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What is a Sub Escrow Fee?

What is a Sub Escrow Fee and why do I have to pay it?

What is a Sub Escrow Fee Who pays for WhatA Sub Escrow Fee is not an escrow fee. The Sub Escrow is a service provided by the Title Companies where the buyer’s lender requires the Title Company to take the buyer’s loan proceeds and send (via check or wire) the payment in full to the seller’s mortgage payoffs. This process originated in Southern California with the perception that this process gives the buyer’s lender an insured closing and guarantee that their mortgage to the buyer will be in a first lien position on the property. (A policy of title insurance guarantees that there are no clouds on title and that the buyer is receiving the property free and clear of encumbrances against the previous owner.) The amount of the fee can range from $75.00 –  $125.00 depending on the Title Company, and the Sub Escrow fee is typically split evenly between the buyer and seller; unless the transaction is a Short Sale. Short Sale lenders are very stingy and will very rarely approve this fee on behalf of the seller, so it must be paid by the buyer. Title fees cannot be discounted. California is a fee scheduled state, where Title Company’s post their fees for review by the California insurance Commissioner and once approved, these fees cannot be discounted.

What fees are provided as a result of the Sub Escrow Fee?

  • Coordinating with the escrow/lender for recording
  • Verify an update payoff demand figures with blender
  • Verify payment of property taxes
  • Calculate the payoffs on the day of closing
  • Distribute all payoffs per instructions
  • Upon confirmation of recording, notify escrow company and provide final figures
  • Process refunds to escrow

Who pays for What? Simi Valley Home Buyers & Home Sellers want to know

Posted in: Buyers, Real Estate News, Sellers Tagged: Buyer, California insurance Commissioner, payoff demand, recording, Seller, sub escrow, title companies

About Ted Mackel

Active real estate broker and entrepreneur in Simi Valley. Ted has a passion for business, has deep knowledge about residential and commercial real estate and is one of the few to be a long time blogger/writer on these subjects. In his free time you'll find Ted enjoying baseball with his family (Go Dodgers), reaching his goal of spanish fluency, and pursuing his hobbies with RC aircraft and Lionel Trains.

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Client Testimonials

Ted actually helped us find a new home AND sell two homes. He was beyond helpful with everything. When looking for a home, Ted didn't waste our time…My husband and I are really busy so this meant a lot to us….he always had plenty of houses lined up for us to look at and he acted as our personal chauffeur. He really knows Simi, so he knew exactly where to take us….and ultimately he found us our beautiful new home. Selling the other two was a breeze…Ted took care of everything. No complaints here!

suelac2

Ted was wonderful in helping us sell our house. He was in constant communication with us and made the process very easy and stress-free. He was very knowledgeable and professional. I highly recommend him.

reuel

Professional and very easy to work with.

geralyn

Ted's continuing knowledge of local real estate markets enabled an immediate, correct valuation of the house we sold. Calm and competent throughout the process, he remained unflappable through the invevitable hurdles. His escrow team at Keller Williams were perfect.

jeff

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