Buying a home in Los Angeles is exciting, but the word “escrow” can make the process feel confusing. You might be wondering who holds your deposit, what deadlines matter, and how you actually get the keys. You deserve a simple, trustworthy roadmap. This guide explains California escrow in plain English, with Los Angeles timing, documents, and tips so you can move forward with confidence. Let’s dive in.
What escrow means in California
Escrow is a neutral third party that follows the purchase contract and written instructions from you and the seller. The escrow company holds your deposit and closing funds, collects required documents, and coordinates signing and recording once all conditions are met. When everything is complete, escrow releases funds and the county records the deed.
Escrow is different from title. Title companies research ownership, clear title issues, and issue title insurance. In California, many companies provide both title and escrow services under one roof.
Who does what in LA escrow
- Buyer: deposits earnest money, completes inspections and reviews, satisfies loan conditions, signs and wires funds to close.
- Seller: provides required disclosures and signs closing documents.
- Buyer’s agent and seller’s agent: guide strategy, track deadlines, and coordinate inspections and paperwork.
- Escrow officer: opens escrow, holds funds, prepares instructions, manages signatures, and closes per written instructions.
- Title company: issues the preliminary title report, clears defects, and issues title insurance.
- Lender: orders appraisal, underwrites the loan, and funds once conditions are cleared.
- HOA (if applicable): provides CC&Rs, bylaws, financials, and other association documents for your review.
Step-by-step escrow timeline in Los Angeles
Every transaction is unique, but most LA escrows follow a similar flow. Contract deadlines control the pace.
1. Offer accepted and escrow opened
Once the seller accepts your offer, escrow is opened with the selected escrow or title company. You receive escrow instructions and deposit directions.
2. Earnest money deposit
You send your initial deposit by wire or cashier’s check based on the contract. Escrow confirms receipt and holds the funds in a trust account.
3. Disclosures and preliminary title report
The seller provides required disclosures such as the Transfer Disclosure Statement, Natural Hazard Disclosure, and any HOA package. The title company delivers the preliminary title report to you and your agent for review.
4. Due diligence and contingencies
You complete inspections, review disclosures and title documents, and progress your loan. Your lender orders the appraisal. You and your agent address repair requests or credits based on findings.
5. Contingency removal and negotiations
By each deadline, you either remove contingencies or request an extension. Any repair credits or contract changes are documented in writing.
6. Loan underwriting and Closing Disclosure
Your lender clears conditions, then issues a Closing Disclosure. Federal rules require that you receive the Closing Disclosure at least 3 business days before closing when you have a mortgage.
7. Final walkthrough and signing
You complete a final walkthrough, usually 24 to 48 hours before closing, to confirm the home’s condition. You sign closing documents and prepare final funds for escrow.
8. Funding, recording, and keys
The lender funds the loan, escrow releases funds as instructed, and the county records the deed. After recordation, you receive keys.
Local note: Los Angeles can be competitive. Buyers sometimes shorten or waive contingencies to strengthen offers. If you consider this, understand the risks to your deposit and be sure you are comfortable with the property and financing.
Key documents and disclosures you will review
- Transfer Disclosure Statement and Seller’s Property Questionnaire: seller-provided property information.
- Natural Hazard Disclosure report: flags whether the property sits in designated zones such as flood areas, earthquake fault zones, seismic hazard zones, very high fire hazard severity zones, wildland fire areas, or dam inundation zones. Review this report closely and consider insurance quotes if hazards are flagged.
- Lead-based paint disclosure: required for homes built before 1978.
- Local disclosures: may include rent control notices, smoking rules, earthquake retrofit status, or special district information depending on the city or neighborhood.
- HOA documents: CC&Rs, bylaws, financial statements, budgets, and other items for condos or homes in associations.
- Preliminary title report: lists recorded items like easements, liens, and CC&Rs that affect ownership or use. Ask questions early so the title company can clear issues before closing.
Inspections that matter in Los Angeles
- General home inspection: a broad review of structure and systems. This is your foundation for further specialty inspections.
- Pest and termite inspection: common in LA, especially for older homes.
- Roof, HVAC, electrical, and plumbing: order as needed based on age, condition, or inspector recommendations.
- Sewer scope: important across many LA municipalities. Some areas require inspection or repairs before transfer.
- Foundation and geological assessments: smart for hillside properties and homes in areas with slope or unique soil conditions.
- Mold or asbestos testing: consider for older properties or where conditions suggest it.
- Wildfire risk and defensible space: useful for homes near wildland interfaces or canyon locations.
Understanding contingencies
Contingencies protect you while you investigate the property and secure your loan. Common ones include:
- Inspection contingency: cancel or renegotiate based on inspections and disclosures.
- Loan contingency: cancel if you cannot obtain financing under the agreed terms.
- Appraisal contingency: if the appraisal is low, you can renegotiate or bring in additional funds as allowed by your contract.
- Title contingency: cancel if title defects cannot be cleared.
- HOA review contingency: cancel if you reasonably object to HOA documents.
Deadlines are critical. If you miss a removal date, you may waive the contingency by default. Track each date closely and communicate with your agent and escrow.
