A California escrow involves a 1031 exchange buyer whose qualified intermediary (QI) can only wire exchange funds on the actual closing date, but the buyer's lender requires loan funds to be received 24 hours before recording. The seller also has an existing loan payoff that must be wired same-day. Which approach correctly resolves this funding timeline conflict while complying with California escrow law?
Correct Answer
B) Request that the lender fund one day early and negotiate with the QI to confirm same-day wire receipt before authorizing recording, ensuring all funds are confirmed in escrow prior to recording
Under California Financial Code §17003 and established escrow fiduciary duties, an escrow officer may not record a deed until all funds required to close are confirmed received in the escrow account. The correct resolution is to align all funding timelines before recording: negotiate with the lender to fund one business day early (a common lender accommodation) and confirm the QI wire will be received and cleared the same day. Only after all funds — lender proceeds, QI exchange funds, and any buyer closing cost deposits — are confirmed in escrow may the deed be recorded and the seller's existing loan payoff disbursed.
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Related Topics & Key Terms
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Related Concepts
Recording is the act of placing a document in the public records at the county recorder's office to give constructive notice to the world of an interest in real property. Recording protects the holder's interest against subsequent claims.
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
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Previous Question
In a California residential transaction, the purchase agreement designates one party to provide a home warranty to the buyer. At closing, the escrow officer deducts the warranty cost from that party's proceeds. Which party is most commonly designated to provide the home warranty under a standard California Residential Purchase Agreement?
Next Question
A buyer in a California transaction receives the preliminary title report and notices that there is an easement for a utility company across the back of the property. The buyer asks the escrow officer whether this easement can be removed before closing. The escrow officer should explain that: