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Buyer Process: Page 12

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How Does the Escrow Process Work?

How do I open an escrow?
The escrow officer takes instructions based on the terms of your Purchase Agreement and the lender’s requirements. The escrow officer can hold inspection reports and bills for work performed as required by the purchase agreement. Other elements of the escrow include hazard insurance, and the grand deed from the seller. Escrow can’t be completed until these items have been satisfied and all parties have signed escrow documents.

Either your real estate agent or the seller’s agent may open escrow. As soon as you execute the Purchase Agreement, your agent will place your initial deposit into an escrow account at the Title Company.

Where does the buyer’s money go?
Written evidence of the deposit is generally included in your copy of the sales contract. The funds will then be deposited in a separate escrow or trust account.

What information do I need to provide?
You may be asked to complete a Statement of Identity as part of the paperwork. Because many people have the same name, the Statement of Identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is considered confidential and will be treated as such.

How long will this take?
The amount of time necessary to complete the escrow is determined by the terms of the purchase agreement. It is normally 45 to 60 days, but can range from a few days to several months.

What happens next?
Unless you are paying cash, the next step will be for you, the buyer, to apply for a mortgage loan. During the escrow process, you are still required to make your payments on existing loans so that you don’t incur late fees or damage your credit rating.

Escrow instructions
Escrow instructions define the events that must take place prior to an escrow closing. The escrow instructions are your written instructions to the escrow holder acknowledging the terms and conditions of the sale. An itemized statement is included with your instructions, reflecting all agreed upon debits and credits.

A Grant Deed is the document that legally transfers title to the property of the new owner. The seller will sign the Grant Deed as part of the escrow instructions and the escrow officer or another notary public will notarize your signatures. Proper identification is needed for this procedure, (which must be a picture I.D.). The Grant Deed is recorded at the time escrow closes, and thus transfers title.

Typically you will sign your loan documents at the escrow office. However, on occasion you may go to your real estate agent’s office or some other location agreed upon by all parties. Or you can have the documents delivered to you. But be aware that there must be a notary present, and you will have to pay extra for a traveling notary.

Your Appointment
An appointment is required for the signoff. Please call your escrow officer to arrange a convenient time. Please expect the process to take approximately one hour.

There are several acceptable forms of identification which may be used during the escrow process. These include:

  • A current driver’s license
  • Passport
  • State of California Department of Motor Vehicles ID Card

One of these forms of identification must be presented at the signing of escrow in order for the signature to be notarized.

Any funds required to close escrow by either buyer or seller will need to be in the form of a cashier’s check made payable to the title company or by wire transfer. A personal check will delay the closing, as the Title Company is required by law to have “good funds” prior to disbursing. Similarly, an outofstate check could cause delay in check clearance.

After the signoff
After all the parties have signed the necessary instructions and documents, the escrow officer will return them to the new lender for a final review. Following the review, which usually occurs within a few days, the lender is ready to fund the buyer’s loan, and advises the escrow officer. At this time, the escrow holder compiles all the documents required to record and successfully close the transaction.

What is the “Close of Escrow”?
It signifies the legal transfer and recording of title to the property from the seller to the buyer and is the culmination of the transaction. In Los Angeles County, once the loan is funded, the title officer will go to the county recorder’s office on the following day to record title.

When do I receive the keys?
Once the title is recorded, your real estate agent will be able to give you the keys to your new home. A final settlement statement and any refund check for the proceeds will be mailed to you after escrow has closed.