I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. Call (800) 239-1103.
What Is Escrow in California? A Complete Guide for Homebuyers
California real estate transactions work differently than most states — and escrow is the reason. Here’s everything you need to know as a buyer.
What Is Escrow?
Escrow is a neutral third-party arrangement where an escrow company holds all funds, documents, and instructions until all conditions of the sale are met. In California, escrow companies (not attorneys) handle closings — we’re one of the few states that does it this way.
How California Escrow Works
- Opening escrow: After your offer is accepted, escrow is opened (typically by the listing agent or per local custom). You’ll deposit your earnest money — typically 1–3% of purchase price — into escrow within 3 business days.
- Escrow instructions: Both buyer and seller sign instructions that tell the escrow officer exactly what conditions must be met to close.
- Title search: The escrow company orders a title search to confirm the seller has clean title and there are no liens.
- Lender coordination: Your mortgage lender sends loan documents to escrow for signing.
- Signing: You’ll sign loan documents (typically at a notary or title company) 2–3 days before closing.
- Funding and recording: Your lender wires funds to escrow, escrow pays off existing liens, the deed records at the county, and keys are released.
Escrow Timelines in California
Standard California escrow is 30 days. In competitive markets or when paying cash, 21-day escrows are common. Shorter escrows (15 days) are possible for all-cash buyers and can be a competitive advantage in multiple-offer situations.
Escrow Fees
Escrow fees are typically split 50/50 between buyer and seller in most California counties (though this is negotiable and varies by county custom). Expect $1,500–$3,000+ depending on purchase price and county.
Earnest Money: What Happens to It?
Your earnest money sits in escrow and is credited toward your down payment and closing costs at close. If the deal falls through due to a contingency (financing, inspection, appraisal), you typically get it back. If you back out without a valid contingency, the seller may be entitled to keep it.
Frequently Asked Questions
Who chooses the escrow company in a California real estate transaction?
In California, this is negotiable. In most Bay Area and Marin County transactions, the listing agent often suggests an escrow company, but the buyer has the right to request a different one. In Southern California, customs vary — sometimes buyer and seller each have a preferred company and a negotiation happens. Either party can request a specific escrow company, and it’s worth discussing with your agent and broker before opening escrow.
Can escrow close early in California?
Yes — escrow can close early if all conditions are met ahead of schedule: all contingencies removed, loan funded, all documents signed, title cleared. Both buyer and seller must agree to an early close, and the lender must be ready to fund. For buyers trying to make a competitive offer, offering a shorter escrow period (21 or even 15 days for cash buyers) can be a significant advantage over other offers.
What happens if escrow doesn’t close on time in California?
If escrow doesn’t close by the agreed date, the parties can sign an extension (most common), or either party can issue a Notice to Perform or cancel the contract depending on the circumstances. Delays most often come from financing — lenders requesting additional documentation, appraisal delays, or underwriting conditions. Working with a broker who communicates proactively through underwriting reduces the risk of last-minute delays that push your close date.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | Licensed since 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
