Getting to escrow is exciting. You’re a step closer to the closing table, and the day the keys change hands. But, unfortunately, there’s still a chance for something to bump in the night and derail the deal. You can’t always see what’s lurking in the shadows, but you should know about the issues—ranging from inconveniences to criminal offenses—that can come up.
Wire Fraud
Perhaps the most frightening issue of all is wire fraud. In one common scam, a hacker poses as your real estate agent, lender, or closing company and sends you false directions for paying your closing costs. These directions may come through an email or text message from what appears to be a valid account. When you click a link or follow the wire instructions, you send your money to the hacker’s account, and it’s usually gone forever.
Owner Surprises
Buyers often assume the seller has the legal right to sell the property, but that’s not always the case. In some cases, the seller may not realize that a previous spouse or siblings are still listed as legal owners of the property who need to sell their shares or agree to the sale. Sometimes a seller attempts to sell a property they’ve never owned and have no rights to. A title search should reveal the rightful owner—someone who has an interest in the property because they purchased or inherited it at some point.
Incomplete Paperwork
Selling and buying a house requires a lot of paperwork—a loan application, a mortgage note, a title and deed, closing disclosures, and more. Mistakes happen. Someone may misspell a name or miss a signature. The loan amount may be missing a number or have too many zeros. These mistakes can delay the closing, and someone may need to pay a penalty for each day the closing is delayed.
Pop Up Judgements
Sometimes the title company uncovers judgments the seller never knew existed. Perhaps they forgot to pay property taxes one year or had a contractor file a lien on the property for an unpaid bill. The seller may have gone through a divorce and neglected to remove the previous spouse’s name from the deed. Fortunately, these issues can be easy to remedy, but they can delay closing and lead to penalty fees.
House Inspection Woes
If the contract includes a home inspection contingency, the buyer may have the right to back out of the deal if an inspector finds signs of structural damage or an issue with the electrical, plumbing, or HVAC systems. Sometimes the buyer chooses to back out of the deal, but it’s not always the end of the world. You may be able to negotiate the repairs.
Buyers Who Don’t Qualify
Between stricter guidelines for loans and rising interest rates that price buyers out of the market, there’s a greater chance a buyer may not get the final approval for a mortgage. If they don’t have enough cash on hand to make a bigger down payment, the deal can fall through. Finding this out during the escrow process is disappointing for everyone involved since they have to start over.
When you’re forced to deal with an escrow monster, it helps to know you have the right team of professionals on your side. At New Venture Escrow, our team has the industry knowledge and experience to guide you through the closing process. We’ve been serving clients throughout California for more than a decade and introduced innovative services that speed up the closing process and make it more secure. Learn more about our industry-leading technology and services.
