Here’s a detailed, step-by-step guide to opening escrow and what documents to send when handling a real estate transaction. This process applies to both buyer and seller agents and aligns with California Association of Realtors (CAR) forms and standard escrow practices.

🏦 Step 1: Selecting the Escrow Company

  • The escrow company is usually chosen by mutual agreement between buyer and seller (commonly indicated in the Residential Purchase Agreement, section 7A).
  • The escrow officer acts as a neutral third party to handle funds, documents, and ensure all conditions of the contract are met before closing.
  • Use a reputable local title/escrow company familiar with California real estate laws and CAR forms (e.g., Chicago Title, Fidelity National, Old Republic, or First American).

📄 Step 2: Prepare to Open Escrow

Once the offer is accepted and the Residential Purchase Agreement (RPA) is fully executed, gather the following required documents:

🔹 Required Documents to Send to Escrow:

  1. Fully Executed Purchase Agreement (RPA)
    • Signed by both buyer and seller.
    • Include all counteroffers and addenda.
  2. Agency Disclosure (AD)
    • Confirms agent representation and relationships.
  3. Wire Instructions or EMD Deposit Details
    • The buyer typically deposits the Earnest Money Deposit (EMD) into escrow within 3 business days of acceptance (per RPA).
    • Always advise buyers to confirm wire instructions directly with escrow (to prevent wire fraud).
  4. Buyer’s Contact Information Sheet
    • Include phone number, email, and mailing address for escrow communication.
  5. Seller’s Contact Information Sheet
    • Include forwarding address and preferred contact details.
  6. Preliminary Title Report Request
    • The escrow officer will order it from the title company, but the listing agent should confirm property details match the RPA.
  7. Tax Information / Payoff Info (for Sellers)
    • For seller’s mortgage payoffs, property taxes, and liens.
  8. HOA Information (if applicable)
    • Provide HOA contact info, fees, and any required HOA documents (CC&Rs, bylaws, financials).
  9. Natural Hazard Disclosure (NHD) Report
    • Usually ordered by the listing agent and sent to escrow once ready.
  10. Supplemental Documents
  • Any signed addenda such as:
    • Counter Offers (CO)
    • Addendum (ADM)
    • Contingency Removal (CR)
    • Buyer’s Inspection Advisory (BIA)
    • Transfer Disclosure Statement (TDS)
    • Seller Property Questionnaire (SPQ)

📬 Step 3: Submitting Documents to Escrow

  • Email the executed documents as one PDF package to your assigned escrow officer.
    • Subject line: “Open Escrow – [Property Address] – [Buyer & Seller Names]”
  • Include a short cover note:

“Please open escrow for the above transaction. Attached are the fully executed RPA, counteroffers, and supporting disclosures. Buyer’s EMD will be wired within three business days.”

🔑 Step 4: Escrow Company Confirms Opening

Once received, escrow will:

  1. Assign an escrow number and officer.
  2. Send an Escrow Opening Package to both parties — includes:
    • Escrow instructions
    • Preliminary Title Report (Prelim)
    • Wire instructions
    • Information sheets (for buyer/seller)
    • Payoff demand request forms (for sellers)
    • Vesting form (how buyer wants to hold title)

💰 Step 5: Buyer Deposits the Earnest Money

  • The buyer sends the EMD by wire transfer (never by check without confirmation).
  • Escrow will confirm receipt of funds via an “EMD Receipt Confirmation” email or document.

📆 Step 6: Maintain Communication

Throughout escrow:

  • The escrow officer will coordinate:
    • Title report, lender instructions, and loan documents.
    • Prorations for taxes, HOA dues, and insurance.
    • Signing appointments for closing documents.
  • Agents should monitor timelines for contingencies and document submissions per the RPA.

✅ Step 7: Closing Escrow

Once all conditions are met:

  • Buyer wires remaining funds.
  • Lender funds the loan.
  • Escrow records the grant deed and releases keys.
  • Escrow provides Final Settlement Statements and disburses funds to the seller and agents.

⚠️ Common Mistakes to Avoid:

  • Forgetting to send all counteroffers and addenda (escrow needs full contract chain).
  • Missing buyer/seller contact sheets.
  • Sending EMD to the wrong account (always verify wire instructions).
  • Not informing escrow of updates (extensions, repairs, credits).

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.