How Escrow Works in Los Angeles Real Estate

Buying or selling in Los Angeles and wondering what actually happens in escrow? You are not alone. Escrow can feel like a black box, especially if you are used to attorney-led closings in other states. In this guide, you will learn who does what, how the timeline works, what costs to expect, and the LA specifics that can affect timing and cash to close. Let’s dive in.

What escrow means in LA

In California, escrow is a neutral third party that holds funds and documents until both sides complete their contract steps. Instead of attorneys, licensed escrow companies or title/escrow companies coordinate the closing. The escrow officer follows written instructions from the buyer, seller, lender, and agents, and releases money and records the transfer only when the conditions are met.

In Los Angeles, you and the other party typically agree on the escrow and title providers. Independent escrow companies and national title firms commonly handle these services. Licensed escrow agents operate under state oversight, and title companies handle the title search and issue title insurance.

Who does what

Escrow company

The escrow company opens the file, receives your earnest money deposit, tracks deadlines, coordinates signatures, and prepares the settlement statement. It also collects payoff statements, invoices, and final instructions. At closing, escrow disburses funds and coordinates recording.

Title company and insurance

The title company researches the property’s record and issues a Preliminary Title Report that lists liens, easements, and exceptions. It helps clear issues so the deed can transfer cleanly. After closing, it issues the owner’s and, if there is a loan, the lender’s title insurance policies.

Your agent and lender

Your agent delivers the contract and deposit instructions to escrow, monitors contingencies, and helps you respond to requests. The lender orders the appraisal, underwrites the loan, and sends loan documents and funds to escrow when you are cleared to close.

County recorder

The Los Angeles County Recorder is where the deed and deed of trust are recorded. Recording makes the sale public and official. Once recorded, possession typically follows the contract terms.

Escrow timeline at a glance

• Stage A: Offer accepted and escrow opened
• Stage B: Title search and disclosures
• Stage C: Inspections and contingencies
• Stage D: Contingency removal and prep to close
• Stage E: Signing, funding, recording, disbursement
• Stage F: Post-recording and policies issued

Typical LA timelines: financed deals often close in 30 to 60 days, and all-cash deals can close faster, sometimes 10 to 21 days. Your contract controls the actual dates, and HOA processing, lender speed, repairs, and county recording volume can adjust timing.

Step-by-step: what to expect

Stage A: Open escrow

Once your offer is accepted, escrow opens the file and assigns a number. You deliver your earnest money deposit by wire or check according to the contract. Escrow issues a receipt and holds the funds in a trust account.

Stage B: Initial orders and disclosures

Escrow orders the title search, and the title company prepares the Preliminary Title Report. The seller provides required state and local disclosures, plus HOA documents for condos or planned communities. You receive an early estimate of closing costs to set expectations.

Stage C: Contingencies and inspections

You schedule your inspections right away, including general home and pest inspections, and any specialty inspections you need. Your lender orders the appraisal and asks for documents to complete underwriting. Title exceptions and any liens discovered are addressed during this window.

Stage D: Contingency removal and prep to close

When inspections, appraisal, and loan conditions are satisfied, you remove contingencies in writing. Escrow obtains payoff statements for the seller’s loans and gathers final HOA information and transfer fees. Everyone confirms remaining items needed for closing.

Stage E: Closing and recording

You sign loan and closing documents, and the seller signs the deed and required affidavits. The lender funds the loan to escrow when you have a clear to close. Escrow records the deed and deed of trust with Los Angeles County, then disburses funds, pays off liens, pays commissions, and issues final statements.

Stage F: After recording

You receive keys and possession based on the contract, often at recording or at a specified time after. Title insurance policies are delivered after closing. Keep your final settlement statement for taxes and your files.

Costs and who usually pays

Every transaction is unique, but here are the common categories you will see on your closing statement:

• Escrow fee
• Title search and title insurance premiums
• Recording fees
• Documentary transfer taxes (county and possibly city)
• Lender fees and prepaid interest (if financing)
• Property tax prorations
• HOA transfer and document fees (if applicable)
• Pest inspection or repair costs if negotiated
• Real estate commissions per the listing agreement and contract

In Los Angeles area practice, it is common for buyers and sellers to split escrow fees, though this is negotiable. The seller often pays for the owner’s title policy and the buyer pays for the lender’s policy when there is a loan. County recording charges and documentary transfer taxes are handled per the contract; note that some cities, including the City of Los Angeles, impose their own transfer tax on top of the county tax. Property taxes and HOA dues are prorated so each side pays for the time they own the home.

