The Los Feliz  Escrow Process

Basic escrow procedures include the following:

1. Prepare Escrow InstructionsLos Angeles Real Estate Agent on the escrow holder’s printed form. All principals to
the escrow sign instructions which fully set forth the understanding of the parties to
the transaction. Usually accompanied by an initial deposit. For a home purchase, the
mutual instructions of the principals set forth:

  • the purchase price and terms;
  • agreement as to mortgages;
  • how buyer’s title is to vest;
  • matters of record subject to which buyer is to acquire title;
  • inspection reports to be delivered into escrow;
  • proration adjustments;
  • date of buyer’s possession of the property;
  • documents to be signed by the parties, delivered into escrow, and recorded;
  • disbursements to be made, costs and charges and who pays for them; anddate of closing.

2. Order Title Search on the subject property, resulting in a “Preliminary Report” from
the title company. The escrow holder examines this report carefully for items not
contemplated in the escrow instructions. The seller must clear any such item or it
must be brought to the attention of the buyer “for information” and “expression of
desire in the matter.”

3. Request Demands and/or Beneficiary Statements from any lenders of record. The
necessary document will be:

  • a “Demand for Pay-off” if an existing loan is to be paid in full through escrow;
    or
  • a “Beneficiary Statement” if buyer is purchasing “subject to” or assuming a loan.

4. Accept Structural Pest Control Report and Other Reports (such as plumbing or
roofing inspections) into escrow and obtain, as instructed, any necessary approvals
from the parties in connection with the reports/inspections. Hold the reports (and any
funds associated therewith) for delivery to the proper party, or recording, at close of
escrow.

5. Accept New Loan Instructions and Documents if the buyer is obtaining new
financing. Obtain buyer’s approval/execution of the documents. Satisfy all lender’s
instructions prior to using the lender’s funds to complete the transaction.

6. Accept Fire Insurance Policies and Complete Settlement by:

  • accepting and delivering any fire insurance policy and transferring the insurance
    if so instructed by the parties;
  • making all proration (e.g., property taxes and insurance) as instructed by the
    parties;
  • completing the accounting (settlement) details and informing the principals thatescrow is ready to proceed.

7. Request Closing Funds. The law prohibits disbursal of funds from an escrow
account until all items such as checks, drafts, etc. have cleared and become available
for withdrawal.

8. Audit File in Preparation for Closing by:

  • accounting for all funds (Cash Reconciliation Statement) and documents;
  • determining that the parties have complied with all escrow instructions.

9. Order Recording by authorizing the title company to run the seller’s title to date and
record the necessary documents, provided no change has occurred in the seller’s title
since issuance of the preliminary title report.

10. Close Escrow, after confirming recording, by:

  • preparing settlement statements for buyer and seller;
  • disbursing all funds; and delivering documents to the party or parties entitled thereto.