Reviewed by Craig Hoebing, Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker · Updated October 2026
A commercial loan may require the borrower to deposit, each month, enough to pay the next tax bill, the next insurance premium, and sometimes a replacement reserve or a leasing reserve. Wikipedia's loan-servicing article, opened October 28, 2026, says loan servicing is the process by which a company collects interest, principal, and escrow payments from a borrower, and that distributions typically include paying taxes and insurance from escrowed funds and remitting principal and interest to investors. That is the mechanical picture. It is not a statement that every commercial lender escrows, and the article's fee discussion in basis points is omitted on purpose. This note is general information. It is not tax advice, legal advice, or an appraisal. A CPA, an attorney, or the other professional named in the note decides how the rule applies to a given property.
Some lenders waive tax and insurance escrows when the loan is small relative to the property's income, the sponsor is known to them, and the insurance is on a policy they have already reviewed. Some waive them at closing and keep the right to start them if a payment is late, a policy lapses, or a coverage test fails. That right is often called a springing escrow. It lives in the loan agreement. This page will not say when a waiver is available, because no guide opened for this note stated a universal rule.
How deposits are sized, without a formula
The monthly tax deposit is ordinarily the annual bill divided across the year, plus whatever cushion that lender's documents allow. The insurance deposit follows the premium. A replacement reserve follows the engineer's table of future repairs, which is a different document from the tax bill. Tenant-improvement and leasing reserves, which are not the tax escrow, are tenant improvements and leasing reserves. Insurance coverage lenders ask about in Arizona is insurance requirements. How the Arizona tax bill is classified is Arizona property tax in underwriting. A lockbox, which sweeps rent and is not the same account as a tax escrow, is cash management and lockboxes.
The public Fannie Mae Multifamily Guide home page was opened October 28, 2026. Its index lists supplements, including one titled Interest Rate Cap Escrows dated on that index as March 25, 2024. The index itself did not display a chapter that states when multifamily tax and insurance escrows are required or waived. This note does not describe a Fannie rule it did not read. If you have an agency loan, the loan documents and the guide section the lender cites control. Capital Market Funds is not a Fannie Mae DUS lender.
What happens at refinance
At payoff, the servicer typically applies the remaining escrow to the amount due or refunds it, according to the payoff letter. A new lender may start a new escrow even if the old one was waived. Ask for the escrow balance in the payoff quote so you do not double-fund the same tax bill. Do not assume the old cushion transfers.
Capital Market Funds arranges the loan. It does not hold the escrow account. The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066.
Sources
Questions
- Does every commercial mortgage escrow taxes and insurance?
- No. Some lenders require it, some waive it, and some reserve the right to start it later. The term sheet and the loan agreement control. This page does not state a waiver test.
- Can you publish the monthly escrow deposit as a percent of the payment?
- No. The deposit follows the tax bill, the premium, and that lender's cushion. A percent printed here would be a fiction.
- Is a tenant-improvement reserve the same account as the tax escrow?
- No. Taxes and insurance pay bills that come due whether or not you lease space. A leasing reserve pays the cost of the next tenant. They are different buckets. Read the leasing-reserve note for that bucket.
- Did the Fannie Mae guide, as opened for this note, set the escrow rule?
- The guide index was opened. It listed an interest-rate-cap escrow supplement. It did not display a tax and insurance escrow chapter, so this note does not attribute a rule to one. Your lender's documents govern.