FAQ

1 What is an escrow holder?
2 What is the function of escrow?
3 Who are the principals?
4 Independent Escrow Companies
5 What is escrow?
6 Why do you need an escrow?
7 How does escrow begin?
8 How does escrow proceed?
9 When does the Seller sign the Grant Deed?
10 What does "escrow fee" cover?
11 How should I hold title to a property?
12 When can escrow provide an "Estimated Statement"?
13 Prorations
14 What does "record "mean?
15 What happens when escrow "closes"?
16 Who does the Buyer get the keys from after the escrow closes?
17 When are property taxes due?
18 Escrow "No-No's"







1 What is an escrow holder?
An "Escrow Holder" is an escrow company. Many people think Escrow Holder means Escrow Officer and it actually means Escrow company.

2 What is the function of escrow?
We are a neutral third party whose sole responsibility is to act, in an unbiased manner, on behalf of the principals in a real estate transaction to see that the "escrow related" terms of their Purchase Contract are met. We say "escrow related" because there are matters covered on most purchase contracts with which we are instructed not to be concerned. (We are happy to point them out to you to insure there is no confusion about who is doing what.)
3 Who are the principals?
"Principals" are the Buyer and Seller in a sale escrow; the Borrower (and sometimes the Lender) in a refinance escrow.

4 Independent Escrow Companies
"Independent Escrow Companies" MUST hold an active license with the California Department of Financial Protection and Innovation (DFPI), and must comply with all regulations required for same under Escrow Law and State Law. All independent escrow companies are required to be audited by a CPA each fiscal year, and are subject to surprise regulatory audits by the Department of Financial Protection and Innovation at least once every 24 months. Independent escrow managers are required to have a minimum of 5 years verifiable experience. All independent escrow personnel are fingerprinted and background checked by the Department of Justice.

5 What is escrow?
"Escrow" is a deposit of funds by one principal, and a deposit of a deed or other instrument by the other principal, for delivery to one another through escrow, upon completion of the terms outlined in the purchase contract. (California Escrow Law - Section 17003 of the Financial Code - provides the exact legal definition.)
6 Why do you need an escrow?
The Escrow Holder has the obligation of safeguarding your funds and/or documents while they are in escrow's possession. As a Seller, Buyer, or Borrower you need assurance that funds will only disbursed and title conveyed when all provisions of the escrow have been complied with.
7 How does escrow begin?
The principals cause escrow instructions to be created by providing escrow with a mutually executed purchase contract, usually through the real estate brokers involved (or directly if there are no real estate brokers involved). Escrow will then prepare escrow instructions (or supplemental instructions if your contract serves as a Purchase Agreement/Escrow Instructions). Then we deliver them to the principals of the escrow, and any brokers, lenders, attorneys, or business managers involved. Immediately upon receipt of your executed instructions, we begin complying with all the instructions therein. That is why it is important to sign and return the instructions as soon as possible.
8 How does escrow proceed?
Upon escrow's receipt of your mutually executed instructions, we begin:
- Handling the funds and documents in accordance with the instructions, without delay.
- Ordering reports we are instructed to order, and providing the appropriate parties with copies of documents deposited into escrow.
- Coordinating the escrow with the principals' lender, title company, attorney, business manager, brokers, insurance agent, and a number of other vendors involved, until all terms have been met, all funds required have been deposited with escrow, and we have mutual agreement to close escrow ("record").
9 When does the Seller sign the Grant Deed?
Our company's policy is to draw the Grant Deed when the Buyer's loan has been approved, or in the event that it is an "all cash" transaction, about 7 days prior to close of escrow. If Seller wants to sign the Grant Deed sooner, or they are out of State, we certainly are happy to send it sooner.
10 What does "escrow fee" cover?
The escrow fee pays for the escrow company to process the basic transaction. Although most independent escrow companies charge similarly, they vary a little too. This is our policy...
- We only charge additional fees for items that are not on every transaction, and we are happy to quote you on those, however we are not allowed to "post them".
- Messenger/Federal Express...we only charge you exactly what it costs us, and only when either directly instructed by you, or when required to (i.e.: picking up and delivering important documents such as deeds or loan documents).
11 How should I hold title to a property?
Escrow should NEVER give you advice on how to hold title to a property. It is imperative that you speak to an accountant or attorney for same. It is not that we don't want to help you, we want to help you in every way that legally we are allowed to. But it is against Escrow Law for us to give anyone advice, AND it would not be in your best interest to get advice from someone who is not familiar with your financial situation, or the legal and tax ramifications that would affect only you!
12 When can escrow provide an "Estimated Statement"?
It is best that in the beginning of escrow you only get from escrow quotes on escrow fees, and some title fees. Here is why:
- If you are a buyer and are getting a loan, an estimated statement will not be worth the paper it is written on until you obtain loan approval and we have fees, in writing from the lender (preferably loan documents). And we say "some title fees" because the incidental fees charged by title will also be directly affected by your loan. Additionally, until you have a loan approval we cannot order insurance from your insurance agent. They may give you an approximate quote, but until they see what the Lender wants, they cannot determine what their fee will be.
-If you are a Seller and have a loan being paid off thru escrow, we try not to order the "payoff statements" from your lender(s) until we are in the month escrow is scheduled to close. We do this to avoid duplicate statement fees being charged to you by the Lender. (NOTE: IF YOU KNOW YOU HAVE A PREPAYMENT PENALTY ON YOUR EXISTING LOAN, YOU SHOULD ADVISE ESCROW IMMEDIATELY TO ORDER YOUR PAYOFF STATEMENT SO YOU CAN REVIEW SAME TO INSURE ITS ACCURACY.) Further, the additional items you will pay for i.e.: compliance with local and state ordinances, report fees, etc. will probably not be deposited into escrow until it is very close to closing.
- Both Buyer and Seller, if your original escrow closing date changes, all "prorations" will be changed, affecting your numbers.
It is not that we don't want to give you this information early, we just do not want you to have bad information.
13 Prorations
"Prorations" are fees that belong in part to the Seller and in part to the Buyer. For example Property Taxes; if your escrow closed November 15th, and the Seller paid the property taxes November 1st (it covered July 1st to January 1st), the Buyer needs to credit the Seller for the period of time the Buyer owned the property, November 15th to January 1st. Escrow makes that "proration" on your closing statement. Other kinds of prorations depend on the type of property in escrow. Including, but not limited to the following examples:

