Escrow & Title
What is 'subescrow' in Hawaii real estate and when is it used?
AA. A backup escrow created when the primary escrow company becomes insolvent
BB. A specialized escrow arrangement for handling payoff of existing liens, coordinating between the primary escrow and the payoff lender✓ Correct
CC. A secondary escrow for holding reserved maintenance funds
DD. An escrow arrangement used exclusively for foreclosure proceedings
Explanation
A subescrow is a secondary escrow arrangement, often used when the primary escrow company and the lender being paid off are different institutions. The subescrow handles the specific payoff transaction, ensuring loan proceeds are properly applied to retire existing liens before the new lender's mortgage is recorded.
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