In California, In A Home Purchase, What is the role of the escrow officer?

Based on the escrow instructions, the escrow officer will process the escrow and handle the funds and documents from start to finish. As stated above, the instructions outline all of the duties of the escrow officer. An escrow officer is responsible for the preparation and processing of a significant amount of paperwork. That paperwork includes, but it is not limited to, escrow instructions and amendments, grant deeds and quitclaim deeds, estimated and final closing statements as well as HUD-1 statements required by lending institutions. Escrow officers also facilitate the request, delivery, and signing of documents, not only for the benefit of the principals, but for the real estate brokers, and the applicable title company and lending institution. The escrow officer must also comply with local, county, State and federal requirements relative to required documentation and fees. If the buyer is obtaining financing, the escrow officer will work with the mortgage broker and/or lender to help move the loan approval and underwriting process along, satisfy the lender's conditions, and will likely coordinate the loan document sign-up. Additionally, escrow officers will request closing funds, authorize the release and recording of documents, and are the primary party responsible for all of the accounting of an escrow transaction and disbursement of funds held in the escrow. Another large part of an escrow officer's job is requesting payoff demands and lien releases, and working to ensure that free and clear title will be conveyed to the buyer and in compliance with the lender's instructions, if applicable. In some ways, the escrow officer has one of the most difficult jobs in a real estate transaction as he or she is the neutral party to which all buyers, sellers, borrowers, lenders, real estate brokers, and title companies look to for the proper, efficient and effective administration of an escrow. An escrow officer is the communication link for all of the parties and the central place where buyers, sellers, real estate and mortgage brokers, and lenders go for updates, answers, and problems. Finally, it is the escrow officer's duty to ensure that all of the conditions of the escrow have been met before closing, where documents can be released and/or recorded, and funds transferred and/or disbursed.

It is also important to understand that because the escrow officer is a neutral third party, he or she does not represent or favor any one party to an escrow, and is instead an agent of the principals to the escrow. An escrow officer's role as a disinterested and neutral third party is very clear. For that reason, an escrow officer will never be involved in the negotiation of the contract or advise the principals with respect to the same.

When obtaining a loan, it is the responsibility of the buyer or agent of the buyer to arrange for a loan and negotiate with the lender, not the escrow holder. Similarly, in a short sale transaction, where the sale is contingent upon the approval of the short sale lender, it is the responsibility of the seller or agent of the seller to negotiate with the short sale lender, and not the duty of the escrow officer. Because an escrow officer may only act on instructions and documents agreed to by the parties to a transaction, if a dispute or disagreement occurs, the escrow officer must remain neutral and will not proceed until the parties have reached a mutual agreement. It should also be noted that an escrow officer is not an attorney and cannot give you legal advice. Only a licensed attorney can provide you with legal advice under California law. If legal and/or tax questions arise, it is recommended that you consult with a licensed attorney or qualified tax professional for assistance.

Lastly, because escrows are confidential in nature, the escrow holder has a responsibility to not give out any information to third parties concerning an escrow without the approval of the appropriate parties and principals to the escrow. At the same time, escrow holders have a legal obligation to reveal and disclose any new, detrimental, or material information that was previously unknown to the parties. Moreover, an escrow officer must maintain the highest level of trust and maintain a good working relationship with all of the escrow participants.

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