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HomeMy WebLinkAboutAttachment E, Exhibit 1, K - General Escrow ProvisionsEXHIBIT K General Escrow Provisions 5764- 44062\APB360\AGRM I \I 136768.6 5/1/13 Escrow General Provisions - REVISED JUNE 20, 2011 Receipt of these provisions deems acceptance of the terms. Please read for general information about the escrow process. 1. SPECIAL DISCLOSURES: A. DEPOSIT OF FUNDS & DISBURSEMENTS Unless directed in writing to establish a separate, interest - bearing account together with all necessary taxpayer reporting information, all funds shall be deposited in general escrow accounts in a federally insured financial institution including those affiliated with Escrow Holder ("depositories"). All disbursements shall be made by Escrow Holder's check or by wire transfer unless otherwise instructed in writing. The Good Funds Law (California Insurance Code 12413.1) mandates that Escrow Holder may not disburse funds until the funds are, in fact, available in Escrow Holder's account. Wire transfers are immediately disbursable upon confirmation of receipt. Funds deposited by a cashier's or certified check are generally available on the next banking day following deposit. Funds deposited by a personal check and other types of instruments may not be available until confirmation from Escrow Holder's bank which can vary from 2 to 10 days. B. DISCLOSURE OF POSSIBLE BENEFITS TO ESCROW HOLDER As a result of Escrow Holder maintaining its general escrow accounts with the depositories, Escrow Holder may receive certain financial benefits such as an array of bank services, accommodations, loans or other business transactions from the depositories ("collateral benefits "). All collateral benefits shall accrue to the sole benefit of Escrow Holder and Escrow Holder shall have no obligation to account to the parties to this escrow for the value of any such collateral benefits. C. MISCELLANEOUS FEES Escrow Holder may incur certain additional costs on behalf of the parties for services performed, or fees charged, by third parties. The fees charged by Escrow Holder for services including, but not limited to, wire transfers, overnight delivery/courier services, etc. may include a mark up over the direct cost of such services to reflect the averaging of direct, administrative and overhead charges of Escrow Holder for such services which shall, in no event, exceed $10 for each markup. D. METHOD TO DELIVER PAYOFF TO LENDERS /LIENHOLDERS To minimize the amount of interest due on any existing loan or lien, Escrow Holder will deliver the payoff funds to the lender /lienholder as soon as Escrow Holder is able after confirmation of recordation /close of escrow and as demanded by the lender /lienholder using (a) personal delivery, (b) wire transfer, or (c) overnight delivery service, unless otherwise directed in writing by the affected party. Certain payments such as home equity line of credit payoffs ( "HELOCS ") may require additional time to process. 2. PRORATIONS & ADJUSTMENTS The term "close of escrow" means the date on which documents are recorded. All proration and /or adjustments shall be made to the close of escrow based on the number of actual days, unless otherwise instructed in writing. 3. CONTINGENCY PERIODS Escrow Holder shall not be responsible for monitoring contingency time periods between the parties. The parties shall execute such documents as may be requested by Escrow Holder to confirm the status of any such periods. 4. REPORTS a. Preliminary Report - Escrow Holder has neither responsibility nor liability for any title search that may be performed in connection with the issuance of a preliminary report. b. Other Reports -As an accommodation, Escrow Holder may agree to transmit orders for inspection, termite, disclosure and other reports if requested, in writing or orally, by the parties or their agents. Escrow Holder shall deliver copies of any such reports as directed. Escrow Holder is not responsible for reviewing such reports or advising the parties of the content of same. 5. INFORMATION FROM AFFILIATED COMPANIES Escrow Holder may provide the parties' information to and from its affiliates in connection with the offering of products and services from these affiliates. THIS COMPANY CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CAUFORNIA DEPARTMENT OF INSURANCE. Copyright Ink Page l of 6. RECORDATION OF DOCUMENTS Escrow Holder is authorized to record documents delivered through escrow which are necessary or proper for the issuance of the requested title insurance policy(ies). Buyer will provide a completed Preliminary Change of Ownership Report form ( "PCOR'). If Buyer fails to provide the PCOR, Escrow Holder shall close escrow and charge Buyer any additional fee incurred for recording the documents without the PCOR. Escrow Holder is released from any liability in connection with same. 7. PERSONAL PROPERTY TAXES No examination, UCC search, insurance as to personal property and /or the payment of personal property taxes is required unless otherwise instructed in writing. 