The 7 SIMPLE Steps of Escrow in California

What is Escrow?

In order to obtain home financing and have a home loan funded, a buyer must go through a process called Escrow. In California, an escrow is “closed” on the day that the grant deed is recorded in the official records at the County Recorder’s office. The moment the grant deed is date-stamped by the county clerk is considered the moment that ownership of the property changes hands.

By definition, Escrow is….    a process that provides for a fair and equitable transfer of property from one person to another. The Escrow Agent acts as the bridge between seller, lender, and buyer while the Escrow Account is where the money is held until all agreements are settled.  Realize that some people have referred to escrow as the monies held by the mortgage company to pay the homeowners taxes and insurance….. most refer to those monies as “impounds”.

To better explain, here is escrow broken down into seven steps:

1) Opening Escrow – Buyer and Seller agree on terms of sale

2) Buyer’s initial deposit placed into escrow account – additional identification information will be needed

3) Buyer and Lender work out details to secure that the loan will ultimately pay for the home

4) Closing Escrow – Buyer will be contacted to sign the escrow instructions and ultimately the loan documents

5) Seller gets estimated amount of proceeds from the sale and signs the grant deed

6) Escrow has mutually agreeable written instructions and the funds received from buyer and lender are enough to satisfy the purchase

7) Escrow CLOSES. 

In California, it is important to realize that the “closing” does not mean the day the buyer signs loan documents, it does not mean the day the lender funds the mortgage loan and it does not mean the day the seller receives the proceeds of the sale.

Remember that clear communication and preparation is the key to a successful escrow closing. And always contact your real estate agent and your escrow team with any questions as early as possible in the transaction.

Cheers to a successful closing! 

Dee Marie Fisher

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