Question 1

What is the legal definition of escrow in California?

Accepted Answer

Escrow is a neutral depository arrangement where a third party (escrow holder) holds funds, documents, and instructions from both parties until all conditions of a transaction are met.

Question 2

Who can legally conduct escrow in California?

Accepted Answer

Licensed escrow companies, banks, savings associations, title insurance companies, attorneys, and real estate brokers (when representing a principal in the transaction) may conduct escrow in California.

Question 3

What is the escrow holder's primary duty?

Accepted Answer

The escrow holder acts as a neutral third-party dual agent for both buyer and seller, strictly following the written escrow instructions of each party without favoring either side.

Question 4

When does escrow legally 'close' in California?

Accepted Answer

Escrow closes when all conditions in the escrow instructions have been met, the deed has been recorded, and funds have been disbursed to the appropriate parties.

Question 5

What is a 'bilateral escrow' instruction in California?

Accepted Answer

A bilateral escrow instruction is a single document signed by both buyer and seller that contains all the terms and conditions of the escrow, replacing separate instructions from each party.

Escrow & Transfer – California Real Estate Salesperson Exam

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