In which situation would an escrow agent request a beneficiary statement?

An escrow agent would request a beneficiary statement in a situation where property is purchased subject to an existing loan. This statement, provided by the lender or beneficiary of the loan, details the outstanding balance, interest rate, and any prepayment penalties associated with the loan on the property being sold.

When buyers are purchasing a property that has an existing loan, it's essential for them to understand the financial obligations tied to that loan. The beneficiary statement helps ensure that the buyer is fully informed about what they are stepping into regarding the existing debt. This due diligence is crucial to avoid surprises in the future.

In contrast, if a property is sold free and clear, there is no loan involved, and thus no beneficiary statement would be necessary. Similarly, a contingent sale scenario does not require a beneficiary statement, as it primarily relates to conditions tied to the sale rather than existing financing. While a buyer might request various documents during a transaction, the escrow agent's role involves securing required financial disclosures like the beneficiary statement specifically in scenarios where an existing loan is part of the transaction.