Money, fees, and who pays what
Earnest money: Your deposit shows good faith and is held by escrow. Amounts vary by price point and market conditions. In many LA offers, deposits range from several thousand dollars to a few percent of the purchase price. Competitive situations sometimes prompt larger deposits.
How funds are held: Escrow places funds in a trust account and disburses them at closing per the written instructions. For short escrows, these accounts typically do not earn interest unless you arrange otherwise.
Common cost patterns in Los Angeles
- Seller often pays the owner’s title insurance policy in many Southern California transactions. This is negotiable.
- Buyer typically pays the lender’s title policy if financed, most loan-related fees, recording fees for the deed, and a share of escrow fees.
- Documentary transfer taxes may be charged by the city or county at recording. Local custom determines who pays, and it can be the seller or a split. Ask escrow or title early for the exact amounts.
- HOA documents and estoppel fees are often a seller cost but can be negotiated in the purchase contract.
Typical escrow timelines in LA
- About 30 days: common for all-cash or minimal-contingency deals.
- About 30 to 45 days: typical for financed purchases that require appraisal and full underwriting.
- About 45 to 60 days or more: common for complex sales such as new construction, certain loan programs, or probate transactions.
Remember the Closing Disclosure timing requirement of at least 3 business days before consummation when you are financing. That timeline can affect your signing and funding date.
Stay safe: wire fraud and escrow security
Wire fraud attempts are common. To protect yourself, call a known phone number for your escrow officer to verify wiring instructions before sending any funds. Never trust last-minute changes that arrive by email. Always use the contact information provided directly by your escrow team.
Practical expectations and a buyer checklist
What to expect
- A lot of documents will arrive early. Read them quickly so you can act before deadlines.
- The escrow officer and title company will coordinate with both sides and your lender. Expect requests for signatures and information.
- Inspections and negotiations move fast in LA. Lock in vendors and time slots as soon as your offer is accepted.
- Confirm wiring details by phone before you send any money.
Buyer checklist
- Immediately after acceptance:
- Open escrow and calendar your contingency deadlines.
- Send your earnest money deposit per escrow instructions.
- Begin your loan application and provide initial documents.
- Schedule the general inspection and any specialty inspections you anticipate.
- Confirm you will receive the Natural Hazard Disclosure and preliminary title report.
- During escrow:
- Review disclosures, NHD, HOA documents, and the preliminary title report.
- Request repair quotes and negotiate credits or repairs in writing.
- Order homeowner insurance quotes, especially if the NHD shows fire or flood risks.
- Monitor appraisal status and loan conditions with your lender.
- Before signing and closing:
- Review your Closing Disclosure carefully.
- Verify final wiring instructions with your escrow officer by phone.
- Complete the final walkthrough and confirm agreed repairs.
Common pitfalls and how to avoid them
- Missing contingency dates: set reminders, confirm dates with your agent, and respond early.
- Waiving contingencies without a plan: understand you could be obligated to close even if issues arise. Proceed only if you are comfortable with the property and financing.
- Overlooking NHD and insurance: hazard zones can affect coverage and premiums. Get quotes early if hazards are flagged.
- Title exceptions or liens: read the preliminary title report early and require resolution of unexpected issues in writing.
- Sewer lateral and permit issues: order a sewer scope and ask your agent to help you review permits and local compliance requirements.
Special Los Angeles property considerations
- Hillside homes: consider geotechnical and foundation inspections due to slope and soil dynamics.
- Canyon and wildland interface areas: evaluate wildfire risk and defensible space; insurance availability can vary by location.
- Coastal and flood-prone areas: even if not flagged on the NHD as a special flood hazard, consider flood insurance availability and historical flooding.
Ready to move forward?
Escrow does not have to be stressful. With clear steps, realistic timelines, and a plan for documents, inspections, and funding, you can close smoothly and protect your interests. If you want local guidance and a steady hand from offer to keys, connect with Andy Hairabedian for buyer representation across Los Angeles.
FAQs
What is escrow in California for Los Angeles buyers?
- Escrow is a neutral third party that holds funds and documents and follows the purchase contract until conditions are met, then helps record the deed and disburse funds.
How much earnest money is typical in LA and is it refundable?
- Deposits often range from several thousand dollars to a few percent of price and can be refundable if you cancel within active contingencies per your contract.
What is a Natural Hazard Disclosure and why does it matter?
- The NHD flags if the property lies in zones like flood, earthquake fault, seismic hazard, very high fire hazard, or dam inundation areas, which can affect risk and insurance.
How long does escrow take for a financed LA purchase?
- Many financed transactions close in about 30 to 45 days, with longer timelines for complex sales or loan programs.
Who pays for title insurance in Los Angeles County?
- It is common for the seller to pay the owner’s title policy in Southern California while the buyer pays the lender’s policy, but this is negotiable.
What happens if the appraisal comes in low during escrow?
- You can renegotiate with the seller, bring in additional funds, or use an appraisal contingency to cancel if allowed by your contract.
How can I avoid wire fraud when sending escrow funds?
- Call your escrow officer at a known number to verify instructions and never follow unexpected wiring changes sent by email.
