Some of you in the real estate business are probably aware of this, but for others this information may be also be useful. E-mails have been circulating regarding King County Recorders office closures due to staffing furloughs. I called the recorders office to confirm and they sent me the letter dated December 11, 2008 to all the “recording customers.” In addition to normal recognized Holidays, the King County Recorders office will be closed the following 2009 dates:
Friday, January 2, 2009; Friday February 13, 2009; Friday, April 10th, 2009; Friday, May 22, 2009; Friday, June 19, 2009; Monday, July 6, 2009; Friday, September 4th 2009; Monday October 12, 2009; Wenesday, November 25, 2009; and Thursday, December 24, 2009.
From the Dec. 11th 2008 letter from the King County Records and Licensing Services Division:
“King County is facing an unprecedented $93.4 Million 2009 budget deficit. The 2009 budget deficit will be addressed through permanent reductions, efficiencies, salary and overhead savings and limited use of reserves. One of the strategies to offset costs is with reductions in employee hours worked. All King County employees, with the exception of essential safety and transit staff, will take ten unpaid furlough days in 2009.
The schedule of furlough days in 2009 is as follows: (see dates above)
Could someone with Foreclosure sale experience answer the question below? Or, at least discuss the possible outcome?
A homeowner has a Federal Tax lien against the property. The homeowner is delinquent on their mortgage and it goes to Foreclosure. At the Foreclosure sale, the property then goes back to the lender because there were no bidders for the home.
1) Is the Lender required to pay off the Federal Tax lien at Foreclosure or resale of the home?
2) If the Lender pays off the Federal Tax lien, what recourse does the Lender have against the borrower?
3) If the Lender pays off the Federal Tax lien, has the delinquent borrower just handed off their tax burden to the Lender and walked away with no liability?
I can’t make this stuff up. This happened today.
Agent: “Please send me the HUD when you have it ready.”
Escrow: “Sure, no problem.”
A short time later…..
Agent: “I got your e-mail and I want to know how much my buyer needs to bring to close.”
Escrow: “Did you review the HUD?”
Agent: “Yes, I have it right here, but I want to know how much my buyer needs to bring to close?”
Escrow: dead silence….a moment goes by, then…”It’s on the HUD.”
Agent: “But, I want to hear you say it.”
This place, while “very rough”, was not the worst. We’ve been to some very remote and isolated areas. While escrow firms go way out of their way to assist agents and loan officers in closing their transcations for our mutual clients, you can see why courtesy signings outside of normal business hours or far distances are not free.
We’ve signed clients from one extreme to the other: in jail at 9pm at night a couple days before Christmas when no one should be working, to the Columbia Basin dust bowl of Ephrata in eastern Washington; the Columbia Tower Club in downtown Seattle to everyone’s second office, Starbucks!
Please do not construe this as legal advice, it is not. The sampling below is general in nature and is referencing common escrow misconceptions we see in the course of conducting business.
Here are a few to get started.
1) Escrow firms produce and verify the validity of Legal Descriptions.
- Incorrect. In a sale it is the Seller’s responsibility to correctly identify the property that is being sold. The Buyer should verify that the legal description matches the property that they intend to purchase.
2) Escrow firms are bound by Northwest Multiple Listing Rules.
- No. Escrow is bound by the Escrow Agent Registration Act of Washington. Some managing real estate brokers erroneously believe otherwise. The Legislature also has determined that escrow officers are subject to the Consumer Protection Act.
3) Escrow firms never have conflicts of interest or problematic transactional issues.
- Untrue. Escrow firms commonly run into potential conflicts of interest, and problematic issues. The idea is to reduce the exposure of potential conflicts and issues as much as possible via a variety of means. For example, escrow commonly discloses those problems to the principals in the transaction so they can consult appropriate professionals and give escrow additional instructions on how to proceed.
4) Independent Escrow firms are sued more often than attorney-owned escrow firms.
- No. Ironically, Attorneys who own escrow firms have earned that privilege. (Source: Fred Phillips- Attorney, LPO Seminars).
