What is an Escrow?
When opening an escrow, the buyer and seller of a piece of property establish terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a neutral third-party known as the escrow holder. The escrow holder in turn has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent, neutral account, and the vehicle by which the interests of all parties to the transaction are protected.
What does the Escrow Holder Do?
The escrow holder is a neutral third-party that maintains the escrow and impartially oversees the escrow process, insuring that all conditions of the sale are properly met based on the original purchase agreement and lender requirements.
The escrow officer’s duties include:
- Serve as the neutral agent and the liaison between all parties involved
- Prepare the escrow instructions
- Requires a Preliminary Title Search to determine the status of title to the property
- Request a Demand from the existing lender (Seller’s Lender) for the Payoff
- Comply with the new lender’s requirements as specified in their instructions to escrow
- Receive and handle purchase funds from the buyer
- Prepare or secure the deed and other documents related to the escrow
- Secure releases of all contingencies or other conditions imposed on the escrow
- Record the deed and any other documents
- Request the title insurance policy
- Close the escrow pursuant to instructions supplied by the seller, buyer and lender, if any
- Disburse funds as authorized by the instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs
- Prepare final statements for all parties involved that account for the disposition of all funds held in the escrow account
How Do I Open an Escrow?
Your real estate agent will open escrow. As soon as you execute the Purchase Agreement, your agent will place your initial (earnest money) deposit into the escrow company’s trust account. You will receive a receipt for the funds.
What Information Will I Have to Provide
You may be asked to complete a Statement of Identity as part of the paperwork. Many people have the same or similar names. The Statement of Identity is used to identify the specific person involved in the transaction. Some of the information you may be asked to provide will include date of birth, social security number, etc. This information is strictly confidential.
How Long is an Escrow
The length of an escrow is determined by the terms of the Purchase Agreement and can range from a few days to several months. Typically, the length of an escrow is usually 30 to 45 days.
Your Escrow Signing Appointment:
This is a list of items you will need in preparation for your appointment to sign escrow papers:
Identification – All Parties – There are several acceptable forms of identification which may be presented. One of the following forms must be presented at the signing of escrow in order for the signature to be notarized: a current driver’s license, passport, State of California Department of Motor Vehicles ID car.
Signing the Escrow Instructions – Buyer & Seller – Within a few days of opening escrow you will need to sign the escrow instructions. The seller will typically sign the Grant Deed which needs to be notarized.
Cashier’s Check – Buyers – You need a cashier’s check or a certified check issued by a California financial institution made payable to the title company in the amount given to you by your Escrow Officer. A personal check will delay the closing since the title company is required by law to have “good funds” before disbursing funds from the escrow.
Hazard Insurance – Buyers – You must have fire and hazard insurance in place before the lender will release any funds to the title company, to fund the loan. Complete the form provided and call your insurance agent. Once you have spoken to your insurance agent, call the escrow officer or assistant with the insurance agents’ name and phone number so they can be sure the policy complies with your lender’s requirements.
Common Ways to Hold Title – Buyers – There are many different ways that you might hold title to your new property. You may refer to materials your real estate agent or escrow holder supplies you with or contact your attorney or tax consultant for more specific advice. This is a very serious matter and a decision not to be taken lightly. You must let your Escrow Officer know so he/she can draw the Grant Deed to your new property. “See the Chart Common Ways to Hold Title”
Signing the Loan Documents – Buyers – After loan documents, your Escrow Officer will return the buyer’s loan documents to the lender for a final review.
Escrow Closing – The escrow closing is the legal transfer of the title to the property from the seller to the buyer. Usually the Grant Deed and the Deed of Trust are recorded within one working day of the title company’s receipt of loan funds.
Final Proceeds Check – Sellers – The proceed check is disbursed as soon as the close of escrow, when the Escrow Officer is able to confirm with the County Recorder that the documents have recorded and the legal transfer has occurred. The proceeds check can be delivered to you or mailed to you. It can also be electronically wire transferred (for an additional fee) or you may make arrangements to pick it up at our escrow office.
