What is Escrow?

Escrow is the process by which the interests of all parties in a real estate transaction are protected, ensuring that all conditions of the sale have been met before property and money change hands. Escrow is an independent depository wherein all funds, instructions, and documents for the purchase of your home are held, including your down payment, your lender’s funds, documents for the new loan, hazard and title insurance, inspection reports, and the grant deed from the seller. At the close of escrow, the “escrow holder” delivers these items to the appropriate parties, disburses the funds, and handles the associated paperwork.

What Does an Escrow Holder Do?

The escrow holder is a neutral third party that maintains the escrow account and impartially oversees the escrow process, making sure all conditions of the sale are properly met.


The Escrow Holder’s Duties Include:

- Serving as the neutral professional and the liaison between all parties involved

- Requesting a preliminary title search to determine the status of title to the property

- Requesting a beneficiary statement of debt or obligations that will be taken over by the buyer

- Requesting a payoff demand from beneficiaries when the seller is paying off debts

- Complying with the lender’s requirements as specified in their instructions to escrow

- Securing releases of all contingencies or other conditions imposed on the escrow

- Preparing or securing the deed and other documents related to escrow

- Prorating taxes, interest, insurance, and rents

- Preparing escrow instructions

- Receiving purchase funds from the buyer

- Receiving loan funds from buyer’s lender

- Closing the escrow pursuant to instructions supplied by the seller, buyer, and lender

- Recording the deed and any other documents

- Disbursing funds as authorized by the instruction, including charges for title insurance, recording fees, real estate commissions, and loan payoffs

- Preparing final statements for all parties involved that account for the disposition of all funds held in the escrow account.

The Escrow Process

Your escrow is created shortly after you execute the purchase agreement to sell your home. It cannot be successfully completed until all escrow instructions have been carried out and all parties have signed escrow documents. The length of escrow can range from a few days to several months, depending on the terms of the purchase agreement. On average, an escrow closes within 30 to 45 days.


Opening the Escrow

Either your real estate professional or the other professional may open the escrow depending on the county. As soon as you execute the sales agreement, your professional will place the initial deposit into an escrow account. At the opening of escrow, you may be asked to provide identification information such as your birth date and Social Security number. This information remains confidential.


The Loan Process

Unless you are paying all cash, the next step will be for you to select a lender and apply for a mortgage loan. Your real estate professional will keep escrow and the other professional informed of your loan progress. The loan(s) on the owner’s property will be paid off at the close of escrow unless you take over their existing loan(s). When your loan is approved, the loan documents will be sent to your escrow officer, and he/she will then prepare your escrow instructions and arrange for your signing.

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1290 Howard Ave #201, Burlingame, CA 94010