What
is Escrow?
It is customary and prudent for California buyers
and sellers to have a third, disinterested party
to assist them in carrying out the terms of their agreement.
In California, this procedure is known
as an escrow. When opening an escrow, the buyer and seller
establish terms and conditions for the transfer of ownership
of property. Your escrow is created shortly after you
execute the contract to purchase your home. The escrow
becomes the depository for all monies, instructions and
documents. The Escrow Officer has the responsibility of
seeing that all terms of the escrow are carried out.
NOTE: In some states, the process
of completing the purchase of a home is known as the "Settlement"
process. Often the seller and buyer will come together
at the Settlement table where documents are signed and
exchanged. There may be a settlement attorney who facilitates
this process. In California, the term
"Escrow" is used to describe the process of
completing the sale of property.
How
does the escrow process work?
The escrow holds all monies, instructions and documents
for the purchase of your home, including your down payment
funds and your lender’s funds and documents for
the new loan. The escrow officer takes instructions based
on the terms of your purchase agreement and your lender’s
requirements. The escrow officer can hold inspection reports
and bills for work performed as required by your purchase
agreement. Other elements of the escrow include hazard
insurance, title insurance and the grant deed from the
seller to you. Escrow cannot be completed until the instructions
(requirements) have been satisfied, and all parties have
signed escrow documents.
The escrow
holder’s duties include:
•
Serve as the neutral agent and the liaison between all
parties involved.
• Prepare the escrow instructions.
• Request a Preliminary Title Search to determine
the status of title to the property.
• Comply
with the lender’s requirements as specified on its
instructions to escrow.
• Receive and handle
purchase funds from the buyer.
• Prepare or
secure the deed and documents related to the escrow.
• Prorate 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
title insurance policy.
• Close the escrow
pursuant to instructions supplied by the seller, buyer
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?
Your real estate agent will open the escrow for you. As
soon as you execute your purchase agreement, your deposit
is given to the title company for deposit into the escrow
account. How will I know where my money has gone? Written
evidence of your deposit generally is included in your
copy of your purchase contract. Your funds will then be
deposited in your separate escrow or trust account and
processed through your local bank.
Escrow
Instructions
Escrow instructions define all the conditions that must
occur before the transaction can be finalized. Your escrow
instructions specify, in a debit and credit format, the
disposition of your purchase funds. They also provide
for title protection for your home.
What
information will I have to provide?
You may be asked to complete a statement of identity.
Because many people have the same name, the statement
of identity is used to identify the specific person in
the transaction through such information as date of birth,
social security number, etc. This information is kept
confidential.
How long is the 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. On average, it takes 30 to 45 days.
Contact
us for more info on San Jose California escrow accounts..
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