If you need assistance, please call 800-784-2616

  • Real Estate 101: Escrow

    Thursday, April 20, 2017   /   by Scott Foster

    Real Estate 101: Escrow

    The escrow process can be a complicated and often technical necessity of buying and selling real estate.  The escrow company and its officer have many duties to juggle on behalf of the Realtor, Seller, and Buyer during the real estate transaction.  Understanding the various duties and functions of the escrow can assist all parties in ensuring a successful and timely transaction as everyone involved has a part to play.

    The Escrow Officer’s main duty is to remain a neutral third party between Buyer and Seller in a real estate purchase transaction at all times. The Escrow Officer is not to be involved in negotiations between Buyer, Seller, and/or Lender.

    Additional escrow officer duties and responsibilities are as follows:

    • Receive and hold Buyer’s funds in a non-interest paying trust account during escrow.
    • Read and comply with all agreements as detailed in the Purchase Contract and Joint Escrow Instructions as it pertains to the escrow process.
    • Follow mutually written and signed instructions as agreed upon by both Buyer and Seller during escrow.
    • Prepare Escrow Instructions/General Provisions, Amendments, Grant Deed (for Seller’s signature), Estimated Closing Statement, and any additional documents required to clear title or as required by the lender.
    • Although, in many cases, reports are ordered by the Buyer, Seller, or Agents outside of escrow, in some cases, the Escrow Officer will obtain reports as required by the Purchase Contract and provide these to the Buyer during escrow for their review.
    • Make sure escrow is in receipt of Buyer and Seller signatures on Purchase Agreement and Joint Escrow Instructions, Escrow Instructions/General Provisions, Grant Deed, any Amendments, Estimated Closing Statements, and any other documents required during escrow.
    • Receive loan documents from the Buyer’s Lender (IF APPLICABLE). Prepare any amendments and estimated closing statements as required by the Lender.
    • Order the Evidence of Insurance from the Buyer’s Insurance Agent per the requirement of the Lender.
    • Send the signed loan documents and all lender required items to the Lender for funding.
    • Send original recordable documents along with any releases required to clear title to the Title Company for recording at the close of escrow.
    • Make sure that escrow is in receipt of all funds necessary to pay the Seller their proceeds as well as all invoices agreed upon by Buyer and Seller during escrow.
    • Make sure that the Seller has sufficient equity in the property to cover all costs, payoff of liens, and any invoices agreed upon by Buyer and Seller during the escrow.
    • Make sure that all of the proper paperwork is in escrow to provide the Buyer with clear title to the property.
    • Make sure that all of the conditions agreed upon by the Buyer and Seller, on the Purchase Contract and in writing through escrow have been satisfied prior to closing the escrow and transferring the property into the Buyer’s name.


    The seller has more to then simply select an agent and sign a Purchase Contract to get their home sold. Here are some of the responsibilities of a Seller.

    Opening Escrow
    The Seller will receive opening package which includes the following documents for review.
    Escrow Instructions and Documents
    • Tax Forms - (please consult with a CPA with any questions as Escrow Officer cannot offer tax advice.)
    • Deed for Notarization
    All documents are to be returned promptly to assure a timely close of escrow.

    Upon receipt of Seller's completed Escrow Instructions, the Escrow Holder will:
    • Review all items to assure everything is properly and fully completed.
    • Review notarized documents for proper notarial stamp and legibility.
    • Order payoff demands from the holder of existing loans of record and for any other liens of record.
    It is critical for Seller to keep mortgage/loans/HOA dues and other payments current through close of the escrow.

    Escrow Holder will conduct a comprehensive audit on the file to assure all documents are received and all pre-closing conditions will be met.

    Typically, within a week before closing, the Escrow Holder will provide an Estimated Closing Statement along with any outstanding documents and/or Buyer's loan disclosures for the Seller's signature.

    After the Closing, the Escrow Holder is still handling important details.
    • Escrow Holder will complete the Final Closing Statement by the next business day and forward to Seller.
    • Note: Be sure to keep your closing statement, so you have it for your CPA or Tax Preparer.
    • The Seller net proceeds will be issued as previously instructed - either by wire transfer or check. Funds are issued the next business day after closing.
    • After closing, your file is properly protected and stored for 5-years, as required.
    • It is important for the Sellers to keep the Final Closing Statement, for tax.


    To purchase a home, the Buyer has more to do then simply see a great home and sign a contract. 

    Opening Escrow
    • Escrow is officially open upon receipt of a fully executed Residential Purchase Agreement and the Buyer’s initial deposit.
    • Escrow Instructions are delivered to Buyer and include forms for insurance, vesting, and other critical needs.
     It is important for the Buyer to review the escrow instructions for accuracy.

    • Escrow receives and reviews Preliminary Title Report from Title Company. – It is important for the Buyer to review and approve title report.
    • Escrow forwards Natural Hazard Disclosures to Buyer for their review and signatures.
    • Buyer and Escrow to provide all Lender requested items to the Lender.
    • Escrow will order and provide Homeowners Association Documents. Buyer to review and approve (if applicable).
    Lender and Loan Documents (Pre-Closing)
    • The lender will order loan documents once the Buyer's loan is approved and deliver them to escrow.
    • Escrow reviews loan documents and prepares any additional Lender-required documents.
    • Escrow provides a copy of Estimated Closing Statement to Buyer for review and requests final. Funds to close by wire transfer – the Buyer must wire funds so they arrive 2-business days before scheduled close of escrow
    • Escrow contacts Buyer to schedule signing appointment for loan documents
    • Escrow receives signed loan documents and packages them for a return to Buyer’s lender to include required conditions.
    • The lender receives and reviews signed loan documents and contacts Escrow with any additional “funding conditions” that may be required to close.
    • Once the Lender is in a position to fund Buyer’s loan, Escrow will contact all parties to confirm that all parties are ready to close and that funds have been received.

    • Escrow requests funding of Buyer’s loan and authorizes the title company to record the Grant Deed with the County Recorder’s Office which affects the transfer of the property to the Buyer.
    • The Title Company contacts escrow when the deed has officially been recorded.
    • The Title Company will forward charges to Escrow to finalize the closing statements. Final closing statements are prepared and Escrow issues funds as per the contract, including any refund due buyer.