Escrow & TitleUncategorized December 18, 2022

Ask the Experts – Title & Escrow Hawaii

Experts on Title & Escrow in Hawaii with guest Shannon Cortez, State Manager & Vice President of Hawaii Escrow Operations with First Hawaii Title

Shannon is an industry veteran with over 20 years, based on Maui she oversees escrow operations on the island of Oahu, Hawaii Island for a total of six offices and over 30 employees. Little known fact that Shannon was born and raised in Waikapu on the island of Maui and her grandfather and his brothers started one of the few piggeries on the island which are still in existence today!

Escrow & Title in Hawaii – Why is it so important?

Not many consumers may know why the Escrow and Title company represent a vital and essential part of any real estate transaction. Escrow and Title companies work for the buyers and sellers of real estate behind the scenes as a neutral third party to the transaction. Escrow supports buyers and sellers with the transaction timeline and contingencies, problem-solving, and all the little pieces of the puzzle of each transaction by dealing with all parties within a real estate transaction. It’s about helping buyers become first-time home buyers it’s about helping sellers navigate through a sometimes complex and emotional real estate transaction process.

Hawaii is an escrow and Title state, is it different from other states in the U.S.?

It does differ and it does vary there are some states that would be considered an attorney state so in Hawaii we would say escrow where they would call it settlement.

What if someone doesn’t want to use escrow or a family member just wants to transfer the title to another family member?

We would also always recommend consulting with an attorney because there may be some implication on the backend where they’re conveying from one family member to the next and it might have an impact on the title insurance that was issued during their initial transaction.

Real Buyer Story – Why you should not change your job/employment status when you’re in escrow when financing or a loan is involved. 

We had a seller who was in a distressed property situation and also had to relocate back to the mainland from Hawaii. The buyer was moving to Hawaii from the mainland. This transaction became complicated after the buyer’s lender was ready to fund the loan. Escrow had the recording package and was ready to send it to the title team. I received a call from the funder instructing us to hold the funding and hold the transaction from recording.

The lender would not fund the loan because the buyer placed their resignation with their current employer. The buyer’s current employer decided to let the buyer immediately upon receiving the notice of resignation. The buyer did not anticipate being released immediately after turning in the resignation notice, but the buyer’s employer terminated the buyer’s employment that day.  The lender called in to confirm and re-verify employment and they couldn’t get the employment verification because of the termination. So, the lender couldn’t go through with funding the loan.

The buyers had already moved into the property so that in itself led to legal matters that they had to address. The bottom line is don’t terminate your employment when you are in escrow if you’re purchasing a property, get advice from your real estate agent from your loan officer/lender, and don’t make changes to employment without consulting the experts in the field because it definitely can lead to unexpected situations on your home purchase.

Can Buyers move into the property during escrow?

It is possible for a buyer to move into their new property before the transaction closes.  There is advance preparation during the negotiation process and during the contract stage of the transaction. There is an early occupancy agreement that can be drafted. This document includes the terms and negotiations made between the parties and the seller and the buyer came to an agreement to allow the buyer access to the property before closing escrow so yes it can be done.

Advice to Buyers: When in Escrow for a property with a financing/loan:

In addition to not making employment changes when you are in escrow, it is advisable to not purchase a new (or used) car. Do not “pay off” previous loans, and do not change your financial situation. If you are thinking about doing anything to your personal financial situation, you should always consult with the experts so that don’t get yourself into a situation that will be hard for you to get out of.  Escrow and title will always do their part to protect the parties to the transaction.

What happens if you’re in escrow in a transaction in real estate and someone passes away?

For example: What if the seller passes away during escrow? What happens?

There are different recording systems in the state of Hawaii so we have Land Court and the Regular System. In the Regular System if the deed was executed prior to the death it may be still considered a valid conveyance or a valid deed and if it is in the land court system it is definitely that you would have to consult with your escrow and title teams because a Land Court petition may be required but there’s always a potential option out there.

Will Tanaka, J.D., RA was the President of First Hawaii Title Corporation for five years, and prior to that the General Counsel for Fidelity National Title before becoming a full-time real estate professional and teamed up with his wife Leonie to serve their real estate clients.

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