This is it. It's time to sign on the dotted line, apply the John Hancock, sign your life away, and buy that brand new home. Practice writing your initials and signature over and over again, because the endorsements will seem to take forever. In some parts of the country, buyers go to attorney's offices to sign closing documents on their new homes. Other areas have stand-alone title and escrow companies. And some, as in Northern California and elsewhere, combine both operations in one office. When buying a new home from a builder, is it necessary to use the builder's designated title and escrow company, or should you be able to choose your own? What advantages are there in using the builder-preferred escrow firm?

To put it in simple terms, I believe it's wise to agree to use the builder's contracted title & escrow company for the sheer ease of it all. That is, every possible detail for closing your escrow is arranged in advance for the purchase of a home from that builder. The escrow & title company has master files for the builders' various communities' preliminary title reports, public reports, C.C. & R's, bond assessment disclosures, etc. right at their fingertips. There are pre-assigned escrow numbers, lender forms and emergency addendums on hand for use by the buyers and sellers. The escrow company is familiar with all the builder's 'quirks' (and they all do some things differently!). They are also familiar with the builder's preferred or in- house lender's personnel (loan officers and processors), lending forms, fees, and methods for closing loans, because they handle them day in and day out.

Builders are generally very fussy over who they do business with in an auxiliary sense. Whomever their buyers come into contact with is an important link in their chain. Weak links are usually not tolerated, especially when large sums of money are involved! It is at the escrow company where final monies are accepted and funding for the builders' homes takes place, giving those builders the revenue they need to continue building homes, For this reason alone, you can bet that they will hold their escrow and title companies to a very high standard of service.

Because this company is given all or a good part of their business, the builder looks to them to give their buyers a high priority. Many title companies have representatives that solicit builder business exclusively, working with them from land acquisition all the way through to the final closed escrow. This alone demonstrates how deep the loyalties may go between the two. If you count the number of homes in one subdivision and multiply that by the number of communities the builder has in the area, the state, or even possibly the country, this represents big numbers to the title company. It is safe to assume that the builder may receive, in return "bulk rate" title and escrow fees because of that volume. When terms for closing are such that some title and escrow fees are split "50/50", buyers win with this as well.

Another 'ease of use' feature has to do with accommodation and service. In my experience, when there are buyers who, for some reason, cannot fit the normal buyer appointment time frames for signing their documents, the builder's escrow/title company will go to great lengths to accomplish this within the parameters desired by both buyers and builder. (These usually appear in the contract to purchase) I have seen escrow officers in "civilian clothes" at the community sales office on a Saturday morning when an emergency signing must take place. They may be able to arrange "satellite" office signings in other parts of the country with their branch offices or affiliates. Wire transfers can be arranged when there are time constraints, or they may even arrange for the closing documents to be explained in a foreign language -- you name it - if the builder and buyer need it, there is usually a way for it to be done.

"The bottom line is that we are willing to meet the buyer's and builder's needs, and try to make the closing process as stress-free as we can. We do this by striving to provide easily understandable explanations of every document the buyer signs," says Cindy Perez, a veteran Stewart Title escrow officer from a Sacramento, California office. A good escrow officer is indeed a thing of beauty to a builder and an important 'tour guide' through the closing process for the buyer before they take title to their new home. Their neutral "third party" status is an important balancing act for both buyer and seller, as they cannot act on any part of the escrow instructions without agreement and signatures from both. For a sampling of information on a nationally recognized title company, visit Stewart Title on the World Wide Web at www.stewarttitle.com.

I don't know of any law that requires you to use the builder's chosen escrow and title company, but it is usually automatically made a stipulation in the builder's purchase agreement. Chances are, the builder will not even sign the purchase agreement as the 'seller', should you demand to use another company. The heightened sense of accountability the builder experiences using their own contracted company is that important to them.

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Published: February 5, 1999

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