Frequently Asked Questions
What is escrow, and why is it used in California?
Escrow is a secure process where a neutral third party holds funds and documents until all agreed-upon conditions are met by buyer and seller. In California, it ensures fairness and safety, protecting each party and ensuring all contract terms (like inspections, financing, and disclosures) are completed before funds or title are transferred.
Why Do I Need Escrow?
As a buyer, seller, lender, or borrower, it's crucial to have peace of mind that all the instructions in a transaction are followed before any funds or property change hands. That's where an escrow company comes in. They have a responsibility to protect and hold onto the funds and/or documents while they are in their possession, and they only disburse funds and/or convey title when all the provisions of the escrow are complied with. This ensures that everyone involved in the transaction plays by the rules and that the process is carried out smoothly and securely. Trusting an escrow company adds an extra layer of assurance to your real estate transaction, giving you confidence that your funds and documents are safeguarded until all the requirements are met.
How do I open escrow?
Escrow is typically opened by the buyer’s or seller’s agent upon acceptance of the purchase agreement. The deposit is placed in a secure escrow account, and the escrow holder orders a preliminary title report, initiates document review, and sets upfront instructions based on the contract.
Who selects the escrow company in california?
California law allows either buyer or seller to propose the escrow company, but both parties must agree. In San Diego, it's common for the seller and their real estate agent to select the escrow company, though this is negotiable.
How long does escrow typically take?
The length depends on your purchase agreement. In California, escrows often run 30–60 days, but timing can vary based on loan approval, inspections, appraisal delivery, and recording timelines.
What do I need to do during escrow?
To ensure a smooth process:
Carefully read and review escrow instructions.
Respond promptly to documents and communication.
Confirm wire instructions with your Escrow Officer over the phone (Elite Escrow will never send wiring instructions via email) and remain alert to wire fraud.
Inform your Escrow Officer of any special timing needs early or if you plan on being out of town during your escrow.
What fees are involved in escrow, and when are they disclosed?
Escrow fees vary based on transaction type, location, and market. Escrow companies will charge fees that are commensurate with the costs of producing the service, the liability assumed, and the overhead expenses, which include a profit factor. Escrow fees are not regulated by the state; therefore, the fees will vary between companies and from county to county. In addition, escrow companies do not have control over the costs of other services that are obtained, such as the title insurance policy, the lender's charges, insurance, recording charges, etc. To get a breakdown of our costs and fees, please call us at (858) 560-4781 or email us at AskElite@EliteEscrowServices.com.
What happens at closing?
Once all escrow conditions have been met (including inspections, lender requirements, and signed documents), the escrow company directs funding, records the deed, disburses proceeds to involved parties, and provides the final closing statement.
What Is A Closing Statement?
A closing statement is a written accounting document prepared at the close of escrow. Your closing statement will be provided in your closing package with a breakdown of the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services, and the funds due to you at the close of the escrow.
Please be sure to examine your closing papers thoroughly and look for a refund check. If there is a check, be sure to endorse and deposit it immediately. Additional fees will be charged for a duplicate check to be issued.
Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes. Your accountant will need information about the sale or purchase of the property. Additionally, the IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The Escrow Holder is only required to maintain records for five years, and fees may be charged by your escrow company for the retrieval of a file from storage.
What if someone cancels escrow?
If conditions aren't met or contingencies aren't removed, the escrow may be subject to cancellation. Whether the deposit is refundable depends on the contract terms and which party is at fault. Escrow fees and charges may also apply; always review your purchase agreement or speak with your real estate advisor or Escrow Officer for specifics.
What is title insurance?
Title insurance insures the owner and/or the lender of ownership or lien priority of the property. There are various types of coverage, but a basic policy ensures that the buyer is the owner and that any lender shown on the policy is an "insured" lender. Many different types of extended coverage are available; for example, an ALTA policy is quite often required by institutional lenders to afford them additional protection under the title insurance policy. The title policy is written after extensive examination of public records and after the recording of the required documents in escrow.
The title insurance policy fee is a one-time fee, paid at the close of escrow. The determination of who pays for the policy differs from county to county in California. In almost every case, the agreement between parties is what determines the payment of closing costs.
How Are Property Taxes Handled During Escrow?
Property taxes are handled according to the terms of your contract and escrow instructions. If taxes are prorated, your closing statement will show either a credit or a charge, depending on how much each party owes.
Even if there’s a credit on the statement, unpaid property taxes are the buyer’s responsibility. If the buyer doesn’t receive a tax bill, they can request one from the County Tax Collector by providing a copy of the recorded deed.
In addition, buyers should be aware of supplemental property taxes. When a property changes ownership, the County Assessor reassesses its value and issues a supplemental tax bill. Shortly after escrow closes, the buyer may receive a request for information from the Assessor to help determine the new tax value. This process is often supported by a Preliminary Change of Ownership form submitted during escrow.
Is a Perfect Escrow Possible?
Every escrow is unique, and perfection isn’t always possible due to factors beyond anyone’s control, including the needs of the parties involved. That said, your Escrow Officer is highly trained and supported by systems designed to carry out your escrow instructions efficiently and professionally.
If you have concerns during the process, start by contacting your Escrow Officer. If the issue isn’t resolved, reach out to company management. For further assistance, you may contact the appropriate regulatory agency, as several entities oversee escrow practices in California.