recorded, return the certified copies to the lender, and forward the originals to title. Many lender's, especially on larger transactions, will want confirmation that the documents are signed, and may want fax copies of signed pages, but will fund prior to the documents being returned.

Sign-Ups Handled Outside of Escrow
Sometimes when sign-up was done outside escrow, the escrow officer may receive the entire loan package from the borrower. This will require confirming to lender that escrow has the documents and faxing signature pages. The lender may fund prior to your returning the documents to them. Often however, the escrow officer will only receive the documents to be recorded. The most common documents involved are: deed of trust, security agreement (sometimes combined with the deed of trust ), assignment of leases/rents, UCC-1 to be recorded with the County Recorder and UCC-1 to be filed with the Secretary of State.

Attorney Closing Instruction Letters
In most large commercial transactions the Buyer's attorney and/or Seller's attorney and/or lender's attorney, will issue final closing instruction letters which can be from 2-20 pages. These letters must be read very carefully, they contain the escrow holder's final instructions.

Request Draft Copies
Request draft copies of the closing instruction letters a few days prior to close. You will often not get draft copies until the day prior to close, usually without exhibits attached, and final closing instruction letters often do not arrive until the morning of close.

Title Requirements and Closing Instructions
The lender's attorney letter and the Buyer's attorney letter will normally contain specific directions for the title policy, including approved exceptions, and endorsements. Immediately fax a copy to your title officer. Watch for endorsements you were unaware of, get pricing for these endorsements and immediately add them to your estimated closing statements. Some endorsements can be quite expensive. Closing instruction letters usually contain directions for documents deposited with you and delivery of documents when escrow is closed. Watch, closing instruction letters may contain conditions you were unaware of. Immdiately add new conditions to your Need to Close List.

Signing the Instruction Letter
The escrow officer, and sometimes the title officer, will usually need to sign a copy of the closing instruction letter before close and fax it back to the attorney. Usually the original instruction letters, with the escrow officer's signature, is included in the final closing package. Carefully review the instruction letter before you sign it. These letters can include provisions that are not correct or you cannot comply with. In these cases, the instruction letters must be modified before you sign it.

Conditions Requiring Approval to Close
The closing instruction letters usually contain a provision that just prior to close, you have to obtain either verbal or written (fax) authorization to proceed with the closing.

Making an Outline
If you receive a long closing instruction letter, make a working outline of the terms and conditions of the letter. By doing this, you will not overlook any of the closing requirements.

Coordinating Insurance
Sometimes the lender will deal directly with the insurance agent and sometimes escrow will coordinate insurance. Usually copies of insurance certificates are faxed to the lender for review, and it is common to have the insurance certificates corrected several times. The escrow acts as the coordinator between the insurance agent and the lender, making sure the lender is satisfied with the final form of insurance.

Estimated Closing Statements
The Buyber, Seller and attorneys will want detailed, estimated closing statements which may be updated and reissued a number of times. The escrow officer must be prepared to quickly make adjustments to closing statements.

Changes and Adjustments
Just prior to close there may be many changes made to your estimated statements. Escrow will receive updated rent rolls, requiring adjusting the rent prorates. Demand lenders must be contacted and demand figures verified and updated as necessary. Lender or the lender's attorney may not have all of loan closing figures until just prior to close. In large commercial transactions Buyer or Seller may submit bills for items occurring outside of escrow, which they want paid through escrow and reflected on their closing statements. It is quite common for legal fees to be paid through closing.

Use Caution - Avoid Shortages
The updates and changes to the estimated closing statement will happen at a rapid pace. Avoid errors on closing statements and avoid discovering you closed short. Always balance your case receipts and disbursements statement prior to close.

Obtain Signatures on Estimated Statements
Do not close until the Buyer and Seller have approved and signed the estimated closing statement and have faxed a copy back to you.

Wire Instructions
Both the Buyer and the lender may wire final funds to you. Provide correct wire instructions ahead of time. Many final disbursements will be by wire, including not only Seller's funds, but often Buyer's funds, broker's commission, legal fees and other items. Request complete wire instructions ahead of time.


