Over-the-shoulder view of printed MLS listing

Your Guide to Common Title and Escrow Claims

The home buying process can be confusing — and not just for first time buyers! There is a bit of a language barrier for those outside our industry. In previous blogs, we have covered title insurance, cyber security tips, and complications in the home buying process. In this blog, we will cover closing escrow and common claims or issues that can arise. 

Escrow: What Does It Mean?

In escrow, an earnest money deposit is paid as a way to protect all parties if the purchase cannot be completed for various reasons. That payment is held in escrow, usually 5-10 days from the fully signed contract until the day of closing. Once the purchase is final, the earnest money is applied to the buyer’s funds at closing.

The money is held to protect both parties and ensure all contractual conditions and home improvements are met prior to handing over the keys.

Depending on where you live, the middle man at this stage might be an individual escrow agent, an attorney, or a title company like Monarch Title Company.

Sending Earnest Money Prior To Escrow

In order to go into escrow, you need to make an earnest money deposit. This can be in the form of a personal check, a bank-issued check, or a certified check, each of which have their own particular process.

We know that running back and forth between the bank and your closing agent is difficult. That’s why Monarch Title Company provides a modern solution: online earnest deposits, which offer you the convenience of being able to process a secure payment online. 

Common Escrow Claims

Certain issues or claims can arise that will cause you to “fall out of escrow.” These could be issues on the loan, on the property, or with the claim to ownership. There are a few common issues:

Home Inspection Shows Problems

Some of the most common problems that cause home buyers to fall out of escrow are unaddressed problems revealed with the home upon inspection. Most offers include a home inspection contingency, so that if the inspection reveals a serious problem, the buyer can back out without losing their earnest money deposit. 

If the buyer decides not to back out, they will likely need to renegotiate who is responsible for the fixes, and it can delay the closing.

Financing Falls Through

Most savvy home buyers make sure to get a preapproved loan. However, situations can change. The interest rate could increase, the buyer could lose their job, or your credit score could go down, each of which can cause someone to fall out of escrow.

Issues With The Title

The title search happens during escrow. So if any issues arise with the title — unknown heirs having claim to the property, unknown liens that have been taken out, etc. — this would impact closing. We’ve covered issues that can come up during the title search extensively in previous blogs. 

Monarch Title Can Help With Your Title And Escrow Claims!

No matter your situation at closing, Monarch Title Company can help! Our company has over 20 years of experience in the industry, and our closers have seen it all! There are other issues that can arise during the title and escrow process, too. Be sure to check out ALTA’s Title and Escrow Claims Guide as a resource, which is updated annually with the latest information on relevant cases and claims. But when in doubt, talk with a professional.