ESCROW & TITLE
Joann Bersell, AVP
Senior Escrow Officer
Stewart Title & Trust of Tucson
Escrow & Title Resource - Frequently Asked Questions
Are you ready to make an offer on a home or vacant land in Marana? Joann Bersell, Branch Manager and Senior Escrow Officer of Stewart Title & Trust of Tucson, has compiled a list of frequently asked questions and answers about opening escrow and title insurance.
Q: What is escrow?
An escrow is an independent third party account and is the means by which the interests of all parties to the transaction are protected. The escrow is created after the contract for the sale of the home is executed. The escrow becomes the depository for monies, documents and instructions that pertain to the sale of the home. The amount of time necessary to complete the escrow is determined by the terms of the purchase agreement. It is normally 30-45 days but can range from a few days to a several months.
Q: What is a home warranty?
A home warranty is an insurance policy that covers a variety of mechanical, electrical, and plumbing items, as well as some appliances inside the home. Optional overage is available for additional cost for more additional systems such as air conditioners, refrigerators, pools and spas.
Sellers may purchase a home warranty plan prior to selling in order to protect against repairs needed during the listing period. The purchaser may have the option to assume the policy at the close of escrow, or the Seller may offer to purchase a home warranty policy for the Purchaser. Offering a home warranty plan can provide these benefits:
1. Increase the marketability of your home by reassuring the potential Purchaser.
2. Help sell the home faster.
3. Ward off potential disputes after the sale for repair and/or replacement of covered items.
Most home warranty plans can be paid for at the close of escrow.
Q: What is a CLUE report?
CLUE, an acronym for “Comprehensive Loss Underwriting Exchange” is another hot button in the real estate industry. CLUE is a database of homeowner’s insurance policy claims information. In existence for some years now, insurance companies use the database to determine both the issuance as well as the continuance of homeowner’s insurance policies.
A CLUE report consists of two parts; one addresses the insured’s claim history, the other the property’s claim history. How many claims an insured has made as well as what type of claims can affect their insurability. They type and number of claims made on the property affect the insurability of the residence. In determining whether or not to issue or terminate new policies, some insurers consider both the claims history of the proposed insured (home purchaser) as well as the claims history of the property itself; still others consider the claims history of the proposed insured alone. In other words, there is no standard for making the insurability determination within the industry. Nonetheless, a CLUE report may affect not only a property which interest the purchaser, but the purchaser as well depending upon the number of claims the purchaser has made.
Home purchasers have no access to the CLUE database information through their own insurance carrier because they don’t yet own the property, nor for that matter is their insurance agent able to
supply them any information on the property. A purchaser is permitted to see only that part of the report that pertains to his or her own individual claims history. The property seller alone may provide a copy of the report to a prospective purchaser and the seller may obtain a copy of the CLUE report from www.choicetrust.com for a nominal fee.
As a consequence of the impact that CLUE may have not only on the insurability of a property, but individual purchasers as well. REALTORS® and their clients should consider three things:
1. Make disclosure of the CLUE report one of the contingencies of the contract.
2. Submit your insurance application early.
3. Should your current carrier determine a property uninsurable, consider a company that makes its determination solely on the purchaser’s claim history, not that of the Property.
Q: What is title insurance?
Title Insurance is a contract of indemnity that guarantees against the defects in title. In Arizona, most real estate transactions are closed with a title insurance policy. Many homeowners make the assumption that when they purchase a piece of property, possession of the deed is all they need to prove ownership. However, there is a possibility that there are hidden hazards attached to the real estate.
Title companies work to eliminate risks by performing a search of the public records, laws and court decision pertaining to the property. This is done to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record that could affect the title to the property.
Q: What owner policies are available and how do they compare?
Please click on the link below to view a table of the available policies and a comparison of the type of coverage provided for each.