Escrow, Title, Taxes and Closing Costs
The Escrow Process :
When opening an escrow, the buyer and seller 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 Officer, in turn has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent third party – the vehicle by which the interest of all parties to the transaction are protected.
How does the Escrow Process Work?
The Escrow officer takes instructions based on the terms of your Purchase Agreement and the lender’s requirements. The Escrow Officer can hold inspection reports and bills for work performed as required by the Purchase Agreement. Other elements of the escrow include hazard and title insurance, and the grant deed from the seller to you. Escrow cannot be completed until these items have been satisfied and all parties have signed escrow documents.
What Does the Escrow Holder Do?
The Escrow holder is a neutral third party, that maintains the escrow and impartially overses the escrow process, ensuring that all conditions of the sale are properly met.
The Escrow holder’s duties include:
Serve as the neurtral agent and the liason between all parties involved.
Prepare the escrow instructions.
Request a Perliminary Title Search to determin the status of title to the property.
Comply with the lender’s requirements as specified in its instructions to escrow.
Receive tand handle purchase funds from the buyer.
Prepare or secure the deed and documents related to the escrow.
Pronate taxes, interest, insurance and rents.
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, biyer 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?
When your offer is accepted, your real estate agent will open escrow. As soon as you execute the Purchase Agreement, your realtor will place you initial deposit (earnest money) into an escrow account.

Written evidence of the deposit is generally included in you copy of the sales contract. The funds will then be deposited in a separate escrow account and processed through you local bank. You will receive a receipt for the funds from the escrow company.

What Information Will I Have to Provide?
You may be asked to complete a Statement of Indentity as part of the paperwork. Because many people have the same name, the Statement of Identity is used to identify the specific person involved in the transaction through such information as 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. The average length of an escrow is usually 30 to 45 days.
When Do I sign Escrow Instructions and Where?
A few days before closing, your Escrow Officer or your realtor will contact you to make the appointment for you to sign your escrow instructions, grant deed and final papers. At this time, your Escrow Officer will also tell you the amount of money you will need to bring in.
Your Appointment
This is a list of items you will need in preparation for your appointment to sign escrow papers :
All Parties – These 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 or passport or State of California Department of Motor Vehicles ID card.
Cashier’s Check
Buyers – You need a cashier’s check or a certified check issued by a California (or your state) financial institution made payable to The escrow company in the amount givent to you by your Escrow Officer. A personal check will delay the closing since Fidelity is required by law to have “good funds” before disbursing funds from the escrow.
Lender’s Requirements
Buyers – Check with your lender to make sure you have satisfied all your lender’s requirements before coming to The escrow company.
Fire and Hazard Insurance
Buyers – You must have fire and hazard insurance in place before the lender will send money to The escrow company to fund the loan. Whenever you buy a home. you must have insurance. Once you have spoken to your insurance agent, call The escrow comapny with the insurance agent’s name and phone number so they can make sure the policy complies with your lender’s requirments.
Title to your Home
Buyers – You may refer to the “Methods of Holding Title” in the next section of this book for general information with regard to holding title, but it is best to contact you attorney or tax consultant.
After Your Appointment
After all parties have signed all the necessary papers, your Escrow Officer will return the buyers’ loan documents to the lender for a final review. This review usually occurs within a few days of execution of the documents. Once the review is completed, the lender will call your Escrow Officer so that the neccessary final paperwork can be completed to record the documents and close the escrow.
Final Proceeds Check
The proceeds check is disbursed upon the close of escrow and your Escrow Officer is able to verify with the Country Recorder that the documents have recorded and legal transfer has occurred. The procceds checks can be delivered to your realtor so that he/she can deliver it to you, or you may make arrangements to pick it up at The escrow company.
The Life of an Escrow
It all begins with the offer and acceptance skillfully negotiated by the real estate agents representing Buyer and Seller
The Buyer(s)
Submit a written offer to purchase (or accepts the Seller’s counter-offer) accompanied by a good faith deposit amount.

Applies for a new loan, completing all required forms and often prepaying certain fees such as credit report and appraisal costs.

Approves the preliminary report and any property disclosure or inspection reports called for by the purchase and sale aggreement (Deposit Receipt).

Approves and signs the escrow instruction, new loan documents and other related instruments, required to complete the transaction.

Fulfills any remaining conditions specified in the contract, lender’s instrunctions and/or the escrow instructions.

Approves any final changes by signing amendments to the escrow instructions or contract.

Deposits sufficient funds in the escrow to pay the remaining down payment and closing costs.

The Lender (When applicable)
Accepts the new loan application and other related documents from the Byer(s) and begins the qualification process.

Orders and reviews the property appraisal, credit report, verification of deposit(s), preliminary report and other related information.

Submits the entire package to the loan committee and/or underwriter for approval.
When approved, loan conditions and title insurance requirements are established.

Informs Buyer(s) of loan approval terms and commitment expiration date and provides a good faith estimate of the closing costs.

Deposits the new loan documents and instruction with the escrow holder for Buyer’s approval and signature.

Reviews and approves the executed loan package and coordinates the loan funding with the escrow officer.

The Escrow Offier
Receives an order for the title and escrow servies for The Company.

Orders the title search and examination on subject property.

Acts as the impartial “stakeholder” or depository, in a fiduciary capacity, for all documents and monies required to complete the transaction per written instructions of the principals.

With authorization from the real estate agent or principal, orders demands on existing deeds of trust and liens or judgements, if any.

For an assumption or subject to loan, orders the beneficiary’s statement or formal assumption package.

Reviews documents received in the escrow: preliminary report, payoff or assumption statements, new loan package and otehr related instruments. Reviews the conditions in the lender’s instructions including the hazard and title insurance requirements.

Prepares the escrow instructions and reuired documents together with a preliminary estimate of settlement charges, for the Buyer and Seller, in accordance with the terms of the sale.

Presents the instructions, documents, statements, loan package(s) and other related documents to the principal(s), for approval and signature.

Receives the balance of funds required from the Buyer and/or the proceeds of the loan from the lender.

Determines when the transaction will be in the position to close and advises the parties.

Assisted by title personnel, records the deed, deed of trust and other documents required to complete the transaction with the Country Recorder and orders the title insurance policies.

closes the escrow by preparing the final settlement statements disbursing the proceeds to the Seller, paying off the existing encumbrances and other obiligations. Delivers the appropriate statements, funds and remaining documents to the principals, agents and/or the lenders.

The Seller(s)
Accepts Buyer’s offer to purchase and initial good faith deposit to open escrow.

Submits documents and information to the escrow holder, such as : addresses of lien holders, tax receipts, equipment warranties, home warranty contracts, any leases and/or rental agreements, etc.

Orders inspections, receives clearances and approves final reports and/or repairs to the property as required by the terms of the purchase and sale agreement (Deposit Receipt).

Approves and signs the escrow instructions, payoff demands, grant deed and other related documents required to complete the transactions.

approves any final changes by signing amendments to the escrow instructions or contracts.

Title Company
Examines the title to the real property and issues a preliminary report.

Determines the requirements and documents needed to complete the transaction and advises the escrow officer and/or agents.

Reviews and approves the signed documents, releases and the order for title insurance, prior to the closing date.

When authorized by the escrow officer, records the signed documents with the Country Recorder’s office and prepared to issue the title insurance policies.