What Is An Escrow?

An escrow is a neutral "stakeholder" account and is the vehicle by which the interests of all parties to a transaction are protected. The escrow is created after you enter into an agreement with a lender or mortgage broker to refinance your home, sign a contract to buy or sell a home or any other property, and the escrow becomes the depository for all monies, instructions and documents pertaining to the transaction. Some aspects of the agreements are not part of the escrow. For example, in a refinance transaction, items such as credit reports and appraisals do not become part of the escrow holder's file; in a sale transaction the buyer and seller must decide which fixtures or personal property items are included in the sales agreement; in land acquisitions, items such as environmental studies and local zoning classifications are handled outside of the escrow. Your lender, real estate agent and/or attorney can advise you in any of these matters.


The escrow officer takes instructions based on the terms of your agreement, whether that is the Purchase Agreement or a lender's requirements. The escrow officer makes sure that any "clouds" and liens shown on the Preliminary Report/Title Commitment issued by the title company are either approved by the party to be insured or removed before the escrow closes. In the case of a refinance or loan escrow, that party is the lender. In the case of a sales transaction, that party is the buyer. The escrow holder can also hold inspection reports and copies of bills to be paid through the escrow as required by a lender or as part of the purchase agreement. Escrow holders can also prepare the documents to be recorded as part of the transaction, obtain evidence of hazard insurance and obtain the title insurance. Escrow cannot be completed until these items have been satisfied and all parties have signed escrow documents.


In the case of a refinance transaction the lender usually opens the escrow. In the case of a home sale a real estate agent usually opens the escrow, or if no realtor is involved because the property is "for sale by owner", the buyer and seller can open escrow. Land transactions are regularly opened by the buyer or seller. As soon as the parties involved have reached an agreement as to the terms of a sale, an initial earnest money is handed to the escrow holder, along with the purchase agreement. As a rule, in the case of a refinance, no money is deposited until the loan has been approved and the escrow is getting ready to close.


For a sale transaction, written evidence of the deposit is generally included in your copy of the sales contract. All monies paid to the escrow holder are deposited in a separate escrow or trust account. The escrow holder will then send you a receipt for the funds so deposited.


You may be asked to complete a Statement of Identity as part of the paperwork. Because many people have the same name, the Statement of Identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. You might also be asked to provide a mailing address. All of this information is confidential.


The amount of time necessary to complete the escrow is determined by the terms of the Purchase Agreement or the time taken to process your loan. It is normally 45 to 60 days, but can range from a few days to several months.

Contact Us

Embassy Escrow, Inc.

7369 Day Creek Blvd.,

STE. 102,

Rancho Cucamonga, CA 91739

Phone. (909) 922-8393

Fax. (909) 304-0014