Buying a Home: Escrow

In California, title companies handle most escrows. Attorneys are almost never used, as in some other states. In San Francisco County, it is customary for the buyer to pay for escrow fees and title. Sometimes this can be negotiated.

What are Escrow and Title Insurance?

Escrow is a neutral third party that holds funds and disperses them to the various parties with, and only with, the proper instructions from all parties.

Title Insurance guarantees that the person or entity that is selling the property is the rightful owner, and that there are no undisclosed and recorded liens or easements on title.

Depending on how the contract is written, a typical escrow might look like this:

  • Offer is made and presented.
  • Offer is accepted and escrow is opened.
    • Agent deposits initial check.
    • Agent helps buyer order various inspections.
    • Agent notifies buyer's lender of pending sale.
    • Buyer reviews and discusses with agent all of the property disclosures.
  • After acceptance of the various inspection reports, buyer increases the deposit to (typically) 3 % of the purchase price.
  • Buyer has been approved for loan and removes the loan condition.
  • Buyer signs loan papers and other escrow documents.
  • Buyer's money is transferred to the title company by cashiers check or wire transfer a day or two prior to close.
  • Title Company receives funds from lender.
  • Title Company records the deed of trust at City Hall and releases the funds. This is called the close of escrow.

Contact us for more information about escrow and title insurance, or for any other questions you have about buying a home.