What Is the Arizona Escrow Process and Timeline?

In many states in the United States, buying a home involves a lawyer or notary handling the money transfer between parties. However, in Arizona, all home and other real estate transactions involve escrow. As a future Arizona real estate agent, you should know about escrow and how it is involved in the real estate process.

What Is Escrow?

In summary, escrow is when a third party manages the money and transactions between a buyer and seller. For a real estate transaction, for example, a buyer would deposit their money with the escrow company. Once the selling and contract process is over, the escrow company would then disburse the money to the seller. Escrow serves as a guarantee that the money will be available once the transaction is finished.

Here is how the 40-day escrow process works in Arizona.

1. Opening the Escrow Account (0 Days)

Once a buyer and a seller have agreed on the sale terms, a realtor will contact a title and escrow company. The realtor will send the signed contract to the escrow company, who will verify the contract and open an account.

2. Sending Deposit to Escrow

Once the account is open, the escrow company will receive the "earnest" deposit funds either by check or via wire transfer. These funds confirm the buyer's interest in the property. The escrow company will then send a receipt to all parties.

3. Completing Documents

At this point, the escrow officer will send documents to be filled by all parties, including proof of identity. The buyer provides loan information, for example, while the seller provides title information. The seller has three days to deliver the property disclosure statement and five days to deliver the insurance claims history.

4. Checking Title And Inspection Notice (10 Days)

Once the escrow officer receives the documents, they will do a title check on the property. This is to make sure that the title is clear and can be freely transferred to a new owner. If the seller needs to do anything to clear the title, the escrow agent will inform them.

If the property is part of a Homeowner's Association (typically for condos), the escrow officer will also receive information about fees. This information is passed on to the buyer.

The Buyer's Inspection Notice is also sent to the seller to inform them about repairs. The seller has five days to respond to the Inspection Notice (day 15). Day 10 is also the deadline for the buyer to cancel the contract.

5. Clearing Title and Signing Deed (20 days)

If needed, the escrow agent will work with all parties to clear the title so the transaction can proceed. This is also the time limit for the buyer to accept the seller's response to the Inspection Notice. The seller plans for repairs, if required. At this point, the contract is finalized. The seller will also sign the deed and other documents to have them ready for the next step.

6. Obtaining Loan Documents (37 Days)

If the buyer is taking a mortgage loan, this is their deadline for submitting documentation. The lender will send all appropriate documents to the escrow agent. From there, the escrow agent prepares the Closing Disclosure. This document lists all the costs of the transaction, from the deposit to the loan to the real estate agent commission and escrow fees. 

By day 37, the seller should also have made the required repairs to the property. 

7. Verifying and Signing the Loan

Once the escrow officer has everything they need, they send the documents to the lender. The lender will approve the loan and send the money to the escrow officer to be distributed in the next few days. Documents are also sent to the local records office to register the sale and title change.

8. Closing Escrow (40 days)

Once the funds are distributed, the escrow is closed, and the buyer receives the keys. 

With fast-growing cities, there are many opportunities for real estate professionals in Arizona to start or grow their careers in the field. Working alongside lenders, inspectors, and escrow companies, Arizona real estate agents have a bright future ahead of them.

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