What is the escrow process in Las Vegas?
There are two ways of closing real estate deals in the US. The states west of the Mississippi River use the escrow process while states east of the Mississippi River and Canada use attorneys and pay a high price for it (they charge much higher fees).
We use escrow companies in Las Vegas to close real estate transactions. In theory, they act as a neutral third party whose job is to follow and enforce the terms of the real estate contract. They are forbidden to offer legal advice on anything that you need a real estate attorney for.
It is illegal to force the buyer to buy title insurance from a particular title company
Buyers or sellers have the choice of buying title insurance from the escrow company or from another source. If you are not happy, the best way to punish them is to buy title insurance from another source. The lion share of their profit comes from selling title insurance which is separate from escrow.
When does the escrow process start?
The escrow process starts when buyers and seller both execute the purchase agreement. Then the buyer deposits the earnest money deposit (EMD) with the company, and they open a file and sends out a preliminary title report within the first 10 days.
The preliminary title will list any clouds on the title including, unpaid liens on the property or any past due taxes, HOA or mechanical liens that need to be resolved upon closing in order to issue title insurance. If all is good, they will give you a commitment to issue title insurance if everything checks out. These people are extremely jumpy and if there is the slightest problem they will not issue title insurance.
The company contacts the HOA management company, trash and sewer companies and Clark County, which Greater Las Vegas is a part of, for property tax in order to get the exact amounts that will be pro-rated when the property changes hands. They are in charge of distributing all funds until the escrow is closed.
Not all escrow companies are equipped to handle FIRPTA deals
Foreign sellers are subject to Foreign Investment in Real Property Tax or FRIPTA tax. The escrow company has to file the paperwork with the IRS and withhold money from the seller’s proceeds for possible tax liability.
It is important to work with a knowledgeable agent especially if you have a foreign seller involved.