Escrow is the process that buyers and sellers of homes use to complete the monetary and legal details of a sale. A neutral third party manages the escrow, called an “Escrow Officer,” who generally works for a title company. “Title” is the proof of ownership of a property. The title company ensures that all terms of the contract are adhered to before the sale is complete and money changes hands.
In order to successfully bring an escrow to close, the title company will:
Sellers of properties built prior to 1978 have the following obligations to you:
California law requires sellers to disclose to you, via a “Natural Hazard Disclosure Statement” or NHD, if properties are located in one of six predetermined “natural hazard” zones. (If the property is not within one of these zones, sellers, of course, have no such obligation.)
The six zones are:
If an NHD is delivered to you after you signed the Purchase Agreement, you will have three days to rescind the agreement. However, if you receive the NHD before you signed the Purchase Agreement then you cannot use the NHD to rescind.
Especially (but not exclusively) if you are buying a home in a newer area, you may be locating into a Mello-Roos tax district, and the seller must provide to you a “Notice of Special Tax” to let you know. If this notice is delivered to you in person, you have three days to rescind your offer. If it’s delivered via U.S. mail, you have five days to decide.
Basically, a “Mello-Roos Community Facilities District” is formed by a local government, district, or agency to finance public services and facilities including police and fire departments, ambulance and paramedic services, parks, schools, libraries, museums and cultural facilities.
If you’re buying a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all “condominiums”), there are things you need to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association.
You will be required to make monthly payments, known as regular assessments, to maintain common areas, as well as special assessments to replace a roof or repair the plumbing, as determined by the homeowner’s association (HOA.)
Condominiums also may have regulations regarding architectural requirements, limitations on pets, and age restrictions (i.e., senior housing). These must be formally disclosed to you during escrow. You may receive this information via the following documents, to the extent that they exist and are available:
Many smaller HOAs will not have all of these documents, but must provide what they do have. We recommend that you review these documents thoroughly, because they will affect you firsthand.
If a registered sex offender lives in the neighborhood in which you want to locate, you have the right to investigate – this is made possible due to a 1996 statute known as “Megan’s Law.” (Note that the seller does not have an obligation to provide this information to you.)
To investigate, you may: