Buying or selling a home in Southern California? Escrow can feel like a black box when you are trying to hit deadlines, protect your deposit, and move on time. You want a smooth, secure close with no surprises. In this guide, you will learn exactly how escrow works here, who does what, the typical timeline and costs, and how to avoid delays and wire fraud. Let’s dive in.
Escrow basics in California
What escrow does
Escrow is a neutral third party that holds money and documents until everyone’s written instructions are met. The escrow holder follows the purchase contract and any signed amendments to transfer title to the buyer and funds to the seller. In California, escrow is a standard settlement process. Attorneys are not required at closing.
Escrow is regulated in California. Licensed companies must follow strict trust accounting and consumer protection rules under the state’s oversight. You can learn more about licensing and consumer protections on the California Department of Financial Protection and Innovation site.
Who is involved
- Buyer. You deposit earnest money, complete inspections and other contingencies, sign loan and closing documents, and bring in final funds.
- Seller. You provide disclosures, payoff details for any loans, and sign the deed.
- Escrow holder. The escrow company opens the file, holds funds, coordinates paperwork, clears instructions, records documents, and disburses money.
- Title company. Title reviews the property’s public records, issues a preliminary title report, and provides title insurance policies after closing. In many cases, the same company handles both escrow and title functions.
- Lender. If you finance, the lender underwrites the loan, orders the appraisal, and sends loan documents to escrow.
- Real estate agents. Your agents coordinate timelines, deliver disclosures, and help you meet contract requirements.
Escrow vs. title vs. lender escrow account
- Escrow. The neutral settlement process that manages your closing.
- Title insurance. A separate product that helps protect owners and lenders against covered title defects. Consumer resources are available from the California Department of Insurance and the American Land Title Association.
- Lender escrow account. After closing, your mortgage servicer may collect monthly amounts for property taxes and insurance. This is different from the closing escrow.
Your step-by-step timeline
1. Open escrow and deposit earnest money
Once your offer is accepted, escrow is opened with the company named in your contract. You send an earnest money deposit by check or wire to the escrow trust account. Escrow issues a receipt and opens your file.
2. Title search and preliminary title report
The title company searches public records and issues a preliminary title report. It lists recorded liens, easements, and items that must be cleared before closing. If issues appear, the seller and title work to resolve them so you receive clear, insurable title.
3. Contingencies and inspections
You complete your investigation during contingency periods. This can include general home inspections, specialized inspections, appraisal, loan approval, and review of seller and HOA documents. Standard forms and timelines are widely used in California contracts. The California Association of Realtors provides consumer guidance on how contingencies work.
4. Clear to close and final numbers
After contingencies are removed and the lender gives final approval, escrow prepares your settlement statement with prorations, credits, and payoffs. You confirm your final funds. The lender issues a Closing Disclosure that must be delivered at least three business days before loan consummation. You can read more about this rule on the Consumer Financial Protection Bureau.
5. Signing, funding, and recording
You sign loan and closing documents with a notary, often at the escrow office or remotely. Signed loan documents go back to the lender for funding. After funds are released, escrow records the deed and any loan documents with the county recorder. Once recording is confirmed, escrow disburses money to payoffs, commissions, and the seller’s proceeds.
How long escrow takes in SoCal
Most Southern California escrows run about 17 to 45 days. A 30-day close is common, but your timeline depends on financing, appraisal speed, HOA document delivery, and any title issues. Your contract sets the deadlines for each contingency. Competitive markets may push for shorter timelines. If you need more time, your agent can negotiate extensions.
Closing costs and who pays
Common line items
- Escrow fee for settlement services
- Title insurance premiums for owner and lender policies
- Recording fees and any city or county transfer taxes
- Loan costs such as appraisal, credit report, and underwriting
- Prorations for property taxes and HOA dues
- Miscellaneous items such as notary, courier, HOA estoppel, pest clearance, home warranty if purchased, and homeowner’s insurance premium
Who usually pays in California
Customs vary by county and are negotiable. In many California transactions, the seller commonly pays for the owner’s title policy, county transfer taxes, and agent commissions. Buyers usually pay the lender’s title policy, loan fees, and recording of the deed of trust. Escrow fees are often split but can be negotiated. Title insurance is regulated in California. The Department of Insurance provides consumer information on how premiums work.
