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Question 1
What is the legal definition of escrow in California?
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?
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?
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?
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?
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.