Construction Escrow

Traditional Construction Escrow Services are used when a lender is financing a construction project and deposits escrow funds with a title company. The title company oversees the disbursement of all construction payouts, which are made to the general contractor, subcontractors, and material suppliers as work is completed. Having the title company administer this process ensures that no mechanics' liens are recorded against the real estate as a result of the work performed on the property.

Each time a general contractor requests a payment or "draw," the general contractor must submit a Sworn Statement listing all the subcontractors entitled to be paid from that draw. Each subcontractor and material supplier listed on the Sworn Statement must provide a lien waiver. Prior to authorizing a payment, Advocus verifies all amounts to make sure there are sufficient funds to meet the obligations set forth on the Sworn Statements and that the loan is in balance. In addition, Advocus reviews all documentation and conducts a later date search to make sure title is clear and no mechanics' liens have been recorded. Interim mechanics' lien coverage is provided by issuance of the ALTA 32.1 Construction Loan Endorsement and ALTA 33-06 Disbursement Endorsement to be attached to the Loan Policy for each construction draw.

Construction Escrow Services protect both the lender and the owner during the construction of the project to make sure that payment is made for completed work, and that persons and entities supplying materials or labor to the project have waived or released any statutory lien rights on the property.

Outside Interim Construction Escrow Services are used when a lender is financing a construction project and handles disbursement of construction loan funds outside of the a title company construction escrow. Each time a general contractor requests a payment or "draw," the general contractor must submit a Sworn Statement listing all the subcontractors entitled to be paid from that draw. Each subcontractor and material supplier listed on the Sworn Statement must provide a lien waiver. Prior to authorizing a payment, Advocus verifies all amounts to make sure there are sufficient funds to meet the obligations set forth on the Sworn Statements and that the loan is in balance. In addition, Advocus reviews all documentation and conducts a later date search to make sure title is clear and no mechanics' liens have been recorded.

Owner's Construction Escrows Without Title Insurance are used when a property owner is financing a construction project without involvement of a lender. Each time a general contractor requests a payment or "draw," the general contractor must submit a Sworn Statement listing all the subcontractors entitled to be paid from that draw. Each subcontractor and material supplier listed on the Sworn Statement must provide a lien waiver. Prior to authorizing a payment, Advocus verifies all amounts to make sure there are sufficient funds to meet the obligations set forth on the Sworn Statements. In addition, Advocus reviews all documentation and conducts a later date search to make sure title is clear and no mechanics' liens have been recorded. No interim mechanics' lien coverage is available for this type of construction escrow.