Getting Ready for Recording
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Special Recordings
Special recordings are becoming more the norm than the exception. Make sure all parties understand ahead of time the effect of special recordings.

Advise Cut-Off Times
Inform all parties of cut-off time for receipt of the wires. Advise all parties cut-off
time for receipt of documents to be recorded. Advise all parties cut-off time for recording.

Inability to Disburse Funds
Advise all parties you cannot disburse funds until you have confirmation of recording and
this may be after your funds disbursement cut-off time.

Investment of Funds
When dealing with large amounts of money, even though you may hold the money only overnight, the client will expect interest.

Investment of Buyer and Lender Funds
If the Buyer and the lender deposit funds the day prior to close, unless instructed differently by the lender, the Buyer's funds and lender's funds will be invested in an interest-bearing account for the benefit of Buyer.

Investment of Seller's Funds and Demand Funds
Unless closing is at 8:00am or a special recording occurs very early in the day, usually confirmation is received too late to disburse the Seller's proceeds or to pay off the Seller's existing loan. These disbursements cannot be done until the next business day. The Seller's funds and the payoff funds must be invested overnight.

Investment on Day of Special Recording
When a special recording is likely, discuss investment of funds with Buyer and Seller. Advise Seller ahead of time that funds will not be disbursed on the day of close. If the special recording is late in the day, discuss with Buyer and Seller, or their counsel, what happens if funds are invested overnight, in Sellers name, but the recording was pulled.

Obtaining Investment Instructions & W-9 Forms
Investment of funds normally requires signed investment instruction and signed W-9 form. If you invested the Buyer's initial deposit, you will already have these forms from the Buyer. If you do not have these forms from the Buyer, you need to get them. If the possibility exists that the demand will not be paid on the day of close, or the Seller's funds will not be disbursed, also get investment instructions and a W-9 form from the Seller. Do not wait until the last minute; get these forms ahead of time.

Moving Funds Quickly
You will need to move funds in and out of investment accounts very quickly. Have an arrangement with your bank that will allow you to invest funds as late as possible in the day, and to withdraw as early as possible the next day. Also, if your company requires special approvals for the disbursement of large sums of money, make sure ahead of time that the appropriate people will be available to provide required approvals.

Authorizing Recording
When you have all documents, all funds and all conditions to closing are satisfied, you are ready to close.

Final Review
Take a few minutes and do a final review of your Need to Close List and your attorney closing instructions.

Obtain Final Authorizations to Close
If attorney closing instructions require either verbal or written approval, get the approval and document your file. If you received verbal approval, put a note in your file showing date, time and name of person who provided the approval. When receiving verbal approval, ask the person to follow up with an informal fax. Beware, you may have had ten conversations in the last several hours with lender's attorney, who has indicated they are quite anxious to close, do not interpret this as your final verbal authorization to close. Make sure the attorney is very clear you are asking for the final approval required by the closing instruction letter. It is common that final negotiations may be going on between the Buyer and the lender or the Buyer and Seller, which you are unaware of.

Completing the Closing
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

The clients will be anxious to get final confirmation of closing. Instruct title, even if they do not have final charges, to immediately confirm recording. If confirmation will be after normal business hours, provide title with an after hours phone number or your home number. When you receive confirmation, immediately notify all parties. You may need to take the file home, and call the clients from home.

Final Closing Statements
The clients will want final closing statements as soon as possible.

Close Investment Accounts
If closing occured at 8:00 am, you will need to immediately close the Buyers investment account. If closing occured as a sepcial recording the day prior, you will need to immediately close the Seller's investment account. Add the "interest earned" figures to the final closing statements.

Obtain Final Title Charges
Have title fax final closing charges, update your estimated closing statement with final charges and issue the Final Closing Statements.

Discovering Major Differneces to Estimated Statement
If you discover major changes between your estimated closing statements and final statements, immediately notify the parties. Even though you will include copies of the final statement in the closing packages, always fax copies as soon as they are ready.

