Glossary

Escrow words, in plain English.

59 terms you will hear between opening escrow and getting the keys. Search, or jump to a letter.

1

1031 exchange

A qualified intermediary, which is a separate company, holds the sale money between the sale and the purchase. Federal rules give you 45 days after the sale to name the replacement property and 180 days to buy it, or less if your tax return comes due first. Escrow handles its part of the exchange and works with your intermediary. Escrow can’t give tax advice, so plan the exchange with your tax adviser.

A

Acceptance

Acceptance is Day 0. Every deadline in the purchase contract, from the deposit to the contingencies, counts from this date.

Amendment

If the buyer and seller agree to a change, such as a new closing date, it goes into an amendment. Everyone who signed the instructions must sign the amendment before escrow can act on it.

C

Cash to close

Your lender’s Closing Disclosure shows the figure. Escrow confirms the exact amount before you sign. Call us at (714) 962-0999, a number you look up yourself, before you wire money.

City transfer tax

No Orange County city adds one. In Los Angeles County, five cities charge their own: Pomona, Redondo Beach, Santa Monica, Culver City and the City of Los Angeles. The City of Riverside charges one too. Your purchase contract says who pays.

Close of escrow (COE)

In California, escrow closes on the recording date. Signing happens days earlier, so signing and closing are separate events. After recording, escrow pays out the money, and your agent hands over the keys as your contract provides.

See also: Recording, Disbursement, Funding

Closing Disclosure (CD)

Federal law says you must receive it at least 3 business days before you become bound on the loan. That usually happens when you sign. Compare it with your Loan Estimate and ask your lender about anything that changed. Escrow’s settlement statement shows every charge and credit for each side of the sale.

Consummation

The Closing Disclosure must reach the borrower at least 3 business days before this moment. Consummation comes before close of escrow. Escrow closes later, when the deed records.

Contingency

While a contingency is in place, a buyer who cancels under it normally gets the deposit back. Each contingency has a deadline. The buyer removes it in writing. Your contract controls the details, so talk with your agent before removing any contingency.

Contingency removal

Removal isn’t automatic when a deadline passes. The buyer signs a form, and the agents send a copy to escrow. After removal, backing out for that reason puts the buyer’s deposit at greater risk.

D

Deed of trust

The borrower signs it, and it records with the county along with the deed. The lender is called the beneficiary. When the loan is paid off, a reconveyance records to show the debt is cleared.

E

EAFC (Escrow Agents’ Fidelity Corporation)

California requires most licensed independent escrow companies to be members. The fund is not a state agency. It does not cover losses from cyber theft, such as wire fraud. That is one more reason to confirm wiring instructions by phone.

Earnest money deposit

The purchase contract sets the amount. Under the standard California contract, it is due within 3 business days after acceptance. Call us at (714) 962-0999, a number you look up yourself, before you wire money.

Easement and encumbrance

A utility line along the back fence is a common easement. Loans and liens are encumbrances too. Both show up on the preliminary title report for the buyer to review.

Escrow

Both sides hand their part to the escrow holder. The escrow holder releases everything only when the written instructions are satisfied. California defines escrow in section 17003 of its Financial Code, and the DFPI licenses independent escrow companies.

Escrow holder and escrow officer

Your escrow officer follows everyone’s written instructions and can’t take sides. An escrow officer also can’t give legal or tax advice. Questions about your rights or taxes go to an attorney or tax professional.

Escrow instructions

In a California home sale, many of these terms come from the purchase contract itself. Escrow can act only on what the instructions say. Any change needs a signed amendment.

F

Final verification of condition (walk-through)

The standard California contract sets it for about 5 days before closing, unless the contract says otherwise. It checks condition and repairs only. It doesn’t reopen the inspection period. Escrow isn’t part of the walk-through.

Funding

Funding usually happens just before recording. Once the loan money arrives, escrow tells the title company it can record. On a refinance of a main home, funding waits until the borrower’s 3 business days to cancel have passed.

G

Grant deed

The seller signs it in front of a notary, usually a few days before closing. It records with the county on the closing day. That makes the transfer public.

H

HOA documents

Escrow orders the package and pays the association from the sale. The buyer reviews it under the purchase contract. If the home is in more than one association, each one sends its own package.

Home warranty

The purchase contract says whether there is one and who pays for it. It is a service contract, separate from homeowners insurance.

I

Impound account

Your lender decides whether you need one. The first deposit into it is often collected at closing. The amounts show on your Closing Disclosure.

Independent escrow company

Banks, title companies and real estate brokers can hold some escrows under other rules. An independent escrow company is licensed and examined by the DFPI for escrow work itself. Advantage One is one.

Investigation (inspection) contingency

The standard California contract gives the buyer 17 days after acceptance, unless the contract sets a different period. During that time, the buyer can hire inspectors and ask for repairs. Talk with your agent well before the deadline.

