An escrow is a deposit of funds and/or documents by one party for the delivery to another party upon completion of a particular condition or event. California Financial Code Section 17003 provides the legal definition.
Why do I need an Escrow?
Buyers, Sellers, and Lenders all want to be sure that no funds, documents, and/or property will change hands until all of the terms of the deal have been observed. The escrow holder has the obligation to safeguard the escrow items while they are in the possession of the escrow holder and to disburse only when all provisions of the escrow have been complied with.
The Escrow Process
First, the buyer and seller, or a broker if involved, will provide the escrow officer with the information necessary to open escrow and generate the opening paperwork and instructions. Then the seller and buyer sign escrow instructions generated by the Escrow company and deliver the same to the escrow officer. The escrow officer will process the escrow in accordance with the escrow instructions and close when all conditions required in the escrow can be met or achieved.
Escrow duties typically include handling the funds and/or documents, paying all bills/fees authorized, coordinating with the principals as well as the title company, and in general, working to meet the escrow instructions.
