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How does Escrow work?
The principals to the escrow, namely the buyer, the seller, the lender and the borrower — cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he 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 escrow instructions, and when all conditions required in the escrow are met or achieved, the escrow will be “closed.” Although following a similar pattern, each escrow will be different in some respects, as it deals with your property and the transaction at hand.

What are the duties of the Escrow Holder?
The duties of an escrow holder include:
a) following the instructions given by the principals and parties to the transaction in a timely manner
b) handling the funds and/or documents in accordance with the instructions
c) paying all bills as authorized
d) responding to authorized requests from the principals
e) closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same : the Closing or Settlement Statement.

What types of transactions go through escrow?
Most contracts that involve the transfer, lease or financing of real or personal property can be placed in escrow. Even prizefighters have been known to have their purses guaranteed through an escrow depository.

Who chooses the Escrow Holder?
Normally the choice of the escrow holder is made through an agreement between the principals. While a real estate broker (if one is involved in the transaction) may recommend an escrow holder, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. An important note: there are laws that prohibit the payment of referral fees — this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.

Why do I need an escrow?
Particularly for transactions involving a substantial investment, the buyer or seller should demand the protection of an escrow. Whether you are the buyer or the seller, you want assurance that no funds or property will change hands until all of your instructions have been followed. With the increasing complexity of business, law and tax structures, it takes experienced and trained professionals like those with Southwest Escrow Corporation to supervise the transaction.

What is the difference between “Licensed” and “Controlled” Escrow Companies?
All escrow companies in California can be classified into two basic categories: Licensed or Controlled.

  • “Licensed” escrow companies. These are independent businesses licensed by the California Department of Corporations. Such license regulates the procedures and practices of the companies and subjects them to stringent requirements designed to protect consumers.

  • “Controlled” escrow companies are non-licensed businesses that can be owned by a variety of entities, including real estate brokers, mortgage brokers, banks, savings and loans, and title insurance companies. Such companies fall under the jurisdiction of a variety of supervising agencies, with regulations and requirements that vary widely. Bear in mind though that none of the agencies have regulations as strict as those imposed on the escrow companies licensed by the Department of Corporations.


Therefore, insist on a qualified and licensed escrow company such as Southwest Escrow Corporation 

– we have your best interests at heart.


While licensed escrow companies are regulated by the state, escrow fees are not. Like any other businesses, escrow holders will charge fees that are commensurate with the costs of producing the service, the complexity of the transaction and a host of other factors. Therefore, fees will vary between companies and from county to county. You can call Southwest Escrow Corporation for an estimate of the escrow fees and costs. However, please keep in mind that Southwest Escrow Corporation has no control over the costs of other services like title insurance, title fees, commission’s, the lender’s financing charges, hazard insurance, recording charges and other fees that may be charged by outside parties.

Can I get legal advice from an escrow officer?
An escrow officer is not a legal counselor and cannot give legal advice. In the event that the parties disagree, the escrow officer must remain neutral until agreement is reached. The transaction should not be negotiated in the escrow office, nor should an escrow officer become involved in the negotiation.

If I still have questions about my escrow, where can I go for answers?
If negotiations have been conducted through a real estate agent or broker, that person should be your primary consultant. As an independent agent, the escrow officer is prohibited from answering many of your questions. However, in accordance to his or her responsibility in giving impartial service to all parties, a knowledgeable escrow officer will refer you to the proper source for your answers. An escrow officer will often suggest that the customer seek the advice of legal counsel or a tax consultant.

For more information on how we can help you in your next transaction, you may call us at 310-674-7660.

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