- We prorate Homeowner Association dues.
- We prorate rents for Rental properties (and debit Seller/credit Buyer for security deposits and interest, if applicable)
- If the Buyer assumes the Seller's loan (instead of getting a new one) we prorate interest on the loan.
- If there are any additional items that need to be prorated, we need to be instructed regarding those in writing.
14 What does "record "mean?
This is what happens the day escrow "closes". It means that any documents required to be recorded with the County Recorder have been electronically sent by the title company to the County Recorder and have been recorded.
15 What happens when escrow "closes"?
The escrow officer assigned to the file calls everyone to tell them it has closed, balances the file, pays all bills required to be paid through escrow, refunds the Buyer any excess funds deposited into escrow, and delivers the Seller's proceeds as directed by the Seller. Escrow provides the parties with a detailed accounting for same, "the Closing Settlement Statement".
16 Who does the Buyer get the keys from after the escrow closes?
Usually the Seller or the Real Estate Broker involved. Keys should not be given to escrow.
17 When are property taxes due?
In California the "first half" real property taxes are due November 1st, and are delinquent December 10th. The "first half" property taxes cover July 1st to January 1st (the bill is due sort of in the middle).
The "second half" property taxes are due February 1st, and delinquent April 10th. The "second half" covers January 1st to July 1st (the bill is delinquent sort of in the middle).

BUYERS! PLEASE DON'T MISS YOUR TAX PAYMENT! THE TAX COLLECTOR PENALIZES WITHOUT EXCEPTION, IF YOU ARE LATE, REGARDLESS OF WHETHER OR NOT YOU RECEIVED A BILL, AND WHETHER OR NOT IT WAS ISSUED IN YOUR NAME!. The Tax collector reassesses your property on January 1st. If your escrow closed after January 1st, you will probably not get a tax bill. You will need to make a written request for a duplicate tax bill to the County Tax Collector approximately 2 months before the bill is delinquent! When you receive the tax bill, it will probably still be in the previous owner's name. You still need to pay it on time or it will accrue penalties. Lastly, you will receive a Supplemental Tax Bill from the Tax Collector sometime after escrow closes, it will be based on the new assessment of subject property, and will be charged from the escrow closing date until the time you receive the bill. If you have any questions, please call us.

18 Escrow "No-No's"
- Never give advice!
- Never be partial!