During the latest “The Commercial Real Estate Hour” on KHTS, Host Jesus Henao of Leola Commercial, Inc. invited a special guest to help break down the world of escrow and explain the process for listeners.

Hami Moshe Gabayan of Capital Trust Escrow described escrow as a “hub” where those involved in a real estate transaction “go” to funnel information.

The first step during the escrow process is for a professional such as Gabayan to obtain a copy of the purchase agreement and review it, noting if there are any encumbrances or liens on the property.

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“That’s important,” Henao said. “It could be, an apartment owner had some guy do the roof work and for some reason, there was a fallout and the roofing contractor puts a lien — it’s called a mechanic’s lien — on the property, because he did the work (but) for some reason the seller didn’t pay… That encumbers the property, so before it sells, that has to be removed.”

If there are no encumbrances or liens on the property or any existing ones have been removed, the escrow professional then collects an initial deposit based on the agreement, usually 3 percent of the total sale price, according to Gabayan.

“Now the question is, how do you get money into escrow?” he said. “There’s a couple ways. One is, you get a check, which is the old-school way. They don’t do that really anymore as much. And another way is to send a wire.”

Gabayan stressed the importance of the buyer’s escrow company using encrypted wiring instructions for the protection of their money.

“It’s always good practice that … they don’t get a regular email from escrow — they have to get secure wiring instructions,” he said. “That way you know there is no interruption from escrow to the buyer, because we don’t want some third party hacking in and putting in their own wiring instructions. And no one will know because it’s going to look like it’s coming from escrow, and the buyer unknowingly will send the money to another bank, which is the criminal.”

Next the escrow professional prepares supplemental escrow instructions with general terms and the agreement, and sends out the opening escrow package to both the buyer and seller.

“The buyer will have their documents in there and it will have escrow instructions. It will ask who the lender is going to be. Usually we’ll send a copy of the prelim that we get,” Gabayan said. “A prelim is a preliminary title report, and that was the document which we get from title, which tells us what’s on record on the property.”

For commercial real estate, Henao noted it typically takes about 60 days for the transaction to close and the escrow process to be completed.

Leola Commercial, Inc.

26575 Ruether Ave 2nd Floor

Santa Clarita, CA 91350

(818) 570-3301

Leola Commercial, Inc. is a boutique Santa Clarita commercial real estate firm that specializes in the sale of multi-family apartments, land for development, retail real estate, senior housing, tax credit properties, industrial, NNN and office. Headed by Jesus Henao, the Santa Clarita real estate firm prides itself on maintaining “old world” customer service principles and personalized representation. Henao is also the host of “The Commercial Real Estate Hour” on KHTS Mondays at noon.

Leola Commercial, Inc. – Santa Clarita

https://www.youtube.com/watch?v=2r03vXvoRtM

Leola Commercial Inc., Commercial Real Estate, Multi-Family Apartments, Santa Clarita Commercial Real Estate, Land for Development, NNN, Retail Real Estate, Santa Clarita Real Estate