“Close of Escrow”

Recently we worked with a couple who were relocating from Chicago.  As we went through the process of their purchase they became more and more confused by the procedure because it was so different from their closing in Chicago.  First of all, what is the “close of escrow”?  Very simply put, an escrow closing is the culmination of the transaction.  It signifies legal transfer of title from the seller to the buyer.  Once all the conditions of the escrow have been satisfied, the escrow officer will prepare the final documents, taking care of the technical and financial details and escrow will close.  Usually, the grant deed and deed of trust are recorded within one working day of the escrow holder’s receipt of loan funds, completing the transaction and signifying the close of escrow.

Escrow Company

So, who is the escrow company/officer?  It is a company or individual assigned to handle the facilitation of a particular escrow, including preparing escrow instructions, collecting necessary documents, making sure that all matters which have been agreed to by the parties are fulfilled, closing the escrow, disbursing funds, and getting closing statements to those involved in the transaction.  Independent escrow firms are licensed by the state of California.  Generally, buyers and sellers pay the escrow company a fee to facilitate the transaction.   Our client compared the California closing process to theirs in Chicago in which all parties were present for “the closing” in an attorney’s office.  Here, in California, we generally have no need for attorneys.

Escrow Instructions – Purpose

What are the escrow instructions and where do they come from? Quite simply, the “escrow instructions” are written documents, signed by the parties which specify the steps necessary to complete the transfer of the property.  The steps outlined in these escrow instructions are comprised of, and taken directly from, the terms and conditions agreed upon by the buyer and seller through the California Residential Purchase Agreement. Since the escrow holder can only follow the instructions as stated, and may not exceed them, it is extremely important that the instructions be stated clearly and be complete in all details.

Escrow Instructions – Contents 

What does a typical set of escrow instructions include?

• The method by which the escrow holder is to receive and hold the purchase price to be paid by the buyer.
• The conditions under which a lapse of time or breach of purchase contract provision will terminate the escrow without a closing.
• The instruction and authorization to the escrow holder to disburse funds for recording fees, title insurance policy, real estate commissions, and any other closing costs incurred through escrow.
• Instructions as to how insurance and taxes are to be prorated.
• Instructions to the escrow holder on the payment of prior liens and charges against the property and distribution of the net sale proceeds.

We at Geller-Meier Real Estate recognize that changes from state to state can be confusing and make a point of explaining and helping our buyers understand the California escrow process.   Our ultimate aim is to make it as smooth and painless as possible, so you can get on with the business of settling in to your new home!

For customized assistance in relocating to North San Diego County, for excellent representation in purchasing a home, for sound and intelligent real estate advice, contact Maxine and Eva.  We will guide you through the process and make it as pleasurable and painless as possible.