Are There any Differences in the Way Escrows are Conducted in Northern and Southern California?

Escrow procedures differ between northern and southern California, and certain customs have arisen over time that differ between the north and the south, and even between certain counties of the State. In northern California, most escrows are performed by title insurance companies while in southern California, there is usually a separate escrow and title company involved. Although title companies in southern California as well as anywhere in the State may perform escrows under the exemption in the Financial Code as mentioned above, title companies almost always perform the escrow function of a real estate transaction in northern California. With title companies performing both title and escrow functions in northern California, they ordinarily charge only one fee for both services as opposed to southern California where there are two separate fees charged.

With respect to escrow instructions, in northern California buyers and sellers sign separate, unilateral escrow instructions normally a few days before closing. By comparison, in southern California, buyers and sellers sign joint, bilateral escrow instructions after the purchase contract has been signed and escrow has been opened.

The escrow closing statement is usually referred to differently in both regions of the State as well. In northern California, the closing statement is called the Buyer's Statement or Seller's Statement depending on the recipient, while in southern California the closing statement is most commonly referred to as the Final Closing Statement, Settlement Statement, or HUD-1.

The division of escrow and title charges also differs. In southern California, sellers usually pay for title insurance and the documentary county transfer tax, and split the escrow fee with the buyer. In northern California, there are some counties where buyers and sellers split title insurance and escrow charges equally, but in other counties they may pay different percentages of the total cost. An example would be where sellers pay 75% and buyers pay 25%. However, even though it might be customary for fees to be paid in a specific way in an escrow transaction, it ultimately is decided by agreement between the parties. If you have questions about the escrow process and procedures, ask your escrow officer at the beginning of an escrow transaction.


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