Home Buying in Los Angeles>Question Details

Timmieng, Home Buyer in Los Angeles, CA

if i cancel escrow due to one of the contingency clauses, what are my out to pocket expenses? Do I still have to pay escrow, appraisal,bank fees,etc?

Asked by Timmieng, Los Angeles, CA Wed Oct 5, 2011

If i cancel escrow due to one of the contingency clauses, what are my out of pocket expenses that are nonrefundable? Do I still have to pay escrow, appraisal, bank fees, etc?

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Hi Timmieng:

You would be out the appraisal fee if you paid it out of pocket, otherwise, unless there is something stated in the escrow instructions if signed by you, or the purchase contract signed by you, then nothing else would apply.

Review your contract and escrow instructions. If push comes to shove, consult with a real estate attorney.

Good luck!

All the best,

Kat Becker, Realtor
Prudential California Realty
katbecker@prula.com
0 votes Thank Flag Link Thu Oct 6, 2011
Hello Timmieng, it really depends on the contract and if you removed all your contingencies. Many times they will not charge you for the escrow fees, but this is completely up to the escrow company. If you intend to still purchase a home, many times they will not charge you as they assume you will be using the same escrow company for a different home that you would purchase. Why do you want to cancel, is it you just changed your mind on the house or are there other factors that are affecting your decision to complete the escrow? The appraisal fee is generally paid when the appraisal is done, but sometimes this is billed to the lender and added to your loan charges, this you will have to find out directly from your lender or the appraisal company. You could also lose your earnest money deposit depending if you removed all your contingencies, I would highly recommend speaking with your agent about this, they can best answer these questions for you as they have the contract in hand.

Many buyers go through buyers remorse after they have entered into escrow, this is simply when they get worried about the big purchase and nervous, it is very common, however-real estate is still a good investment. I recommend to weigh all your options and speak with your Realtor and then you can make an educated decision is cancelling is right for you.

Have a great day,
Heather Paul, Realtor
Coldwell Banker
310-586-0364
0 votes Thank Flag Link Wed Oct 5, 2011
Dear Timmieng,

The terms and conditions that determine when, how, and who is responsible for costs when an escrow is cancelled are different for each transaction and spelled out in your purchase contract and supplemental escrow instructions.

In a typical residential transaction in Southern California, each party will be responsible for their own incurred fees. Therefore anything you've paid out of pocket will be your loss in the case of a cancellation. Financing fees such as appraisal and other bank fees are either paid up front by the buyer to direct to the lender, or they are paid as part of your closing costs at close of escrow. If you did not pay them out of pocket up front, you may request your lender waive those fees since you did not complete the loan. Most likely, the appraisal fee will be your loss since the appraiser performed his service.

Regarding the fees you have not paid yet, such as escrow, title, etc... Most reputable escrow companies will waive their fee all together or charge a minimal cancellation fee for the time they spent on the file. Title will waive their fee if the transaction is not complete.

Hope this helps, and best of luck!

--
Allan S. Glass
President
ASG Real Estate Inc. ®
149 S. Barrington Ave, Suite #660
Los Angeles . CA 90049
Mobile: 213.952.9052
Direct: 213.973.8637 (213.97.FUNDS)
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0 votes Thank Flag Link Wed Oct 5, 2011
If you have signed the escrow instructions and returned them some escrow companies put in a cancellation fee without regard to why you're canceling but just because you are. I always tell my clients not to return escrow instructions until they know they are definitely moving forward.
Also if there is an HOA there may be a fee if the HOA docs have been ordered.
If you paid for a home inspection or an appraisal those expenses you usually will have to endure no matter what the reason is you canceled. It wouldn't hurt to ask the lender that you stay loyal to them if they would credit you one appraisal at the close of escrow on your next purchase. It never hurts to ask.
This all depends as well if you had not removed your contingencies yet and it was do to an item in the CAR purchase contract.
Web Reference: http://www.laura4homes.com
0 votes Thank Flag Link Wed Oct 5, 2011
Different answer for the buyer vs. the seller. First, the buyer:
If you have already paid for your appraisal and inspections, you are out that money. None of those costs are transferable to the next property you buy. If you have incurred any escrow fees, such as wire or notary costs, you may be out those fees as well.
If you are the seller, you may have incurred fees such as termite or 9A report. Both of those items are related to your property and can be sent forward to your next escrow.
For both buyer and seller, you can negotiate fees by offering to bring your next escrow back to the same officer. While you may still have to pay them now, you can probably get a discount on transaction #2.
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) (310) 800-2954
http://www.thebremnergroup.com
Accredited Buyer Representative|Certified Distressed Property Expert |Pre-Foreclosure Specialist Certified
I want you to know that I appreciate any referrals from friends and associates who may be in the market to buy or sell real estate. You can count on me giving them the same high-quality service I provide to all of my clients.
0 votes Thank Flag Link Wed Oct 5, 2011
I agree with Jane Peters. Unless you charged your physical inspection to escrow, which used to be done in prior years, you should owe nothing. Sometimes, if the escrow has been lengthy, say three months or more, then you might be charged a cancellation fee of $100-200 by escrow. I doubt this is the case with you.
Web Reference: http://DeborahLondon.com
0 votes Thank Flag Link Wed Oct 5, 2011
If you are cancelling escrow for a legitimate reason within the contingency period you should not be liable for any out-of-pocket expenses. If you already had your appraisal you will have to pay for it, but that should be all..
Web Reference: http://www.homejane.com
0 votes Thank Flag Link Wed Oct 5, 2011
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