Who does what in the escrow process?

The Lender

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 Holder

- 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. Prorates insurance, taxes, rent, etc.

- Disburses funds for title insurance, recordation fees, real estate commissions an

  lien clearance. 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 of escrow.

The Seller

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

- Deposits evidence of pest inspection and any required repair work.

- Deposits other required documents such as tax receipts, address of mortgage holder, 

  insurance policies, equipment warranties or home warranty contracts, etc.

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. Arranges for any borrowed 

  funds to be delivered to the escrow holder.

- Deposits any deed of trust or mortgages necessary to secure loans.

- Approves any inspection reports, title insurance commitments, etc. called for by the 

  purchase and sale agreements.

- Fulfills any other conditions specified in the escrow instructions.

Once all the 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 is accomplished.

The method of dividing the charges for the services performed though escrow or as a result 

of escrow varies from place to place. The fees and service charges to be divided

might include, for example, the title insurance policy premium, escrow fee, 

any transfer taxes, recording fees, and cost in connection with any loan being obtained.

Unless there is some special agreement between the buyer and seller as to how these 

charges are to be paid, local custom will generally be followed in drafting the instructions 

to the escrow holder as to how they are to be delivered.

The escrow process was developed to help facilitate the sale or purchase of your home. 

The escrow holder accomplishes this by:

  • Acting as the impartial “stakeholder”, or depository of documents and funds.
  • Processing and coordinating the flow of documents and funds.
  • Keeping all parties informed of progress on the escrow.
  • Responding to the lender’s requirements.
  • Securing a title insurance policy.
  • Obtaining approvals of reports and documents from the parties required.
  • Prorating and adjusting insurance, taxes, rents, etc.
  • Recording the deed and loan documents.
  • Maintaining security and accountability of moneys owed and owing.

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.