Closing the Sale . . . .

Escrow Holder
To finalize the sale of the home a neutral, third party, the escrow holder is engaged to assure the transaction will close properly.  In Northern California this neutral third party is typically affiliated with the firm that will issuing the title insurance.  The escrow holder's job is to insure that all terms and conditions of the escrow instructions are met prior to the sale being finalized. This includes receiving all Buyer funds and documents, completing required forms, obtaining the release documents for any existing loans or liens that are to be paid off with the transaction and assuring clear title is delivered when the property transfers from the Seller to the Buyer.

How it works....

Once there is a ratified contract escrow is "opened".  The initial deposit then needs to be delivered to the Escrow Company as specified in the purchase contract.  The escrow holder will order the title report and also begin collecting various information and documents to get the process going.

Documents the escrow holder may be collecting from the parties include:

  • Loan documents
  • Tax statements
  • Fire and other insurance policies
  • Title insurance policies
  • Terms of sale, which is provided independently by the agents of the parties.
  • Information regarding any seller-assisted financing
  • Requests for payment for various services to be paid out of escrow funds

In the mean time, if there is to be a loan, the Buyer will be working with their lender to get their loan approved. (In the buying process this is the element that takes the longest)  Once the Buyer's loan is approved and the "loan docs" are received, the escrow holder can prepare the final closing instructions for the Buyer's and Seller's signatures. These documents must be signed in person (sorry no electronic signatures) and at least one is likely to require a notarization.  You should discuss with your agent how the logistics of this process works.  

Upon completion of all instructions of the escrow and after all the buyers funds (additional down payment and loan funds) are in the escrow holders hands, closing can take place.  California has some very specific "Good Funds" laws, so a Buyer's funds need to meet these requirements.  Again, this is something to discuss with your agent.  All outstanding expenses and fees are collected and paid as part of the closing process.  These include expenses such as title insurance, escrow fees, loan fees, prorated property taxes, transfer taxes and real estate commissions.