Escrow is an arrangement in which a disinterested third party or an escrow holder, holds legal documents and disburses funds on behalf of a buyer and seller, and distributes them according to the buyer and seller’s instructions.

People buying and selling real estate often open escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to faithfully carry out their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.


Escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments, funds, deeds, and many other items, using the escrow holder as the central deposit point. If the instructions from all parties to escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions without further consultation. This saves much time and facilitates a smooth closing of the transaction.




The Seller

  • Deposits the executed deed to the buyer with the escrow holder.

  • Deposits evidence of pest inspection and any required repair work, per the  purchase and sale agreement.

  • Deposits required documents such as addresses of mortgage holders.


The Buyer

  • Deposits the funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder.

  • Deposits funds sufficient for home and title insurance.

  • Approves any inspection reports, title insurance commitments, etc. called for by the purchase and sale agreement.

  • Fulfills any other conditions specified in the escrow instructions.


The Lender, if applicable

  • Deposits proceeds of the loan to the purchaser.

  • Directs the escrow holder on the conditions under which the loan funds may be used.


The Escrow Company

  • Opens the order for title insurance.

  • Obtains approvals from the buyer on title insurance report, pest and other inspections.

  • Receives funds from the buyer and/or any lender.

  • Disburses funds for title insurance, recording fees, real estate commissions, lien clearance, etc.

  • Prepares a final statement for each party, indicating amounts to be disbursed for services and any further amounts necessary to close escrow.

  • Records deed and loan documents, delivers the deed to the buyer, loan documents to the lender and funds to the seller, closing the escrow.





The Seller

  • Provide your Escrow Officer with your forwarding address, any existing mortgage information, leased equipment, Homeowner Association information, and utilities if they are to be paid out of escrow.


The Buyer

  • Verify with your Loan Officer that all conditions have been met.

  • Notify your Escrow Officer of the names of your lender and homeowner insurance companies.


Both the Buyer and Seller

  • Confirm with your agent that all contingencies have been satisfied.

  • Keep your agent informed of any vacation plans or times you will be unavailable.

  • If you plan to have your documents reviewed by an attorney, please notify your Escrow Officer at least 48 hours prior to signing.



  • Expect to sign at the escrow company one or two business days before the closing date.

  • If funds are required to close, be prepared to bring the monies in the form of a cashier’s check 24 hours before recording or wire transfer the same day as closing.

  • Have valid photo identification available at your signing appointment: Driver’s License/State ID, Passport, or Green Card.

  • Expect the signing to last approximately one hour if you are the buyer and 30 minutes if you are the seller.



Once all terms and conditions of the instructions of both parties have been fulfilled, and all closing conditions satisfied, the escrow is closed and the safe and accurate transfer of property and money has been accomplished.


The Buyer Normally Pays For:

• One-half of the escrow fee according to contract

• Lender’s title policy premiums

• Document preparation if applicable

• Tax pro-ration from date of acquisition

• Recording charges for all documents in buyer’s names

• Fire insurance premium for first year

• Home Warranty according to contract

• Inspection fees according to contract: roofing, property, geological, termite, etc.

• All new loan charges except those required by lender for seller to pay

• Interim interest on new loan from date of funding to first payment date


The Seller Normally Pays For

• One-half of the escrow fee according to contract

• Work orders such as termite inspection and work according to contract

• Owner’s title insurance premiums

• Real estate commission

• Any judgments, tax liens, etc. against the seller

• Any unpaid Homeowner Association dues

• Home Warranty according to contract

• Any bonds or assessments according to contract

• Any loan fees required by buyer’s lender according to contract

• Recording charges to clear all documents of record against seller

• Payoff of all loans in seller’s name or existing loan balance if being assumed by buyer

• Interest accrued to lender being paid off, conveyance fees and any prepayment penalties



Content Provided by Ticor Title. Copyright © 2007-2010, Ticor Title. All Rights Reserved.


Oregon Bay Properties, LLC does not give legal or financial advice.  Information provided is not a warranty of any kind and all information should be verified.