It is only after all things required to transfer the real property into the buyer’s name are verified that your escrow officer can disperse any funds.
The two most significant things are as follows:
- Confirmation from Title Company that the Grant Deed has been recorded with the County Recorder’s Office, verifying the transfer of your real property into the Buyer’s name/ownership. Confirmation from the Title Company usually does not happen until the afternoon.
- Receipt of all Buyer’s funds into Progressive Escrow’s Trust account. This includes funds wired by the Buyer from their bank and/or funds from the Buyer’s Lender.
Sellers Proceeds are usually dispersed to the seller the following business day. On your Instructions for Proceeds form, provided to you in your Opening Escrow Package, we highly recommend that you request a Wire Transfer and not an Escrow Check. Wired funds are good funds on the same day.
A check deposited into your bank can have a hold placed on it for any number of days. It is our policy, without exception, that once an Escrow Check has been delivered to a party there will be a 7 business day turnaround to have a stop pay issued on a check and the funds re-dispersed to you as a wire transfer.
Your real Estate agent will typically negotiate a closing date based on the time that it takes for a lending institution to process a loan, and for any contingencies you agreed to in the purchase agreement to be satisfied.
In most cases, thirty days is generally required for the borrower’s loan to fund, and for all the necessary inspections to be completed. Another factor to consider is contingencies written into your purchase contract.
A home sale contingency is one type of contingency clause frequently included in a Residential Purchase Agreement (RPA). With a home sale contingency in place, your transaction is dependent (or contingent) upon the sale of the buyer’s home.
If the buyer’s house sells by the specified date, the contract moves forward; if it does not sell by the specified date, the contract is terminated, unless both parties agree to a new closing date.
All cash transactions can close much sooner.
There are many different issues that can arise with respect to how you take title to property.
If joint ownership is involved, you should clearly understand the differences between taking title as joint tenants, as tenants in common, as a partnership or as community property. You should also clearly understand your rights versus the rights of your co-owners.
Each type of ownership vesting has significant ownership implications and rights of survivorship. The way a party holds title has significant Tax issues upon the death of a jointly owned property.
There is no general rule of thumb with respect to how to take title on your property. Progressive Escrow urges clients to take the time to seek professional advice, including your lawyer and CPA, to assist you in making a smart decision.
Below is a basic breakdown of different ways to hold title:
CONCURRENT – CO-OWNERSHIP INTERESTS
|COMMUNITY PROPERTY||JOINT TENANCY||Community Property with Right of Survivorship||TENANCY IN COMMON||TENANCY IN PARTNERSHIP|
|Only husband and wife, domestic partners or same sex marriage
|Two or more persons (may be spouses or domestic partners)||Husband and wife domestic partners, or same sex marriage||Two or more persons (may be spouses or domestic partners)||Only partners (any number)|
|Ownership and managerial interest are equal except control of business is solely with managing spouse/partner||Ownership interest must be equal||Ownership interest is equal||Ownership can be divided into any number of interest equal or unequal||Ownership interest is in relation to interest in partnership|
|Title is in the “community”. Each interest is separate but management is unified||There is only one title to the whole property||Title is in the “community”. Each interest is separate||Each co-owner has a separate legal title to his undivided interest||Title is in the “partnership”|
|Both co-owners have equal management and control||Equal right of possession||Both co-owners have equal possession||Equal right of possession||Equal right of possession but only for partnership purposes|
|Personal property (except “necessaries”) may be conveyed for valuable consideration without consent of other spouse/partner; real property requires written consent of other spouse/partner, and separate interest cannot be conveyed except upon death.||Conveyance by one co-owner without the others break his joint tenancy||Real property requires written consent of other spouse/partner, and with separate interest cannot be conveyed except upon death||Each co-owner’s interest may be conveyed separately by its owner.||Any authorized partner may convey whole partnership property. No partner may sell his interest in the partnership without consent of his copartners|
|Purchaser can only acquire whole title of community; cannot acquire a part of it||Purchaser will become a tenant in common with the other co-owners in the property||Purchaser will become a tenant in common with the other co-owner in the property||Purchaser can only acquire the whole title|
|On co-owner’s death, 1/2 belongs to survivor in severalty 1/2 goes by will to decedent’s devisees or by succession to survivor||On co-owner’s death, his interest ends and cannot be deposed of by will. Survivor owns the property by survivorship||On co-owners death the entire tenancy remains to the survivor. This right of survivorship is one of the primary incident of community property with right of survivorship||On co-owner’s death his interest passes by will to his devisees or his heir. No survivorship right||On partner’s death, his partnership interest passes to the surviving partner pending liquidation of the partnership. Share of deceased partner then goes to his estate|
|If passing by will, tenancy in common between devisee and survivor results||Last survivor owns property in severalty||If passing by Will, tenancy in common between devisee and survivor results||Devisee or heirs become tenants in common||Heirs or devises have rights in partnership interest but not in the specific property.|
|Property of community is liable for contracts of either spouse/partner which are made after marriage and prior to or after marriage and prior to or after January 1, 1975. Co-owner’s interest can’t be sold separately: whole property may be sold on execution to satisfy creditor||Co-owner’s interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken, creditor becomes tenant in common||Property of community is liable for contracts of either spouse/partner which are made after marriage and prior to or after January 1, 1975. Co-owner’s interest can note be sold separately; whole property may be sold on execution to satisfy creditor||Co-owner’s interest may be sold on execution sale to satisfy his creditor. Creditor becomes tenant in common||Partner’s interest cannot be seized or sold separately by his personal creditor but his share of profits may be obtained by a personal creditor. Whole property may be sold on execution sale to satisfy partnership creditor|
|Strong presumption that property acquired by husband and wife/domestic partners is community property||Must be expressly stated. Not favored||Favored in doubtful cases except husband and wife/domestic partners case||Arise only be virtue of partnership statue in property placed in partnership|
Completion of this required form will determine whether a tax withholding on your proceeds applies to your transaction. Completion of the (FTB)593 is not optional. Escrow officers are required to withhold 3-1/3% of the sales price and to submit these funds to the Franchise Tax Board if the 593 is not completed, and is not signed, or if your social security number is missing.
Sellers will receive a current Franchise Tax Board (FTB) form in their Opening Escrow. Progressive Escrow urges clients to take the time to seek professional advice from your CPA, to assist you in the completion of this important Tax document. Escrow Officers are not permitted, under the law, to answer questions or advise the seller regarding the 593 forms. Your financial advisor can help you determine which withholding method is best for you. Be sure to complete all information. Please follow the link below to view a copy of the 593-C.
F T B Form 593-C Real Estate Withholding Certificate- https://www.ftb.ca.gov/forms/2014/14_593c.pdf
A “1031 exchange” refers to a means of deferring tax on the sale of an interest in real property allowed under section 1031 of the Internal Revenue Code.
In short, it allows a seller to defer tax on a gain that would otherwise be realized on a sale of property if the proceeds from the sale were reinvested in like-kind property.
It’s quite common for a 1031 exchange to be involved in some manner in an investment real estate transaction. A seller must contractually arrange to convey his or her interest in the property being sold in exchange for receiving an interest in another piece of property.
Because the rules for a 1031 exchange are complex, Progressive Escrow always advises Seller’s to seek professional advice from your CPA or Attorney.