First American Corporation (new) · NYSE:FAF
First American Corporation (new) — First American Financial — Reg A Offering (August 2022)
39 slides from First American Corporation (new)'s offering presentation, Aug 15, 2022
Slide 1: Overview of Escrow & Closing: Escrow & Settlement Statements in the Eastern U.S.
Overview of Escrow & Closing: Exploration of Escrow & Settlement Statements in the Eastern U.S. Reginald Cunningham, VP & Escrow Manager, Chicago, IL Pablo Iglesias, AVP & Escrow Manager, Southeast Escrow Advisor, Atlanta, GA First American Title Insurance Company, and the operating divisions thereo
Slide 2: Today's Presenters
Today’s Presenters Reginald Cunningham Pablo Iglesias VP & Escrow Manager AVP & Escrow Manager Chicago, IL Southeast Escrow Advisor Atlanta, GA PAGE 1 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 3: Opening the Escrow
Opening the Escrow Earnest money deposits Steps to Take ‒ Ask title for W9 if not provided with wire instructions Escrow agreement ‒ Validate wire instructions by phone ‒ Get escrow agreement in place Third party depositors early ‒ Notify escrow agent at the outset regarding key parties for
Slide 4: Closing: Documents and Logistics
Closing: Documents and Logistics Escrow ‒ Escrow agent receives, assembles, completes, holds, and disburses documents and funds, as instructed by the transaction’s parties, in order to: • Facilitate and confirm deliveries required for closing (pursuant to a PSA, a loan commitment, or otherwise), a
Slide 5: Escrow Documents
Escrow Documents Title documents – that is, a deed, security instrument, and/or other documents affecting title to real property, usually to be recorded in the land records Other documents that the parties wish to make a part of the escrow, including PSA document, loan documents, third party agr
Slide 6: Title & Title Documents
Title & Title Documents Title company issues title coverage upon satisfaction of any and all applicable requirements, including one or more conveyances at closing that vest the title as insured, but also including such other requirements as are called for by the transaction and the title itself
Slide 7: Settlement Statements
Settlement Statements Evidences the funds flowing in and out of escrow ‒ Sources (deposits from buyer, seller, or third parties) ‒ Adjustments (offsets against funds that would otherwise be deposited into escrow or disbursed to one party vs. another) ‒ Uses (transaction consideration, title premiu
Slide 8: Practical Tips from the Escrow Desk
Practical Tips from the Escrow Desk Immediately Available Funds Secure Emails Holdback Agreements No title coverage in escrow instruction Mutually signed cancellation instructions Wire verification (ClarityFirst®) PAGE 7 ©2022 First American Financial Corporation and/or its affiliates. A
Slide 9: Best Practices
Best Practices Review the commitment carefully, and well in advance, for closing-related requirements Negotiate closing documents early Prepare, distribute and discuss a checklist Clearly allocate responsibility for title requirements and document preparation Don’t assume that a counterpar
Slide 10: Closing Instructions Letter
Closing Instructions Letter PAGE 9 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 11: Closing Instructions Letter
Closing Instructions Letter Purpose Nature of the Escrow Agent’s Role Components of Closing Instructions Letter Common Problems Best Practices PAGE 10 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 12: Purpose of Closing Instruction Letters
Purpose of Closing Instruction Letters To define the conditions upon which a party to the transaction will perform, or will accept performance, to or from another party to the transaction, usually where the instructing party will not be present at the closing ‒ Certain activities that would be per
Slide 13: Nature of Escrow Agent's Role
Nature of Escrow Agent’s Role Defined by contract (escrow instructions) Escrow instructions delegate execution, not discretion or decision- making In a multiparty escrow, the escrow agent is neutral and un-biased, by definition Escrow agent must be able to follow each party’s instructions, a
Slide 14: Components of the Closing Instructions Letter
Components of the Closing Instructions Letter (Cont.) Identify the parties and the transaction Identify the deliveries that will be received from all parties ‒ Documents ‒ Funds PAGE 13 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 15: Common Problems to Beware of
Common Problems to Beware of Inconsistencies & Conflicts ‒ Between escrow instructions and the commitment/pro forma ‒ Between escrow instructions and the title policy ‒ Between escrow instructions and other escrow instructions ‒ Between the process outlined in the letter and the closing process in
Slide 16: Best Practices
Best Practices Be careful in using form instruction letters Know the commitment and policy forms Avoid redundancy/inconsistency by having a final & approved pro forma Simplicity is generally a good thing …Say what you need to say, but not more PAGE 15 ©2022 First American Financial Corporati
Slide 17: Settlement Statements, Disbursements & Closing
Settlement Statements, Disbursements & Closing PAGE 16 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 18: Settlement Statements & Disbursement
Settlement Statements & Disbursement Purpose of Settlement Statement ‒ A document that summarizes the terms and conditions of a settlement; an itemized list of fees and credits summarizing the finances of an entire real estate transaction Role of Escrow Agent ‒ Holds property in trust for third
Slide 19: Settlement Statements - Items Included
Settlement Statements – Items Included: Consideration Deposits in escrow ‒ Earnest Money ‒ 1031/QI funds ‒ Equity contributions Loan proceeds and Loan Charges Broker Fees PAGE 18 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 20: Settlement Statements & Disbursement: Items Included (Cont.)