L

Legal description

It is based on recorded maps and surveys. A street address alone isn’t enough for a deed. The title company checks that the description matches on every document that records.

Lien

Most liens must be paid off at closing so the buyer gets clear title. Escrow orders a payoff demand for each one and pays it from the sale.

Loan contingency

The standard California contract gives the buyer 21 days after acceptance, unless the contract says otherwise. It is often the last contingency to be removed. Talk with your lender and agent before you remove it.

Loan Estimate (LE)

It lets you compare offers from different lenders. Near closing, you get a Closing Disclosure to check against it.

M

Measure ULA

For sales closing after June 30, 2026, it is 4% of the whole price above $5,400,000 and 5.5% at $10,900,000 or more. The city changes these thresholds every July 1. It applies only inside the City of Los Angeles.

N

Notary acknowledgment

The grant deed and the deed of trust must be notarized. Bring a current government photo ID that matches your name on the file. The notary must check it.

Notice to Buyer to Perform (NBP)

Contingencies aren’t removed automatically when their deadlines pass, so the seller serves this notice first. The buyer then removes the contingency or cancels, usually with the agent’s help.

O

Opening escrow

Escrow assigns a file number and orders the preliminary title report. It also sends each side an opening package with a wire fraud warning. Opening early gives escrow time to order payoffs and HOA documents before they can slow the sale.

P

Payoff demand

With the owner’s permission, escrow orders one for each loan on the property and pays it from the sale or the new loan. Payoff figures include interest up to the payoff date, so escrow updates them before closing.

See also: Lien, Reconveyance, Seller net sheet

Power of attorney

If someone will sign for a buyer or seller this way, the lender and title company must approve it before signing day. Tell your escrow officer early. Approval takes time.

Preliminary title report

People call it the prelim. The buyer reviews it under the purchase contract. Escrow uses it to find the loans and liens that must be paid off. The title policy itself comes at closing.

Prorations

If the seller paid property tax ahead, the buyer credits the seller for the days after closing. If the seller owes for days before closing, the seller credits the buyer. California’s property tax year runs from July 1 to June 30. Your settlement statement shows each proration.

Purchase agreement (RPA)

It sets the price, the deposit, the deadlines and who pays which costs. Many of its terms also serve as joint instructions to escrow. The form now in use carries the revision date 12/25 and was released in June 2026.

R

Reconveyance

After escrow pays off a loan, the old lender’s trustee records the reconveyance. It clears the old loan from the property’s public record.

S

Seller disclosures

Under the standard California contract, the seller delivers them within 7 days after acceptance, unless the contract says otherwise. One of the seller questionnaire forms was expanded in June 2026. Read every disclosure. Ask your agent about anything unclear.

Seller impersonation fraud

The goal is to collect the sale money before anyone notices. Escrow and title companies check each seller’s identity to stop it. If you own vacant land or a rental, watch for sale activity you didn’t start.

Seller net sheet

It is a planning estimate. The final numbers come from escrow’s settlement statement.

Settlement statement

You get an estimated version before signing and a final one after closing. Keep the final statement with your tax records.

Signing appointment

Bring a current government photo ID. Signing usually happens several days before closing. Signing day and closing day are different.

Specialty escrow

A bulk sale covers the sale of a business’s assets, sometimes with a liquor license, and includes a notice to creditors. A holding escrow keeps money under signed instructions over time, such as payments on a note the seller carries. Mobile and manufactured homes usually transfer through the state housing department (HCD) instead of the county. In a probate or trust sale, the executor or trustee signs, and a court may need to approve the sale.

Stock cooperative (co-op)

The community usually must approve a buyer before the sale can close. Leisure World Seal Beach is one example. Escrow for a co-op follows the community’s own steps, so it helps to work with an escrow officer who knows them.

T

Termite (wood-destroying pest) report

Section 1 lists active infestation or damage. Section 2 lists conditions likely to lead to it. The purchase contract says who pays for the work in each section.

Title insurance

The owner’s policy protects the buyer, and the lender’s policy protects the lender. In Orange County, the seller usually pays for the owner’s policy and the buyer pays for the lender’s policy, though the contract decides. The title company sets the premium.

Title versus escrow

In Southern California, these are usually two different companies working together on each sale. Advantage One handles escrow and works with the title company chosen for your sale.

TRID

TRID sets when your lender must send each form. It also limits how much some costs can change between them. That is why the Closing Disclosure must arrive at least 3 business days before you sign the loan.

V

Vesting

The choice can have legal and tax effects. Escrow can’t advise you on it, so ask an attorney or tax adviser before you sign.

W

Wire fraud (business email compromise)

The message can look real and come from an address that is one letter off. We will never email or text you new or changed wire instructions. Call us at (714) 962-0999, a number you look up yourself, before you wire money.