Sunday October 11, 2009, California Governor Schwarzenegger signed the Buyer’s Choice Act, Assembly Bill 957, into law. The new law prohibits owners (typically banks) of foreclosed properties from forcing California homebuyers to use a particular title company, Escrow Company or other real estate service provider. The Buyer’s Choice Act requires that a disclosure notice be provided to buyers informing them of their rights to choose their own real estate services companies to close their transactions.
I was pretty excited about this law passing last year. Basically, when we first started buying the banks would force us to use their escrow companies. Most of these companies would do a terrible charge, charge huge fees, take a long time and just be unpleasant to deal with.
The banks found a pretty simple way around this. In California, the standard practice is for the Seller to buy title insurance and pay half the escrow fees. To get around the law the banks basically say you can pick who you want, but if you do pick you have to pay ALL of the escrow fees and for your own title insurance. That basically boils down to $800 – $1,500 per transaction, so for the most part we end up letting the seller pick.
Some tips for working with a new escrow officer:
ServiceLink is one of my least favorite escrow companies. They are a national company that has a corporate office in Pennsylvania and I have found they have been really hard to work with. I found their paperwork has been standardized for all states and really hard to follow. I just got a 3 page email on directions of all the crazy forms they require.