5) Limited Practice Officers at escrow firms are tested & licensed by the Washington State Dept. of Licensing.
- No. The LPO exam is administered by the Washington State Bar Association twice a year. The pass rate has been under 30 % for quite a while, but has recently improved. LPOs are regulated by the Washington State Bar Association and Washington State Supreme Court. Independent Escrow Companies are regulated by the Washington State Dept. of Financial Institutions.
6) Escrow staff work at all hours of the day and evening.
- Traditionally, no. Most are open from 9-5pm. From a practical standpoint, ownership does work at all times (speaking only for our company). Escrow firms have banking hours for a reason. Escrow firms are closed when the there are Federal holidays and when the Federal Reserve is closed. The receipt of lender wires occurs up to specific times in a business day, typically until about 2 pm. This may depend upon the trust account banking policy the escrow firm has with its own bank.
7) Loan officers and real estate agents are principals in the escrow transaction.
- Incorrect. The buyer(s) and seller(s) are the principals and escrow can only be instructed by these parties. Loan officers and agents cannot instruct escrow or influence the escrow transaction in any manner.
- Example: a loan officer who calls escrow to request proceeds check mailed to their customer instead of being wired to the customer’s bank as the client previously instructed escrow in writing.
- Example: a real estate agent/Broker instructing escrow to refund an earnest money check to a borrower (buyer) without a rescission agreement.
8) Escrow staff can produce, prepare and/or instruct their clients (buyer or seller) on drafting purchase & sale addenda for common things such as extending a closing date.
- No. This is tantamount to practicing law and may be a conflict of interest. Only a licensed real estate agent, attorney or principal parties can draft addenda.
9) Loan documents are almost always perfect when submitted to escrow.
- No. Loan documents frequently and frustratingly have errors, such as incorrect fees, incorrect name spellings, incorrect vesting, among other errors.
- Loan documents take time to prepare after receiving them from the lender, particularly if docs are re-drawn several times. This is a reason many escrow firms refuse to set up signing appointments with clients (who sometimes have to take off work early or are inconvenienced in other ways) until the docs are at escrow, prepared and confirmed correct with the borrower, mortgage broker and real estate agent.
10) Escrow staff have no deadlines.
- Emphatically incorrect. Escrow staff are looking at the clock all day long. In our State, disbursing funds cannot take place until confirmation that the documents have been recorded.
- Escrow staff must get loan payoffs to Fed Ex or UPS on time. This is a prime reason our company is located just blocks away from the major UPS terminal for Snohomish Co. It allows just that much more flexibility in TIME. Time is precious in the escrow business.
- There are many other time-sensitive tasks as well.
11) Once escrow has been opened and is progressing towards closing, Escrow cannot refuse to close a transaction.
- Incorrect, and it does happen.
One of the functions of escrow is to pay lienable utilites. Lienable. There is a large segment of the real estate community that interprets that to mean all utilitites. It does not mean all utilities. In addition, escrow firms do not have access to seller’s account information. Sellers and/or their listing agents need to provide this information to escrow.
While Form 22K is clear in stating “lienable” utilities, there is much confusion by the real estate agents as to what constitutes a lienable utility. Escrow Instructions by any escrow firm or escrow department within a title company are very clear. All unpaid utilities not paid at closing by the escrow company are to be paid by the respective parties.
Which utilities are lienable (subject to property location)?
- Seattle Public Utilities
- Seattle City Light (power)
PUD and Puget Sound Energy (PSE) do not provide final utility bills to escrow and they are not lienable. PUD and PSE will send the final bill to the seller. Homeowners are responsible for paying all utilies, including phone, cable, garbage and so on.
To help your clients obtain a smooth and trouble-free closing, please have the Form 22K filled out properly with correct account information. Agents can avoid post closing phone calls from clients who are upset about utility bills that another party is responsible for by clarifying how the bills are handled during the escrow process. If you are uncertain or have questions, please contact your escrow office as they are eager to help you and the escrow staff avoid post-closing problems.
Preface: Last week Rhonda Porter brought up the topic of “Are you leaving too much on the table.