8. REAL PROPERTY TAXES Real property taxes are prorated based on the most current available tax statement from the tax collector's office. Supplemental taxes may be assessed as a result of a change in ownership or completion of construction. Adjustments due either party based on the actual new tax bill issued after close of escrow or a supplemental tax bill will be made by the parties outside of escrow and Escrow Holder is released of any liability in connection with such adjustments. The first installment of California real property taxes is due November 1st (delinquent December 10th) and the second installment is due February 1st (delinquent April 10th). If a tax bill is not received from the County at least 30 days prior to the due date, buyer should contact the County Tax Collector's office and request one. Escrow Holder is not responsible for same. 9. CANCELLATION OF ESCROW a. Any party desiring to cancel this escrow shall deliver written notice of cancellation to Escrow Holder. Within a reasonable time after receipt of such notice, Escrow Holder shall send by regular mail to the address on the escrow instructions, one copy of said notice to the other party(ies). Unless written objection to cancellation is delivered to Escrow Holder by a party within 10 days after date of mailing, Escrow Holder is authorized, at its option, to comply with the notice and terminate the escrow. If a written objection is received by Escrow Holder, Escrow Holder is authorized, at its option, to hold all funds and documents in escrow (subject to the funds held fee) and to take no other action until otherwise directed by either the parties' mutual written instructions or a final order of a court of competent jurisdiction. If no action is taken on this escrow within 6 months after the closing date specified in the escrow instructions, Escrow Holder's obligations shall, at its option, terminate. Upon termination of this escrow, the parties shall pay all fees, charges and reimbursements due to Escrow Holder and all documents and remaining funds held in escrow shall be returned to the parties depositing same. b. Notwithstanding the foregoing, upon receipt of notice of cancellation by a seller in a transaction subject to the Home Equity Sales Contract law (CC §1695 et seq.), Escrow Holder shall have the right to unilaterally cancel the escrow and may return all documents and funds without consent by or notice to the buyer. 10. CONFLICTING INSTRUCTIONS & DISPUTES If Escrow Holder becomes aware of any conflicting demands or claims concerning this escrow, Escrow Holder shall have the right to discontinue all further acts on Escrow Holder's part until the conflict is resolved to Escrow Holder's satisfaction. Escrow Holder has the right at its option to file an action in interpleader requiring the parties to litigate their claims /rights. If such an action is filed, the parties jointly and severally agree (a) to pay Escrow Holder's cancellation charges, costs (including the funds held fees) and reasonable attorneys' fees, and (b) that Escrow Holder is fully released and discharged from all further obligations under the escrow. If an action is brought involving this escrow and /or Escrow Holder, the party(ies) involved in the action agree to indemnify and hold the Escrow Holder harmless against liabilities, damages and costs incurred by Escrow Holder (including reasonable attorneys' fees and costs) except to the extent that such liabilities, damages and costs were caused by the negligence or willful misconduct of Escrow Holder. 11. USURY Escrow Holder is not to be concerned with usury as to any loans or encumbrances in this escrow and is hereby released of any responsibility and /or liability therefore. THIS COMPANY CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE. Copyright Info Page 2 of 4 12. AMENDMENTS TO ESCROW INSTRUCTIONS Any amendment to the escrow instructions must be in writing, executed by all parties and accepted by Escrow Holder. Escrow Holder may, at its sole option, elect to accept and act upon oral instructions from the parties. If requested by Escrow Holder the parties agree to confirm said instructions in writing as soon as practicable. The escrow instructions as amended shall constitute the entire escrow agreement between the Escrow Holder and the parties hereto with respect to the subject matter of the escrow. 13. FIRE, HAZARD OR LIABILITY INSURANCE POLICIES In all matters relating to fire, hazard or liability insurance, Escrow Holder may assume that each policy is in force and that the necessary premium has been paid. Escrow Holder is not responsible for obtaining fire, hazard or liability insurance, unless Escrow Holder has received specific written instructions to obtain such insurance prior to close of escrow from the parties or their respective lenders. 14. COPIES OF DOCUMENTS; AUTHORIZATION TO RELEASE Escrow Holder is authorized to rely upon copies of documents, which include facsimile, electronic, NCR, or photocopies as if they were an originally executed document. If requested by Escrow Holder, the originals of such documents shall be delivered to Escrow Holder. Escrow Holder may withhold documents and /or funds due to the party until such originals are delivered. Documents to be recorded MUST contain original signatures. Escrow Holder may furnish copies of any and all documents to the lender(s), real estate broker(s), attorney(s) and /or accountant(s) involved in this transaction upon their request. Delivery of documents by escrow to a real estate broker or agent who is so designated in the purchase agreement shall be deemed delivery to the principal. 15. EXECUTION IN COUNTERPART The escrow instructions and any amendments may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute the same instruction. 