Buyer & Seller Guide

The Escrow Process

  • Published 2023-03-09
  • Est. reading time 5 Minutes
  • Author admin

How Does the Escrow Process Work?


The escrow is a depository for all monies, instructions and documents necessary for the purchase of your home, including your funds for down payment and your lender’s funds and documents for the new
loan. Generally, the buyer deposits a down payment with the escrow holder and the seller deposits the deed and any other necessary documents with the escrow holder. Prior to the close of escrow the buyer deposits the balance of the funds required and agreed upon by the parties with the escrow holder. The buyer instructs the escrow holder to deliver the monies to the seller when the escrow holder:

  • Forwards the deed to the title company for recording
  • Is notified by the title company that a policy of title insurance can be issued showing title to the property is vested in the name of the buyer The escrow holder thus acts for both parties and protects the interests of each within the authority of the escrow instructions. Escrow cannot be completed until the terms and conditions of the instructions have been satisfied and all parties have signed escrow documents. The escrow holder takes instructions based on the terms of the purchase agreement and the lender’s requirements.


Escrow Duties
The escrow officer’s duties typically include the following:

  1. Receive signed Purchase Agreement; prepare escrow instructions
  2. Receive and deposit buyer’s earnest money into an escrow account
  3. Serve as the neutral agent and liaison/ communication link to all parties to the transaction
  4. Order Preliminary Report to determine status of title to property
  5. Request beneficiary’s statement or payoff demand related to existing financing
  6. Comply with lender’s requirements as specified in the lender’s closing instructions
  7. Secure releases of all escrow contingencies or other conditions required
  8. Prorate taxes, interest, insurance and rents
  9. Prepare or secure the transfer deed or other documents necessary to consummate the transaction
  10. Arrange appointments for buyer/ seller to sign documents
  11. Request and receive purchase funds from the buyer and loan funds from new lender
  12. Close escrow pursuant to instructions provided by seller, buyer, and lender
  13. Arrange for recording of deeds and any other documents as instructed
  14. Request issuance of the title insurance policies
  15. Disburse funds as authorized, including charges for title insurance, recording fees, commissions and loan payoffs
  16. Disposition of all funds held in escrow account 17. Prepare final accounting statements for the parties


Communication Tips for Escrow

  • When calling the escrow officer, have the escrow number and buyer/seller’s names handy
  • Keep the escrow officer informed on any matters that may affect the transaction
  • Direct your questions to the proper representative, such as:


Real Estate Agent: Physical aspects of property, conflicts, and terms of sale

Lender: Loan terms, credit report issues, etc.

Escrow Officer: Escrow instructions, documents and forms to be filled out

Buyer & Seller Guide

Glossary of Terms

The following is a short glossary of commonly used terms during your escrow transaction. For a more complete glossary

Close Costs and Who Pays What

Closing costs are what the buyer and seller will pay as part of the escrow transaction. Some fees are negotiable between the seller and buyer

Real Property Tax Dates

The following schedule lists some of the more significant dates for California property taxes affecting property owners.


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