Exact amounts change with price, location, and current schedules. Ask your escrow officer for a written estimate early and update it as details firm up.

LA-specific items to know

• City transfer taxes: The City of Los Angeles and some nearby cities have their own documentary transfer taxes in addition to the county tax. Confirm the current rules and who will pay in your contract.
• Recording logistics: All deeds and liens record with the Los Angeles County Recorder. If the office has a backlog or needs extra documentation, that can add days.
• HOA timelines: HOA resale packages and demand statements can take several business days or more. Ordering early helps prevent delays.
• Pest and structural reports: Lenders commonly require a pest report, and findings can affect cost and timing if remediation is needed.
• Seismic considerations: Some buyers evaluate earthquake retrofits or insurance. These choices can shape inspection focus and negotiation.
• Rental properties: If the property has tenants, local rent control or tenant protection ordinances may affect notices, timing, or relocation obligations. Plan ahead so you meet all requirements.
• Insurance and lending: Lenders require hazard insurance and a lender’s title policy. In higher-risk areas, extra coverage like flood or fire may be required or advisable.

Smart safety and timing tips

• Verify all wires: Wire fraud is a real risk. Never rely on email alone for wiring instructions. Call your escrow company at a known, verified phone number before you send funds.
• Move fast on contingencies: Schedule inspections immediately and respond to lender requests within 24 hours when possible. This keeps your timeline on track.
• Know the tradeoffs: Waiving inspection or loan contingencies can help win a competitive offer, but it increases your risk if issues arise. Discuss options with your agent before you commit.
• Read the Prelim carefully: Title exceptions or undisclosed liens must be cleared or insured against to close. Flag questions early.
• Order HOA docs early: Ask escrow to order HOA resale packets as soon as possible to help avoid delays.
• Confirm taxes and fees: City transfer taxes and special assessments can surprise buyers and sellers. Have escrow confirm estimated figures upfront.

Buyer checklist

• Get preapproved before you write an offer.
• Calendar your contingency dates and reminders.
• Deposit your earnest money promptly to escrow.
• Book inspections immediately and review reports quickly.
• Respond to lender and escrow document requests right away.
• Verify wiring instructions by phone with escrow before sending money.

Seller checklist

• Complete all required disclosures as soon as escrow opens.
• Provide access for inspections and appraisal.
• Gather HOA contacts, rules, and recent statements.
• Send mortgage payoff information to escrow.
• Confirm your signing plan, ID requirements, and proceeds delivery method.

Keys and proceeds timing

You typically receive keys after the deed records with the county. Possession can be at recording or at a set time after, depending on your contract. Sellers receive net proceeds after recording and once all funds clear; escrow will send a final settlement statement.

Final thoughts

Escrow is designed to protect both sides by keeping funds and documents secure until every condition is met. In Los Angeles, the process follows a clear path from opening and inspections to loan funding, recording, and disbursement. With the right preparation and quick responses, you can move from offer to keys with confidence.

If you would like help navigating escrow details, timelines, and local customs across Los Angeles and Southern California, connect with Karean Wrightson. Request a Complimentary Market Consultation.

FAQs

What is escrow in Los Angeles real estate?

• Escrow is a neutral third party that holds funds and documents and follows written instructions until all contract conditions are met and the sale can record with the county.

Who chooses the escrow and title company in LA?

• Buyer and seller typically agree on the providers; independent escrow firms and national title companies are commonly used in Los Angeles.

How long does escrow take in Los Angeles?

• Many financed closings run 30 to 60 days, while all-cash deals can close faster, sometimes 10 to 21 days, depending on lender speed, HOA timelines, and recording.

When do I send the earnest money deposit in LA?

• You deposit it with escrow promptly after opening, according to your contract; escrow will hold the funds in a trust account and issue a receipt.

What happens if inspections find issues during LA escrow?

• You can request repairs or credits within your inspection contingency; the seller can agree, negotiate, or decline, and you decide on contingency removal.

Who usually pays title insurance and escrow fees in LA?

• It is common for sellers to pay the owner’s title policy and buyers to pay the lender’s policy, and for escrow fees to be split, but all items are negotiable.

When do I get keys and when are seller proceeds paid?

• Keys usually transfer after recording per your contract, and sellers are paid after recording once funds clear and escrow disburses according to instructions.