16. TAX REPORTING, WITHHOLDING & DISCLOSURE The parties are advised to seek independent advice concerning the tax consequences of this transaction, induding but not limited to, their withholding, reporting and disclosure obligations. Escrow Holder does not provide tax or legal advice and the parties agree to hold Escrow Holder harmless from any loss or damage that the parties may incur as a result of their failure to comply with federal and /or state tax laws. WITHHOLDING OBLIGATIONS ARE THE EXCLUSNE OBLIGATIONS OF THE PARTIES ESCROW HOLDER IS NOT RESPONSIBLE 70 PERFORM THESE OBLIGATIONS UNLESS ESCROW HOLDER AGREES IN WRITING. A. TAXPAYER IDENTIFICATION NUMBER REPORTING Federal law requires Escrow Holder to report seller's social security number or tax identification number (both numbers are hereafter referred to as the 'TIN"), forwarding address, and the gross sales price to the Internal Revenue Service ( "IRS"). To comply with the USA PATRIOT Act, certain taxpayer identification information (including, but not limited to, the TIN) may be required by Escrow Holder from certain persons or entities involved (directly or indirectly) in the transaction prior to closing. Escrow cannot be closed nor any documents recorded until the information is provided and certified as to its accuracy to Escrow Holder. The parties agree to promptly obtain and provide such information as requested by Escrow Holder. B. STATE WITHHOLDING & REPORTING In accordance with Section 18662 of the Revenue and Taxation Code (R &TC), a buyer may be required to withhold an amount equal to 3 1/3% (.0333) of the sale price, or an optional gain on sale withholding amount certified by the seller in the case of a disposition of California real property interest by either: 1. A seller who is an individual, trust, estate, or when the disbursement instructions authorize the proceeds to be sent to a financial intermediary of the sellers. 2. A corporate seller that has no permanent place of business in California immediately after the transfer of title to the California property. THIS COMPANY CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE Copyrightlnfo Page 3 of The buyer may become subject to penalty for failure to withhold an amount equal to the greater of 10 percent of the amount required to be withheld or five hundred dollars ($500). However, notwithstanding any other provision included in the California statutes referenced above, no buyer will be required to withhold any amount or be subject to penalty for failure to withhold if any of the following applies: 1. The sale price of the California real property conveyed does not exceed one hundred thousand dollars ($100,000). 2. The seller executes a written certificate under the penalty of perjury certifying that the seller is a corporation with a permanent place of business in California. 3. The seller, who is an individual, trust, estate, or a corporation without a permanent place of business in California, executes a written certificate under the penalty of perjury of any of the following: a. The California real property being conveyed is the seller's or decedent's principal residence (within the meaning of Section 121 of the Internal Revenue Code (IRC)). b. The last use of the property being conveyed was by the transferor as the transferor's principal residence (within the meaning of IRC Section 121). c. The California real property being conveyed is, or will be, exchanged for property of like kind (within the meaning of IRC Section 1031), but only to the extent of the amount of gain not required to be recognized for California income tax purposes under IRC Section 1031. d. The California real property has been compulsorily or involuntarily converted (within the meaning of IRC Section 1033) and the seller intends to acquire property similar or related in service or use so as to be eligible for nonrecognition of gain for California income tax purposes under IRC Section 1033. e. The California real property transaction will result in a loss or net gain not required to be recognized for California income tax purposes. The seller is subject to penalty for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding requirement. Contact FTB: For additional information regarding California withholding or for the Alternative Withholding, contact the Franchise Tax Board at (toll free) 888- 792- 4900), by e-mail WSCS.GEN @ftb.ca.gov; or visit their website at www.ftb.ca.gov. C. FEDERAL WITHHOLDING & REPORTING Certain federal reporting and withholding requirements exist for real estate transactions where the seller (transferor) is a non - resident alien, a non - domestic corporation, partnership, or limited liability company; or a domestic corporation, partnership or limited liability company controlled by non - residents; or non - resident corporations, partnerships or limited liability companies. D. TAXPAYER IDENTIFICATION DISCLOSURE Federal and state laws require that certain forms include a party's TIN and that such forms or copies of the forms be provided to the other party and to the applicable governmental authorities. Parties to a real estate transaction involving seller - provided financing are required to furnish, disclose, and include the other party's TIN in their tax returns. Escrow Holder is authorized to release a party's TINs and copies of statutory forms to the other party and to the applicable governmental authorities in the foregoing circumstances. The parties agree to hold Escrow Holder harmless against any fees, costs, or judgments incurred and /or awarded because of the release of their TIN as authorized herein. THIS COMPANY CONDUCES ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE. Copyright Info Page 4of4