What is Escrow?

An escrow is an arrangement made under contract between a Buyer and Seller. As the neutral third party, escrow is responsible for receiving and disbursing money and/or documents. People buying and selling real estate open an escrow for their protection and convenience. Both the buyer and seller expect the escrow agent to carry out their written instructions associated with the transaction and also to advise them if any of their instructions are not being met or cannot be met. If the instructions from all parties to an escrow are clearly set out, the escrow officer can proceed on behalf of the buyer and seller without further consultation.

The Escrow Agent

Clears Title
Obtains title insurance.
Obtains payoffs and release documents for underlying loans on the property.
Receives funds from the buyer and/or lender.
Prepares vesting document affidavit on seller’s behalf.
Prorates insurance, taxes, rents, etc.
Prepares a final statement (often referred to as the “HUD Statement” or “Settlement Statement” for each party, indicating amounts paid in conjunction with the closing of your transaction
Forwards deed to the county for recording. Once the proper documents have been recorded, the escrow agent will distribute funds to the proper parties. 

The sale is officially closed when the new deed is recorded and funds are available to the seller, in turn transferring ownership from the seller to the buyer. The escrow agent is a neutral third party acting on behalf of the buyer and seller under the Escrow Law as set forth in the State of California.

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