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Early Bird, Other/Just Looking in San Diego, CA

whats a demand in escrow

Asked by Early Bird, San Diego, CA Thu Jan 6, 2011

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A demand in escrow is anything that needs to be paid at the close of escrow. An inspector the buyer enlists to check out the house may agree to put in a demand in escrow to get paid for the inspection at the close of escrow instead of getting paid at the time of the inspection (usually there is an extra fee for waiting until escrow closes). Any demand in escrow has to be submitted in writing to the escrow company. If there is a disputed demand in escrow, escrow may not be able to close until the dispute has been resolved. However, not all disputes will prevent escrow from closing. Depending on what the dispute is about, sometimes the parties can just agree to hold money in escrow for period of time until a condition has been met. For instance, in good old days when we did not have so many distressed properties, money may be held to pay for repairs and the escrow officer would send the money once proof of satisfactory repairs was submitted. Holding back money in escrow has become rare.
1 vote Thank Flag Link Thu Jan 6, 2011
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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Your question has prompted me to go ask one of my favorite escrow officers. I think it might be semantics, but there are liens against the property (mortgagees, utilities, etc.) , there are contractual liens related to the transaction (broker demands which specifies compensation based on the listing agreement/purchase contract), and there are other identifiable liens like paying for pest inspections, repairs etc.

I'm not sure now that they're all called 'demands' or not...but the objective is that an escrow company must provide to the buyer a property that is free of all claims to the property at the time of purchase. The escrow company must execute the contractual terms without bias to any party. If someone provides a claim for some payment, and it's not in the listing agreement or purchase agreement, the escrow company needs to get authorization from the party(s) involved in order to pay that. They can't just pay it arbitrarily.

So now I'm going to call my escrow officer and ask whether there's different names for these claims or whether they're all called 'demands'....but again, why do you ask?
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Thu Jan 6, 2011
Looks like everyone has this concept down, I was currious why you ask?
0 votes Thank Flag Link Thu Jan 6, 2011
You are all waxing poetic way to early in the morning. Real Estate never sleeps.
:)
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0 votes Thank Flag Link Thu Jan 6, 2011
A demand is a claim for compensation from a lien holder in an effort to settle a dispute. It is different from a payoff letter, which shows actual amounts due (sometimes including penalties, interest, etc). A demand is what the lien holder is willing to "settle" for.

In escrow, demands more commonly come from utility companies for back owed bills, seller lenders (when doing short sales), HOA companies for outstanding HOA dues, DCSS (back owed child support), etc. Finally, there is the broker demand for payment of services on the transaction, or commission payment request.

Hope this helps.
0 votes Thank Flag Link Thu Jan 6, 2011
You've got two basic types of demands for escrow. The most common is a beneficiary demand. This is a letter from the seller's bank that outlines in great detail how much money the seller's bank wants to release the loan. It states a principal balance, fees for the reconveyance and recording, interest due from the last payment date to the receipt by the lender (not the day of closing), and this beneficiary demand is typically good for a certain period, meaning it can expire if escrow doesn't close by the date indicated in the letter.

The second type of demand is from the listing and selling brokerages. These are statements of how much money each brokerage should receive from the seller's net proceeds as commission. They may or may not be equal amounts. These demands do not expire.

A home inspector or a pest company or other type of contractor do not submit demands. They submit invoices for repair work.

Elizabeth Weintraub
Broker-Associate #00697006
Lyon Real Estate
0 votes Thank Flag Link Thu Jan 6, 2011
What is the proper treatment for repayment of a personal loan? How does creditor request/demand repayment from seller in a real estate sale?
Flag Tue Apr 8, 2014
Early Bird...

Hey it looks like you were up in the "O-Dark" time when most of us where snoring.... and yet you were able to get some answers pretty quickly... Pass the word about Trulia to your friends.... this is a great resource isn't it...
0 votes Thank Flag Link Thu Jan 6, 2011
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