Understanding the Escrow Process

At its essence, escrow is the process whereby parties to the transfer or financing of real estate deposit documents, funds, or other things of value with a neutral and disinterested third party (the escrow agent), which are held in trust until a specific event or condition takes place according to specific, mutual written instructions from the parties.

Escrow is essentially a clearinghouse for the receipt, exchange, and distribution of the items needed to transfer or finance real estate. When the event occurs or the condition is satisfied, a distribution or transfer takes place. When all of the elements necessary to consummate the real estate transaction have occurred, the escrow is "closed”.

Section 17003(a) of the California Financial Code defines escrow as "…any transaction in which one person, for the purpose of effecting the sale, transfer, encumbering, or leasing of real or personal property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by that third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by that third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter”.


The SELLER can generally be expected to pay:

  • Real Estate Commission

  • Document preparation fee for deed

  • Documentary transfer tax, if any

  • Payoff of all loans in Seller’s name

  • Interest accrued to lender being paid off

  • Statement fees, reconveyance fees and any prepayment penalties

  • Termite inspection (or according to contract)

  • Termite work (or according to contract)

  • Home warranty (or according to contract)

  • Any judgments, tax liens, etc., against the Seller

  • Tax proration (for any taxes unpaid at time of transfer of title)

  • Any unpaid homeowner’s dues

  • Recording charges to clear all document of record against Seller

  • Any bonds or assessments (or according to contract)

  • Any and all delinquent taxes

  • Seller Notary fees

  • Escrow fee (one half)

  • Title insurance premium for Owners’ policy

  • Homeowner’s transfer fee

  • City transfer/conveyance tax (or according to contract)

The BUYER can generally be expected to pay:

  • Title insurance premium for Lender’s policy

  • Escrow fee (one half)

  • Document preparation (if applicable)

  • Buyer Notary fees

  • Recording charges for all documents in Buyer’s name

  • Tax proration (from date of acquisition)

  • All new loan charges (except those required by Lender for Seller to pay)

  • Interest on new loan from date of funding to 30 days prior to first payment date

  • Assumption/change of records fees for takeover of existing loan

  • Beneficiary statement fee for assumption of existing loan

  • Inspection fees (roofing, property inspection, geological, etc.)

  • Fire insurance premium for first year

I will guide you through the various options on the market and help you find the right mortgage for you.