Understanding the requirements for depositing closing funds into Escrow is critical to avoiding costly delays at the end of a real estate purchase.
California State law requires that all funds be cleared before Escrow can authorize recording of the closing documents. As such, the following 3 types of deposits are not acceptable.
- Money orders, as stop payments can be placed after issuance.
- Cash, as the Escrow company is not a bank and has no way to secure large sums of cash.
- Foreign currency, as the Escrow company cannot be responsible for exchange rate.
Most escrow companies follow these guidelines for acceptable deposits:
Closing deposit less than $500k:
- Payment may be made in the form of a Cashier’s or Official Check drawn on a California Bank or Savings & Loan.
- You can wire the funds. Your Escrow officer will provide you with proper wiring instructions. Wired funds are not subject to the clearance procedures that can delay a closing. This form of deposit is by far the most efficient for all parties involved in the transaction.
- Funds must be on deposit 24 hours before Escrow can authorize recording of the documents to close escrow.
- If funds are not received in this form, your closing could be delayed between 1-10 days or longer while the escrow company confirms that the funds are “good” or cleared.
Closing deposit $500k or more:
Funds MUST be deposited by wire transfer.
Talk to your Escrow officer if you have questions about your final deposit or any other matter concerning your Escrow.
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