FAQs

Escrow is a financial arrangement where a third party holds and regulates payment of funds or assets on behalf of two parties involved in a transaction. According to California Escrow Law Section 17003 of the Financial Code, it's defined as the deposit of funds, a deed, or other instrument by one party for delivery to another party upon completion of a specific condition or event.

Escrow is essential for all parties involved in a transaction, including buyers, sellers, lenders, and borrowers. It provides assurance that no funds or property will be exchanged until all conditions of the transaction have been met. The escrow holder is responsible for safeguarding funds and documents, and only disburses them when all provisions of the escrow agreement have been fulfilled.

The escrow process begins when the principal parties (buyer, seller, lender, borrower) create and sign escrow instructions, which are then delivered to the escrow officer. If a broker is involved, they typically provide the necessary information for preparing these instructions. The escrow officer processes the escrow according to these instructions, and closes it when all conditions are met. While escrows follow a similar pattern, each is unique to the specific property and transaction involved.

The selection of an escrow holder is typically made by mutual agreement between the principal parties. While a real estate broker may recommend an escrow holder, the principals have the right to choose a competent and experienced professional for their specific type of escrow. Laws prohibiting referral fees ensure that consumers receive the best possible escrow services without compromise.