What is an Escrow?
When opening an escrow, the Buyer and Seller of a piece of property establish terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a third, disinterested party known as the Escrow Holder. The Escrow Holder in turn has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent neutral account and the vehicle by which the interest of all parties to the transaction are protected.

How Does the Escrow Process Work?
The escrow is a depository for all monies, instructions and documents necessary for the purchase of your home, including your funds for down payment and your lender's funds and documents for the new loan. Generally, the Buyer deposits a down payment with the Escrow Holder and the Seller deposits the deed and any other necessary papers with the Escrow Holder. Prior to close of escrow, the Buyer deposits the funds required and agreed upon by the parties to the sale with the Escrow Holder. The Buyer instructs the Escrow Holder to deliver the monies to the Seller when the Escrow Holder:

1. Records the Deed.

2. Delivers to the Buyer a policy of title insurance which shows title to the property signed over to the Buyer.

The Escrow Holder is authorized to deliver the Deed to the Buyer when the Buyer has deposited the agreed-upon purchase price and fulfilled any other conditions specified in the escrow instructions. The Escrow Holder handles the pro-rations and adjustment on any fire/hazard insurance, real estate taxes, rents, interest, etceteras, based on the escrow instructions of both parties.

The Escrow Holder thus acts for both parties and protects the interests of each within the authority of the escrow instructions. Escrow cannot be completed until the instructions have been satisfied and all parties have signed escrow documents. The Escrow Holder takes instructions based on the terms of the purchase agreement and the Lender's requirements.

How Do I Open an Escrow?
Your Real Estate Agent will open the escrow for you. As soon as you execute your purchase agreement, your agent will place your initial deposit into an escrow account at Chicago Title Company or into the Real Estate Broker's trust account.

How Will I Know Where My Money Has Gone?
Written evidence of your deposit is generally included in your copy of the purchase agreement (sometimes called an agreement to purchase and receipt for deposit). Your funds will then be deposited in your separate escrow or trust account and processed through your local bank.

What Information Will I Have To Provide?
You may be asked to complete a statement of identity as part of the necessary paperwork. Because many people have the same name, the statement of identity is used to identify the specific person in the transaction through such information as the date of birth, social security number, etc. This information is kept confidential.

What Do I Need To Do Before My Appointment To Sign Escrow Papers?

CASHIER'S CHECK:
Obtain a cashier's check made payable to Chicago Title Company in the amount indicated to you by your Escrow Officer. A personal check may delay the closing since Chicago Title Company is required by law to have "good funds" (check has cleared before disbursing funds from escrow). Wired funds is another method of expediting your closing.

LENDER'S REQUIREMENTS:
Make sure you are aware of your Lender's requirements and that you have satisfied those requirements before you come to the title company to sign your papers. Your Loan Officer or Real Estate Agent can assist you.

HAZARD/FIRE INSURANCE:
If you are purchasing a single family, detached home, or in some cases, a town home, be sure to order your hazard/fire insurance once your loan has been approved. You should immediately begin looking for an agent; not all companies can write fire/hazard insurance. Then call your Escrow Officer with the Insurance Agent's name and phone number so that he/she can make sure the policy complies with your Lender's requirements. You must have your insurance in place before the Lender will fund money to the title company. If you do not have an Insurance Agent, your Real Estate Agent can help you.

IDENTIFICATION:
Please bring either your valid state identification card, driver's license or passport with you to the title company. These items are needed to verify your identity by a notary public. It is a routine, but necessary, step for your protection.

TITLE TO HOME:
Decide how you wish to hold title to your home. You will need to make this decision prior to your escrow appointment. We suggest you consult an attorney, tax consultant, or other qualified professional before you decide. Simply bring your decision on this matter to your appointment to sign the escrow papers. (Also see Forms of Ownership: Common Methods of Holding Title.)

When and Where Do I Sign Escrow Instructions?
Your Escrow Officer or Real Estate Agent will contact you to make an appointment for you to sign your escrow instructions and final loan papers. At this time, the Escrow Officer will also tell you the amount of money you will need (in addition to your loan funds) to purchase your new home. Your loan funds will be sent directly to the Escrow Holder by the Lender.

You may sign your escrow instructions and loan documents at Chicago Title Company or another agreed upon location.

What's the Next Step After I've Signed the Closing Escrow Papers?
After you have signed all the necessary instructions and documents, the Escrow Officer will return the loan to the Lender for a final review. This review usually occurs within a few days. After the review is completed the Lender is ready to fund your loan and informs the Escrow Officer.

When Will I Receive the Deed?
The original Deed to your home will be mailed directly to you at your new home by the County Recorder's Office. This service takes several weeks, sometimes longer, depending on the County Recorder's volume.

How Long is an Escrow?
The length of an escrow is determined by the terms of the purchase agreement and can range from a few days to several months. An escrow averages 30 to 45 days.

How Does the Loan Process Work?
Your Real Estate Agent can provide you with current financing information to help you in selecting a Lender. The Lender might be a bank, savings and loan, or a mortgage company. You will be required to complete a loan application which will require personal and financial information. (Also see Loan Process.)

What Happens After I Submit the Loan Application?
The Lender will begin the qualification process, including verification of information submitted on the application and appraisal of the value of the property.

The Lender will require that you obtain hazard/fire insurance if you are purchasing a detached home. However, if you are buying a condominium or townhouse there may already be a master hazard policy. Check with your Real Estate Agent. Also, check with your Insurance Agent for additional coverage for your personal property. The Lender will also require that you obtain title insurance and may have other requirements that will need your attention prior to the close of escrow. Your Real Estate Agent can help you take care of these requirements well in advance.

When the Loan Is Approved, What's Next?
When your loan is approved and the loan documents are sent to the Escrow Officer or the Escrow Assistant handling your transaction, escrow instructions are then prepared.

Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions represent your written statement to the Escrow Holder (the title company) protecting your interests. Your escrow instructions specify, in a debit and a credit format, the disposition of your purchase funds. They also provide for title insurance protection for your home.

What Is an Escrow Closing?
An escrow closing is the culmination of the transaction. It signifies legal transfer of title from the Seller to the Buyer. Usually, the Grant Deed and Deed of Trust are recorded within one working day of the Escrow Holder's receipt of loan funds, completing the transaction and signifying the "close of escrow." Once all the conditions of the escrow have been satisfied, the Escrow Officer informs you of the date escrow will close and takes care if the technical and financial details.