Thomas W. Burkart is an experienced real estate attorney who has been reviewing and issuing
title insurance and conducting real estate closings since 1986. He is certified and duly
authorized to establish and administer construction loan escrows for the Attorney Title
Guaranty Fund, Inc., one of the strongest title insurance companies in the state of Illinois.
Our firm is staffed with three attorneys, a paralegal and title clerk, and secretarial
professionals.
Banks, which have used this office for construction loan escrow & disbursement services,
include Hamel State Bank of Hamel, Illinois, First Federal Savings & Loan of Edwardsville,
Illinois, and First National Bank in Staunton, Illinois. In all his years of service,
Mr. Burkart has not had a claim or dispute with any title policy or escrow that he has
handled.
A Construction Escrow & Disbursement is a procedure in which the escrow
agent/title company assures a "lien-free" distribution of loan proceeds that
are to be used in a construction project. It is governed by the Construction Loan
Escrow Agreement and administered using a well-defined meticulous review of sworn
contractor statements, lien wavers and other documents involved. Everything
is designed to assure that the proceeds are used to pay only for work done on the
project which is the collateral for the loan and that the property remains free from
mechanic's liens that could potentially prime (achieve priority over) the lender's
mortgage.
Generally speaking, the escrow involves multiple draws from monies initially deposited
into the title company's escrow (a FDIC insured account) by the lender. Sworn statements,
lien waivers and other documents from the contractors and subcontractors are reviewed
prior to each draw. Further, all amounts and balances due are verified with the lender
prior to each draw to ensure that the loan stays "in balance," meaning that there is enough
money in the escrow to meet the financial obligations set forth on the contractor's sworn
startments.
More specifically:
1. The initial condition of the title to the subject property is reported in a Commitment to issue
an MPC (American Land Title Association Construction Loan Policy, as amended
10/17/1992), which must be approved prior to disbursement of any funds.
2. Upon request for the first draw, if there is an architect involved, we obtain
his/her certification that the work and materials for which payment is requested is complete
in accordance with the project plans. If there is no architect, we perform an
independent inspection of the project to assure that the materials and work are
in place. Lien waivers to date are prepared and obtained from each contractor
or supplier that has done work and after completion of the disbursement, the MPC
title policy is issued to the lender. With each draw, the policy is amended by
using a Construction Loan Escrow Disbursement Endorsement, insuring over possible
mechanic's liens to the extent of the accumulated payout.
3. Upon the delivery of the final disbursement endorsement, the lender will have
the option of converting the MPC to a Standard ALTA Loan Policy (MPA) if the same
lender is providing the end loan. If a different lender is providing the end loan
through a refinance, a new MPA will be provided to the new lender at a nominal charge.