Page 11 - Homeowners Manual - Orange County

HOW DOES ESCROW WORK?
The escrow process starts when a party to a real estate transaction (seller, seller’s agent, buyer or buyer’s
agent) opens the escrow after a written sale agreement is reached. Upon opening, the escrow holder
should be provided with the terms of the sale and the information necessary to carry out tasks. The escrow
holder’s duties and the timing of key tasks vary between states.

While your real estate transaction is in escrow, your escrow officer and agent will work with you to make
sure the right steps are taken at the right time. Tasks that the escrow holder may complete include:

• Coordinating communications between all parties in the transaction
• Preparing written escrow instructions
• Requesting a preliminary report or commitment
• Requesting a statement of identity (information) from the buyer or seller as needed
• Ordering demands or beneficiary statements
• Receiving bills from home warranty companies, as well as pest, roof, home and other inspection
companies
• Preparing or securing the deed or other recordable documents
• Complying with lender’s requirements
• Prorating taxes, interest, insurance and rents
• Receiving purchase funds required for closing
• Coordinating recording of deeds and any other necessary documents
• Closing escrow when all the instructions of the buyer, seller and lender have been carried out
• Disbursing funds as authorized, including charges for title insurance, recording fees, real estate
commissions and loan payoffs
• Preparing final statements for the parties, which account for the disposition of all funds
deposited in escrow

When all instructions in escrow have been carried out to the satisfaction of each party, the escrow is ready
to be closed. With closing, the title to the property is transferred to the buyer, the sales proceeds are paid
over to the seller, necessary documents are recorded and title insurance is issued. It is important to note
that the escrow holder does not offer legal advice, negotiate the transaction or offer investment advice.

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