What Is Escrow? Sacramento Buyers and Sellers Guide

Does the word “escrow” make your head spin? You are not alone. When you buy or sell a home in Sierra Oaks, there are many moving parts, tight timelines, and a lot of paperwork. The good news is that once you know what to expect in California, escrow becomes a clear, step-by-step path to the finish line. In this guide, you will learn how escrow works, who does what, how long it takes in Sacramento, what documents and contingencies matter, and how to keep your closing on track. Let’s dive in.

Escrow in California: Plain-English overview

Escrow is a neutral third-party process that protects both you and the other party while you complete the terms of the purchase contract. The escrow holder safely holds funds and key documents, then releases money and records the deed only after all agreed conditions are met. This structure keeps the transaction fair and organized from start to finish.

What escrow does

• Hold your earnest money and any other funds in a trusted account.
• Order or coordinate title work and prepare the deed for recording.
• Collect payoff figures for any loans and obtain lien releases.
• Prepare settlement statements showing how every dollar is allocated.
• Arrange the recording of the grant deed and any deed of trust.
• Disburse funds after recording and deliver final papers.

Who serves as escrow in Sacramento

In California, licensed escrow companies and many title companies provide escrow services. They are regulated and follow written instructions signed by buyer and seller. In the Sierra Oaks area, your agent will open escrow with a local title or escrow provider right after your offer is accepted.

Neutral, not legal advice

Escrow officers must remain neutral. They do not give legal advice and instead follow the written escrow instructions in your contract. If you have legal questions, consult an attorney.

Who does what in escrow

Buyer responsibilities

You deposit earnest money, schedule inspections, complete loan conditions, and review disclosures. You sign escrow instructions and, if you are financing, your loan documents. You also approve and remove contingencies within agreed timelines.

Seller responsibilities

You provide required disclosures, sign the deed and transfer documents, and deliver possession as agreed. You also arrange payoff of any loans and address any negotiated repairs or credits.

Your agent and the escrow/title team

Your real estate agent negotiates terms, tracks deadlines, and coordinates inspections. The escrow officer administers the file and prepares the closing statement. The title company reviews the preliminary title report, clears issues, and issues title insurance policies.

If you have a lender or an HOA

Your lender handles underwriting, orders the appraisal, issues loan documents, and funds the loan at closing. If there is an HOA, the management company provides an estoppel package with balances, rules, and governing documents.

Key documents you will see

• California Residential Purchase Agreement and any addenda.
• Earnest money receipt and escrow opening instructions.
• Preliminary Title Report and list of title exceptions.
• Grant Deed to transfer ownership and Deed of Trust if financed.
• Closing Disclosure for financed buyers and a settlement statement for sellers.
• Required seller disclosures, including TDS, NHD, and lead-based paint disclosures for older homes.
• HOA documents such as CC&Rs, bylaws, budgets, and estoppel certificates when applicable.
• Any repair agreements or credits, plus loan payoffs and final escrow statements.

Typical Sierra Oaks escrow timeline

The length of escrow depends on financing, contingency periods, and vendor availability. Cash deals often close in 7 to 14 days if everyone is ready. Financed transactions commonly take 30 to 45 days, sometimes longer if underwriting is complex.

Day 0–3: Open escrow and deposit

Your offer is accepted, and escrow opens. You send the earnest money per the contract, often within 1 to 3 days. Escrow orders the preliminary title report and opens their file.

Days 1–21: Inspections and loan setup

Many California contracts use a 17-day inspection period as a common default, although yours may differ. You schedule inspections such as general, pest, roof, sewer, pool, or spa. If you are financing, a loan contingency around 21 days is common, and your lender collects documents and begins underwriting.

Appraisal and underwriting

Appraisals and initial underwriting typically take 7 to 21 days, depending on appraiser and lender capacity. In Sacramento County, availability can tighten during peak seasons, so plan ahead.

Removing contingencies to close

After inspections and review of disclosures, you may negotiate repairs or credits. Once you are satisfied and your loan is on track, you remove contingencies in writing so the lender can issue final approval.

Signing, funding, and recording

Your lender issues a Closing Disclosure at least 3 business days before closing for most mortgage loans. After final approval, you sign closing and loan documents, the lender funds, and escrow records the grant deed and any deed of trust with Sacramento County. Funds are disbursed after recording.

Post‑closing items

You receive final statements and title policies after recording. Title policies can take days to weeks to arrive. Keep your closing packet for tax and record-keeping.

