In California, escrow refers to the process of holding funds and documents by a neutral third party (the escrow holder) during a real estate transaction. The escrow holder acts as a mediator between the buyer and the seller, ensuring that all conditions of the sale are met before the transaction is completed.
For buyers, the escrow process typically begins when they submit an offer to purchase a home. The buyer will typically deposit a small amount of money, called an “earnest money deposit,” into escrow. This deposit is typically held by the escrow holder and serves as a show of good faith by the buyer.
During the escrow period, the buyer will conduct any necessary inspections, and the lender will review the loan application and order an appraisal. The escrow holder will also ensure that all necessary paperwork is completed, including the transfer of the title from the seller to the buyer. Once all conditions of the sale are met and the buyer and seller have signed all necessary documents, the escrow holder will release the funds to the seller and the title to the buyer, thus completing the sale.
For sellers, Escrow process will begin when the buyer submit an offer to purchase a home, the escrow holder will provide the seller with a copy of the purchase agreement and will hold the funds from the sale in trust until all conditions of the sale are met. Upon completion of all the conditions the escrow holder will release the funds to the seller and the title to the buyer.
It is important to note that the escrow process is legally binding and is an important part of the home buying and selling process in California, which helps ensure that both the buyer and seller fulfill their obligations in a timely and efficient manner.