Re: Escrow Accounts on Underlying Loans - Posted by John J.
Posted by John J. on May 15, 2000 at 01:38:10:
Steve, I have several of those arrangements. I do the following:
At closing the buyer also buys the escrow account, i.e. he reimburses the seller for whatever amount is in escrow with the mortgage co. SO he then “owns” this. Then he just adds the actual T&I payments to his payment to you, which you then pass on. When you receive the annual adjustment statement and the escrow payments change you need to notify the buyer quickly of the new amount, so that he can change his payment amount to you in time for you to make the new payment on the underlying loan. At the end of the year, just send him a copy of the statement that you receive from the mortgage co,. so he’ll have it for his tax records. I am doing this with 8 buildings that I have sold on wraparound and it works well.