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Escrow Process in California
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Explaining Escrow
What is escrow? It’s simply a small and short-lived “trust” arrangement.A third person or party holds some funds in trust for you . . . until the completion of a transaction.For our purposes here, the transaction is the buying or selling of a home.
What comprises escrow? There are two elements:
1. A binding contract between buyer and seller; and
2. The conditional delivery of transfer documents to a third party.
The binding contract can be: a deposit receipt, an agreement of sale, an exchange agreement, an option or mutual escrow instructions.
What is an escrow “holder” or agent? That’s the impartial third person that holds possession of funds, written documents or personal property... until designated, agreed-upon actions are taken. In the case of the purchase of a home, the agent holds the buyer’s funds on deposit until it’s time to deliver them to the seller.
The escrow holder ensures that all parties to a real-estate transaction comply with the terms and conditions of the agreement. The terms are described in the escrow instructions, which you’ll receivewhether you’re buying or selling. He or she may also coordinate activities of all parties involved:
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Buyer; |
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Seller; |
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Broker; |
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The lending institution; and |
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The title company. |
Proceed to the 10 Escrow Steps
Return to Escrow Introduction
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