The Escrow Process Explained
A clear, step-by-step guide to how escrow works in California real estate — from opening escrow to receiving the keys.
What Is Escrow?
Last updated: August 2026
Escrow is a neutral third-party process that protects both the buyer and seller during a real estate transaction. An escrow company — also called a title company — holds all funds, documents, and instructions until every condition of the sale has been met.
Think of escrow as a safe middle ground. The buyer's money and the seller's deed are both held by a neutral party. Neither side gets what they want until both sides have fulfilled their obligations under the contract.
Important: Escrow timelines and procedures can vary by transaction. This guide provides a general overview of the California escrow process. Your specific transaction may differ based on the contract terms, lender requirements, and other factors.
The Escrow Process Step by Step
Step 1 — Open Escrow
After the purchase agreement is signed, an escrow account is opened with a neutral escrow or title company. The buyer's earnest money deposit is placed into escrow.
Step 2 — Inspections & Disclosures
The buyer completes professional inspections and reviews the seller's disclosures and reports. Contingencies (inspection, loan, appraisal) are active during this period.
Step 3 — Loan Processing
If financing, the buyer's lender processes the loan, orders the appraisal, and works toward loan approval. The buyer provides documentation and satisfies lender conditions.
Step 4 — Remove Contingencies
Once inspections are complete and the loan is approved, contingencies are formally removed in writing. This commits both parties to moving forward with the transaction.
Step 5 — Sign Documents
Both buyer and seller sign final closing documents. The buyer signs loan documents (if financing), and the seller signs the deed transferring ownership.
Step 6 — Close Escrow
The lender funds the loan, the county records the new deed, and ownership officially transfers. The buyer receives the keys and the seller receives the proceeds.
What Happens at Closing?
Closing Day
Closing — also called recordation — is the final moment of the escrow process. Here's what happens:
- The lender funds the loan and sends the funds to escrow
- The county records the new deed, officially transferring ownership
- The buyer receives the keys to their new home
- The seller receives the proceeds from the sale
Frequently Asked Questions About Escrow
What is escrow?
Escrow is a neutral third-party process that holds funds and documents during a real estate transaction until all conditions of the sale are met. An escrow company (or title company) acts as a neutral intermediary between the buyer and seller, ensuring neither party receives funds or ownership until all terms of the contract are satisfied.
How long does escrow take?
In the Bay Area, escrow typically takes 21 to 30 days for a standard transaction, but the timeline can vary based on the terms of the contract, financing requirements, inspection schedules, and other factors. Cash transactions may close faster, while transactions with complex contingencies may take longer.
Who chooses the escrow company?
In Northern California, the buyer typically selects the escrow and title company. However, this can be negotiated as part of the purchase agreement. The choice of escrow company is often specified in the contract.
What happens during escrow?
During escrow, the buyer deposits earnest money, the lender processes the loan (if applicable), inspections are completed, disclosures are reviewed, contingencies are removed or satisfied, the title is searched and insured, and both parties sign final documents. Once all conditions are met and funds are transferred, escrow closes and ownership changes hands.
What is escrow closing?
Escrow closing (also called 'closing' or 'recordation') is the final step where the county records the new deed, transferring ownership from the seller to the buyer. The buyer receives the keys, and the seller receives the proceeds from the sale. This is the moment the transaction is officially complete.
What if something goes wrong during escrow?
If issues arise during escrow — such as inspection problems, appraisal issues, or loan delays — the contingencies in the contract provide opportunities to renegotiate, request repairs, or in some cases cancel the transaction. I guide my clients through these situations to protect their interests.
Questions About Escrow?
I guide my clients through every step of escrow — from opening to closing — so you always know what's happening and what comes next.
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