Selecting an Escrow . All too often real estate buyers and sellers have absolutely no input in the selection of an escrow company they simply follow the advice of their agent. This can be a mistake. It is important to make sure that your escrow is reasonably priced and has knowledgeable, skilled and helpful personnel and most importantly that they will not favor the other side in your transaction. Find out in advance how much the escrow will charge and whether the escrow is affiliated or controlled by any of the agents or parties in the transaction.
Licensed (Also Known as Independent) Escrows v. Controlled Escrows . There are two types of escrows in California. Independent escrows that are licensed by the California Department of Corporations and “controlled” escrows that are basically subsidiaries of real estate companies or title insurance companies. Escrows that are owned by a real estate company are licensed by the Department of Real Estate and escrows that are owned by insurance companies are regulated by the department of insurance. Each of these agencies have different bonding, auditing and licensing requirements and it is important to understand these differences and how they may influence your particular transaction.
Escrow Instructions . The escrow instructions are supposed to follow the language of the offer and counter offer. If the parties later wish to change their agreement, however, they will do it with a supplemental escrow instruction. While it is important to have your escrow instructions reviewed by an attorney, there is not much an attorney can do to change your transaction once it reaches the escrow phase. It is much more important to have your attorney involved early in the transaction so that you can be protected.
Opening of Escrow . The opening of escrow means the deposit and relevant sales documents have been deposited into escrow. A common misconception is that you are not bound by a real estate sales agreement until you open escrow. This is not true. You are bound once both buyer and seller have signed the same offer or counter-offer document.
Close of Escrow . The escrow company is in charge of coordinating all the pieces to the real estate purchase puzzle. At the close of escrow, the escrow will send all grant deeds and deeds of trust to the county recorder’s office for recording and collect funds from the buyer and buyer’s lender and will pay all those who are supposed to receive funds from the transaction such as brokers, title insurance companies, lenders, etc. This is the most critical role an escrow fulfills but you need to make sure the escrow disburses the funds correctly.