What is Escrow and Why do I need it?

As an escrow officer, I'm asked questions like "What is escrow?" and "Why do I even need an escrow anyway?". The following are three answers to commonly asked questions:

Escrow - What is it?
Very simply defined, an escrow is a deposit of funds, a deed, or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law - Section 17003 of the Financial Code - provides the legal definition.

Why do I need Escrow?
Whether you are the buyer, seller, lender, or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.

Escrow - How does it work?
The principals to the escrow - buyer, seller, lender, borrower - cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he or she will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.

The escrow officer will process the escrow, in accordance with the instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed". Each escrow, although following a similar pattern, will be different in some respects, as it deals with YOUR property and the transaction at hand.

The duties of an escrow holder include: following the instructions given by the principals and parties to the transaction in a timely manner, handling the funds and/or documents in accordance with instructions, paying all bills as authorized, responding to authorized requests from the principals, closing the escrow only when all terms and conditions have been met, distributing the funds in accordance with instructions and provide an accounting for same - the Closing or Settlement Statement.

Anchor Seaport Escrow
Jami Harris, Escrow Officer
(562) 434-4437