UNDERSTANDING ESCROW PROCESS

Escrow Steps for Buyers and Sellers
1. Opening Escrow

• Escrow Company Actions:

  • Opens an escrow account upon receiving the purchase agreement and earnest money deposit.

  • Provides a written confirmation of the escrow account and its terms to both parties.

• Buyer and Seller Actions:

  • The buyer provides the earnest money deposit to the escrow company.

  • Both parties review and sign escrow instructions that outline the terms and conditions of the escrow.

2. Managing Escrow Instructions

• Escrow Company Actions:

  • Reviews and verifies escrow instructions from both parties.

  • Sets up and manages the escrow account, ensuring compliance with the terms outlined in the purchase agreement.

• Buyer and Seller Actions:

  • Both parties may need to provide additional documents or information required by the escrow company.

3. Handling Contingencies

• Escrow Company Actions:

  • Monitors the satisfaction of contingencies (e.g., inspections, appraisals) and ensures that conditions are met before proceeding.

  • Updates the parties on the status of contingencies.

• Buyer and Seller Actions:

  • The buyer conducts home inspections and appraisal, and addresses any issues.

  • The seller responds to requests for repairs or additional information.

  • Both parties agree on any necessary modifications to the terms or conditions based on inspections or appraisals.

4. Title Search and Insurance

• Escrow Company Actions:

  • Orders a title search from a title company to ensure the property has a clear title.

  • Coordinates the issuance of title insurance policies for both the buyer and the lender (if applicable).

• Buyer and Seller Actions:

  • The buyer may review the title report and raise concerns if any issues are found.

  • The seller may need to resolve any title issues discovered during the search.

5. Preparing for Closing

• Escrow Company Actions:

  • Prepares the final closing documents, including the settlement statement, and coordinates the signing of these documents.

  • Calculates final closing costs and ensures all financial obligations are met.

• Buyer and Seller Actions:

  • The buyer deposits the remaining down payment and closing costs into the escrow account.

  • Both parties review and sign the closing documents, which may include the deed, loan documents, and settlement statement.

6. Closing the Transaction

• Escrow Company Actions:

  • Records the deed and other required documents with the county recorder’s office to transfer ownership.

  • Disburses funds according to the escrow instructions, paying off any existing mortgages, liens, and other costs.

  • Handles the final accounting and ensures that all conditions of the escrow are satisfied.

• Buyer and Seller Actions:

  • The buyer waits for confirmation of the recorded deed and transfer of possession.

  • The seller ensures that any required documents are signed and funds are properly disbursed.

7. Post-Closing Activities

• Escrow Company Actions:

  • Provides both parties with copies of the recorded documents and final settlement statement.

  • Retains records of the transaction for future reference.

• Buyer and Seller Actions:

  • The buyer takes possession of the property and updates utilities and other services.

  • The seller may follow up on any remaining financial or administrative tasks related to the sale.

This streamlined view should give you a clear understanding of the escrow-related activities and responsibilities for both buyers and sellers in a Southern California real estate transaction.