Disbursement of Funds and Documents
Prepare ahead of time for disbursements that must be done immediately. Pre-do entires or documents for these critical disbursements. If management approvals are required, request them in advance. If multiple signatures are required, make sure in advance that authorized signers will be available.

Disbursment of Funds
Loan payoffs, Seller's net proceeds and broker's commission, are critical to disburse immediately. Other disbursments can usually be done after the critical disbursements have been completed. All disbursements should be done either the day of close, in the case of an 8:00am recording, or the day after close, in the case of a special recording.

Closing Document Packages
Closing document packages need to go out the day of close, in the case of an 8:00am recording, or the day after close, in the case of a special recording. Document packages will normally be prepared for Buyer, Buyer's attorney, Seller, Seller's attorney, lender, lender's attorney and brokers. Often, attorney closing instruction letters will provide that clients documents be delivered to the attorney.

    Pre-Do Packages if Possible
    Closing packages often include many documents and copying and preparing the closing packages can be a time consuming process. Start closing packages the night before close. Instruction letters may provide for dating some of the documents as of the day of close.

    Rule of Thumb
    All closing packages need to comply with the attorney closing instructions; if applicable, however, a rought rule of thumb is as follows:

      Originals to Buyer
      The buyer gets the original of documents that are for his benefit, such as assignment of leases, bill of sale, etc. If there is only one original, it goes to the Buyer, and all other parties get copies.

      Dealing with Multiple Originals
      When there are multiple copies of original documents, such as assignment of leases, the first original goes to the Buyer, the second original goes to the Seller, and if there is a third original, the escrow keeps it.

      Buyer and Seller Copies
      The Buyer and Seller usually get copies of all items, except for each others closing statements and expect for copies of new loan documents, which go only to the Buyer.

      Buyer and Seller Attorney Copies
      The Buyer's attorney gets copies of everything the Buyer received and an original signed copy of the Buyer's attorney closing instruction letter. The Seller's attorney gets copies of everything that the Seller received and an original signed copy of Seller's attorney closing instruction letter.

      Broker's Copies
      The brokers want copies of everything but especially the closing statements and the Firpta and Cal-Firpta affidavits. Often they will not be paid commission until they provide these items.

      Additional Documents to Include
      Along with the closing documents, provide photocopies of all signed agreements and amendments.

      Conformed Copies
      The parties will usually want conformed copies of recorded documents. These are not usually available at the time the closing packages are sent out. If conformed copies are not available, get recording numbers and provide these on a photocopy of the document. On the cover letter, advise parties conformed copies will follow.

      Cover Letters
      Cover letters can state generally "closing documents enclosed" however all original documents need to be specifically listed on closing cover letters, especially original notes.

      Review Closing Instruction Letters
      Before final closing packages are sent out, do a final review of the attorney closing instruction letters to make sure that all items are included.


File Order & Post-Closing Issues
by Kathy Robinson
Chicago Title
Phone: (619) 282-3200
Fax: (619) 282-5201

Clean up Time
When all disbursements are made and closing packages completed, take a few minutes to put the file in order and make post-closing notes.

    Keep Copies of All Items
    Make sure you have copies of all closing items, including cover letters.

    Post-Closing Notes
    If there are post closing issues, put a big note in the file describing the issues. Often files
    may be 3-4 separate files. Having a note on the top of a file, with specific instructions for
    post-closing items, can save time later. When the post-closing items are worked on, someone
    does not have to go through the entire file.

      Conformed Copies
      Have the post closing note describe very clearly who gets copies. If possible, prepare the cover letters for these items in advance. Document the file, and keep copies of cover letters, when the conformed copies are sent out.

      Funds Held
      If funds are held, make an extra copy of the instructions for the held funds. Put a note of explanation on top of the copy of the instructions, and put these items on the top of the file. If post closing items are on the top of a file it is easier to resolve these issues
      later. Make sure held funds are placed into an interest bearing account.

      Title Insurance Policy
      Put a note in file describing handling the title insurance policy. If Buyer's attorney closing instructions instruct you to deliver the policy to the attorney, make sure this is clearly indicated. Document the file and keep copies of cover letters, when the title policy is sent out.


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