Settlement Statements & Disbursement: Items Included (Cont.) Title and Escrow Charges ‒ Closing fee ‒ Search & exam fees ‒ Policy and endorsement premiums ‒ Transfer and recordation taxes ‒ Recording fees Prorations and Adjustments ‒ Property-level adjustments (e.g., rent, security deposits, CAM
Slide 21: Disbursements
Disbursements Sale proceeds Loan payoffs Third party payments Real property tax payments Post-closing escrows PAGE 20 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 22: More on Tax Prorations
More on Tax Prorations Contractual, like any other proration Important to understand the jurisdiction’s custom and practice, ‒ Variations from jurisdictional custom/practice ‒ Clarity is critical Buyer and Seller should be in agreement on all final proration amounts PAGE 21 ©2022 First America
Slide 23: WE'RE CLOSED!
WE’RE CLOSED! WE’RE CLOSED! What triggers closing? ‒ Funds received ‒ Documents received ‒ Approvals received ‒ Title company prepared to act in accordance with Escrow Instructions PAGE 22 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 24: Recording
Recording Recording is fundamental ‒ Although it is generally not necessary to effect a conveyance as between the grantor/grantee, recording is often necessary in order for a conveyance to be enforceable against, or to establish priority with respect to the interest of, a party other than the gran
Slide 25: Challenges & Jurisdiction-Specific Concerns
Challenges & Jurisdiction-Specific Concerns Proper conveyancing language Notarial acts/proper forms of acknowledgment ‒ In-state vs. out-of-state acknowledgments Authority evidence (and jurisdictional requirements) Title chain problems Local review of recordation/transfer tax calculations,
Slide 26: Recording Best Practices
Recording Best Practices Contact title company early to discuss forms/review proposed documents for recordability Review title requirements for recording-related items and defects in the title chain Understand the recordation/transfer tax landscape ‒ If an exemption applies, discuss with the t
Slide 27: Common Escrow & Closing Issues
Common Escrow & Closing Issues PAGE 26 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 28: Third Party Depositors
Third Party Depositors Third Party Depositors are when Earnest Money Deposit arrives from someone other than the Buyer that is named in the Purchase and Sale Agreement. ‒ Why this is important to the Escrow process ‒ What your Escrow Officer may request • Third Party deposit instructions • Clear u
Slide 29: Multiple Escrow Depositors
Multiple Escrow Depositors Cash Reporting to the IRS based on: ‒ Dollar limit ‒ Number of deposits per year • IRS form 8300 completion may be required PAGE 28 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 30: FIRPTA Withholding
FIRPTA Withholding The disposition of a U.S. real property interest by a foreign person is subject to the Foreign Investment in Real Estate Property Tax Act of 1980 (FIRPTA) A disposition includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons
Slide 31: Holdback
Holdback Get Escrow Agent involved as soon as possible Instructions must include: ‒ Amount ‒ Duration ‒ Defined use of holdback of funds ‒ Mutual instructions to release ‒ Arbitration language ‒ Interpleader language should match that of the state where the Escrow Agent’s office is physically lo
Slide 32: Wire Fraud Risks
Wire Fraud Risks PAGE 31 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 33: Wire Fraud Concerns
Wire Fraud Concerns Two-factor authentication highly recommended Avoid emailing wire instructions in an unsecured manner Set expectations with the client that they should expect a phone call to verify wire instructions verbally if instructions are emailed PAGE 32 ©2022 First American Financial
Slide 34: Wire Verification
Wire Verification Vendor wire verification – allow additional time for this. It’s common for third-party vendors to receive a check instead of a wire. If unable to confidently verify wire instructions appropriately, it may result in the issuance of a physical check in lieu wired funds PAGE 33 ©2
Slide 35: Red Flags
Red Flags PAGE 34 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 36: Final Takeaways
Final Takeaways Introductory call / meeting to discuss the transaction Complete contact information for the parties (i.e. name, title, email address, phone number, physical address, relationship to transaction) Early involvement and frequent communication with the parties; especially when invo
Slide 37: Questions
Questions PAGE 36 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
Slide 38: Register Now for our CLE Webinar
Register now for our CLE Webinar Overview of Escrow & Closing: Exploration of Escrow & Settlement Statements in the Western United States Hosted by First American Title’s Kat Van Steenhuyse & Laura Johnson Tuesday, October 18 at 10 am PT Exit Survey If your state requires an attorney ID number
Slide 39: Thank You!
Thank You! PAGE 38 ©2022 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
First American Financial — Reg A Offering (August 2022) on 6ix