Local SoCal details to expect
- County recording. Escrow records documents with the county where the home is located. Requirements and fees differ by county. For Los Angeles County, you can review recording information from the Registrar-Recorder/County Clerk.
- Local transfer taxes. Some cities add their own transfer taxes on top of county charges. Escrow will calculate these and include them in your final statement.
- HOA communities. Condos and many planned developments require HOA resale packages. Delivery timelines and any special assessments can affect timing.
- State disclosures. California uses standardized seller disclosures and Natural Hazard Disclosure reports. Southern California properties may involve wildfire or earthquake zone disclosures.
Common delays and how to avoid them
- Title issues. Unreleased liens, unpaid taxes, or judgments can slow closing. Ask escrow early for status on payoffs and any items flagged in the preliminary title report.
- Loan underwriting. Late documents or credit changes can delay funding. Avoid new credit, large purchases, or job changes until after closing.
- HOA documents. Resale packages can take time. Order them early in the process.
- Missing signatures and notary errors. Sign promptly and review for accuracy. Remote notarization may be available per company policy.
- Payoff coordination. Confirm your lender and any subordinate liens are ready with accurate payoff statements.
Your agent and escrow officer work together to keep these items on track. If an issue arises, your contract contingencies create a path to resolve or, if needed, to cancel under the terms provided.
Protect yourself from wire fraud
Wire fraud targeting real estate closings is common. Criminals can spoof emails and send fake wire instructions. Protect your funds with a simple checklist:
- Verify wiring instructions by phone using a number you find independently, not from an email.
- Do not act on any change to wiring instructions without calling to confirm.
- Use secure portals when your escrow or title company offers them.
- Double check the account name, number, and bank before sending funds.
For more guidance, review consumer alerts from the FBI and best practices shared by the American Land Title Association.
Earnest money if escrow fails
Your purchase contract and escrow instructions control how earnest money is handled.
- If you close, the deposit is applied to your purchase price.
- If you cancel within a valid contingency period, you may be entitled to a refund per the contract.
- If you breach after removing contingencies, the seller may be entitled to the deposit as liquidated damages if your contract allows.
If there is a dispute, escrow holds the funds until the parties resolve it through the contract’s dispute process or other resolution.
What you will sign at closing
Typical documents include the settlement statement, grant deed, loan note and deed of trust if financing, title insurance paperwork, transfer tax declarations, and required state or local disclosures. Condo or HOA transactions may include HOA estoppel documents. Your escrow officer will explain what each document is and how it fits into the closing.
Choosing escrow and your role
Who selects the escrow company is negotiable and set in the purchase contract. You can request a preferred company. What matters most is communication, accuracy, and efficiency. Licensed escrow companies in California follow state rules under the DFPI, and title insurers are regulated by the Department of Insurance. Your agent will coordinate with escrow to keep timelines and paperwork organized.
Work with a team that manages escrow
A smooth closing comes from daily coordination, clear communication, and problem solving. You deserve white-glove support that anticipates issues and protects your money. With hands-on escrow management, proactive title review, and clear guidance on contingencies, you can close with confidence in Southern California’s fast-moving market.
Ready to plan your next move or get answers about your escrow? Start your next step with the Angelo Fierro Group. Start Your White-Glove Consultation.
FAQs
What is escrow in a California home sale?
- Escrow is a neutral company that holds funds and documents, follows written instructions, and coordinates recording and disbursement to complete your closing under California rules.
How long does escrow take in Southern California?
- Many escrows close in 17 to 45 days, with 30 days common, depending on financing, appraisal, HOA documents, title items, and deadlines set in your contract.
Who chooses the escrow company in California?
- The purchase contract names the escrow holder. Selection is negotiable between buyer and seller, and you can request a preferred company before signing.
What is the preliminary title report and why it matters?
- It is a title company report that lists recorded liens, easements, and requirements to deliver clear title. Escrow and title use it to resolve items before closing.
How do I avoid wire fraud when sending funds to escrow?
- Call a verified number to confirm instructions, do not trust changes sent by email, use secure portals, and review FBI guidance on real estate wire scams before you send funds.