Contingencies that protect you

Inspection contingency

This allows you to investigate the property’s condition and cancel or request repairs or credits. Common reports include general home, termite or pest, sewer scope, roof, and pool.

Appraisal and loan contingencies

If the appraisal is below the purchase price, you can renegotiate, bring extra cash, or cancel if protected. Loan contingencies allow you to exit if you cannot meet lender conditions.

Title and HOA review

You can require that liens or title issues be cleared before closing. If there is an HOA, you will review the governing documents, budget, and estoppel for balances and rules.

Title issues to watch for

• Unreleased liens or unresolved judgments.
• Easements and recorded restrictions that affect intended use.
• Encroachments or boundary disputes.
• Prior mortgages that were never reconveyed.
• Probate or trust matters on older transfers.

Closing costs and who pays what

Buyer closing costs typically include lender fees such as origination and appraisal, escrow charges, lender’s title insurance, recording fees, transfer taxes when applicable, and prepaids for taxes, insurance, and interest. A common range is 2 to 5 percent of the purchase price, depending on the loan and local fees.

Sellers usually cover broker commissions, seller-side title and escrow charges, payoff of existing loans, transfer taxes where applicable, and any negotiated credits or repairs. Commission totals of 5 to 6 percent are common in many markets, but everything is negotiated in your contract.

Prorations and local taxes

Property taxes, HOA dues, and utilities are typically prorated to the closing date. California property taxes are billed annually in two installments, and escrow will calculate prorations based on Sacramento County practices. Documentary transfer taxes may apply at the city or county level, so your escrow officer will verify the correct amounts and any exemptions.

Sierra Oaks local tips

• Older homes are common, so expect disclosures related to age, including potential lead-based paint for homes built before 1978 and details on plumbing, electrical, or roof age.
• Appraiser and inspector calendars in Sacramento can book up quickly. Schedule right after acceptance to avoid delays.
• HOA estoppel packages can take several days to two weeks depending on the management company. Request them early if the home is in an HOA.
• Sacramento County recordings are processed daily. Ask escrow for the expected recording day and when you should receive confirmation.

How to keep escrow on track

Buyer checklist

• Have proof of funds for your deposit and down payment and a strong pre-approval.
• Schedule inspections right away and attend if you can.
• Respond quickly to lender requests and appraisal scheduling.
• Keep your ID handy and verify wire instructions by phone before sending funds.

Seller checklist

• Complete required disclosures early and gather warranties, permits, and utility info.
• Provide payoff details for any loans and contact info for your lender.
• If applicable, order HOA documents as soon as escrow opens.
• Plan your move to deliver possession on time.

Common causes of delay

• Loan underwriting issues or appraisal gaps.
• Title problems such as unreleased liens or unclear vesting.
• HOA estoppel delays or disputes over assessments.
• Missed signatures, wire delays, or last-minute payoff changes.
• Scheduling conflicts for inspections or document signings.

Wire transfer safety

• Never rely on wire instructions received only by email. Call your escrow officer at a known, verified phone number.
• Confirm the escrow company’s name and account details before sending funds.
• Use in-person or authenticated portals when possible.

Communication best practices

• Ask for a written closing timeline and status updates during critical windows.
• Keep all reports and receipts organized and shared with your agent.
• For HOA properties, request the estoppel early to avoid last-minute surprises.

Ready to talk escrow?

If you are buying or selling in Sierra Oaks, a calm, organized escrow makes all the difference. Our boutique team pairs clear guidance with steady communication so you can move with confidence. If you want a personalized plan for your timing, contingencies, and costs, reach out to Melissa Allman for a friendly, no-pressure consultation.

FAQs

What is escrow in a California home sale?

• Escrow is a neutral third party that holds funds and documents, then records the deed and disburses money only after all contract conditions are met.

How long does escrow take in Sierra Oaks, Sacramento?

• Cash deals often close in 7 to 14 days; financed transactions commonly take 30 to 45 days, depending on lender speed, contingencies, and vendor availability.

Which documents will I review during escrow?

• Expect the purchase agreement, escrow instructions, preliminary title report, seller disclosures, HOA documents if applicable, the grant deed, and a Closing Disclosure for financed buyers.

What are typical buyer closing costs in California?

• Buyers often pay lender fees, escrow charges, lender’s title policy, recording, transfer taxes when applicable, and prepaids, which can total about 2 to 5 percent of the price.

How can I avoid wire fraud when sending funds to escrow?

• Confirm wire instructions by phone using a known good number, verify the escrow officer’s identity, and use authenticated instructions or in-person verification before sending money.