All About the Escrow Process in California
So you’re trying to figure out the escrow process in California? You’re probably wondering what the important steps are and how long it takes from signing the first paper until the property is yours?
These are some of the most common real estate buying and selling questions that confuse many home buyers in California.
Between the appraisals, mortgage document relaying, and title searching, things can get a bit confusing, but it’s easy enough to understand if you break it down into different steps.
This short, comprehensive article will help you understand all you need to know about how the process typically goes in California.
What is the Escrow Procedure?
Let’s start by defining what the term means and refers to.
The meaning of “escrow” is the time frame between contract and closing, and the events that take place within this time frame.
This process begins when you sign the purchase contract and doesn’t end until the deal is closed.
Basic Outline of the California Escrow Process
These are the basic stages of the process:
1. Beginning of escrow
The escrow period starts as soon as you sign the real estate purchase contract. There will typically also be a significant money deposit. This deposit, along with the contract and other documents, get sent to the escrow agent.
The norm in California is that the seller picks the escrow company, but this isn’t always the case. Whether it’s the buyer or the seller who decides, the deal won’t move on until an escrow agent is involved.
2. Appraisal order
The mortgage lender orders a home appraisal once you’ve entered escrow. This serves to determine the value of the house in the current market. This is to ensure that the home loan won’t exceed the property value.
If you want more information about this rather complex appraisal procedure, take a look at this official handbook.
3. Title search
Before the process can progress, the title must be sorted out. This title is a legal term referring to property ownership. Having the title to something means you own it.
A title company will typically double check to make sure there’s a definite chain of ownership, that there aren’t any court filings or liens that can prevent the sale. This is an important part of the escrow period.
4. Preparation of Documents
The mortgage lender will provide a number of documents about the home loan for the escrow company. Your escrow agent inspects the loan documents and any relevant paperwork to confirm that everything is ready for handover.
All closing costs for both parties will be tallied up, and there’ll be a disclosure document summing up the due amount a couple of days before closing.
5. Closing Time
One last step before the home is sold. The buyer hands over a check for the whole amount of the closing cost. There will also be a number of documents for the buyer and seller to sign.
The title status will be updated to reflect this transfer of home ownership. The mortgage lender receives the documents and will begin releasing the funds soon after.
How Long does the Escrow Process Take in California?
The real estate escrow procedure typically takes 30 to 40 days. This is an average, don’t be surprised if it goes faster or gets drawn out by complications. Many factors play into the timeframe.
Some properties need additional research due to a legal judgment or lien that affects the title, and this takes time.
If the escrow company involved has a busy backlog, this can also delay things.
Escrow can usually be successfully closed within the timeframe designated in the contract. Delays are unusual but do happen sometimes.
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