Updated on September 2, 2021
What happens when parties to a purchase chose to use a escrow to transfer property? The following is a general walkthrough of the typical escrow process and explains how an escrow agent assists with a sale. Actual circumstances may vary depending on the structure and complexity of the transaction and the practices of individual escrow companies and the parties.
In the escrow process, to start, generally one or both parties will designate an escrow holder, which can be a title company that offers escrow services or a stand alone escrow company when the buyer and seller sign a purchase and sales agreement.
Thereafter, the buyer places the deposit and the buyer or seller’s broker opens escrow. The escrow holder then orders a preliminary report from the title company to figure out what outstanding liens to pay off in the course of escrow. The escrow holder will also request a Statement of Information from the parties to clear title.
The escrow holder then prepares escrow instructions providing for specifics of the sale, and obtains loan documents from the lender funding the new purchase.
Next in the escrow process, the escrow holder determines whether all conditions for the sale have been met—including all the necessary sales disclosures, new insurance for the property, required reports and other property information.
Once the buyer completes all the necessary paperwork for the loan, the loan documents return to the escrow holder.
The escrow holder then reviews the entire file to verify all materials, confirm the validity of the loan, and determine whether all conditions have been met.
Following that, the escrow holder and the title company review title insurance requirements and the escrow holder receives the lender’s funds.
In the final steps of the escrow process, the escrow holder submits the deed for recording; prepare statements reflecting the exchange of funds, payoffs, and costs paid in escrow; disburse remaining funds to the right parties; and prepare a 1099 report.
Schorr Law is experienced in dealing with disputes arising from purchase sale disputes Los Angeles. To inquire about a free consultation, contact real estate attorneys in Los Angeles today at (310) 954-1877, or [email protected].
See related: What is the Function of Escrow?