How Escrow Works in Sacramento

Buying or selling a home in Sacramento and wondering what actually happens in escrow? You’re not alone. Escrow is where funds, documents, and deadlines all come together, which can feel confusing the first time through. In this guide, you’ll learn how escrow works in Sacramento County from start to finish, how long it usually takes, what it costs, and how to avoid common snags. Let’s dive in.

What escrow means in Sacramento

Escrow is a neutral third party that holds money and documents and only releases them when agreed conditions are met. In California, many title companies also provide escrow services. Your escrow officer coordinates deposits, signings, payoffs, and recording.

You will hear a few terms as you get close to the finish line:

• Closing often refers to signing your documents.
• Funding is when the lender wires your loan proceeds to escrow.
• Recording is when the deed is recorded with the Sacramento County Clerk/Recorder. Keys typically follow recording unless your contract says otherwise.

Step-by-step: the Sacramento escrow flow

1) Open escrow and order title

After buyer and seller sign a purchase agreement, the agents open escrow with the company named in the contract. Escrow assigns a file number, shares contact details, and requests the earnest money deposit. A preliminary title report is ordered to check liens, easements, and other items that must be cleared before closing.

2) Deposit earnest money

The buyer delivers the earnest money, often within 1 to 3 business days of contract acceptance. Escrow holds the funds in a trust account under written instructions. The exact amount and timing are set by your contract.

3) Work through contingencies

During the contingency period, the buyer completes inspections, the lender orders an appraisal, and both sides review title and required disclosures. For homes in common interest communities, the seller provides HOA documents and the buyer gets a contractual review window.

Common contingency buckets include:

• Inspection: general home, pest, and any specialized inspections if needed.
• Loan and appraisal: underwriting and valuation to confirm the lender will approve the loan.
• Title: review the preliminary title report and clear any issues.
• HOA documents: review CC&Rs, rules, budgets, and assessments.

4) Remove contingencies

Once inspections are resolved, loan approval is issued, and title items are addressed, the buyer removes contingencies in writing. If a problem cannot be resolved and the contract allows, the buyer may cancel and receive the earnest money back per the agreement.

5) Closing disclosure, signing, and final prep

If you have a mortgage, your lender must provide a Closing Disclosure at least 3 business days before consummation. The CFPB explains the Closing Disclosure timing. Escrow prepares the final settlement statements showing fees, prorations, and payoffs. Buyer and seller sign closing documents in person or with an approved mobile notary.

6) Funding, recording, and keys

On closing day, the lender wires funds and the buyer provides any remaining cash to close per escrow instructions. Escrow confirms funding, then instructs the title department to record the deed and deed of trust with the Sacramento County Clerk/Recorder. After recording, escrow disburses funds, pays off any seller liens, and issues title insurance policies. Keys are typically delivered after recording unless your contract states a different handoff time.

How long escrow takes

Every escrow is different, but these ranges are common in Sacramento:

• Standard financed purchase: about 30 to 45 days
• All-cash purchase: about 7 to 14 days
• Complex sales like short sales, probate, or title-curative cases: 60 days or longer

Loan speed, appraisal timing, repairs, and HOA document turnaround can all affect your timeline.

Earnest money basics

Earnest money is a good-faith deposit that shows the buyer is serious. The amount is negotiated and depends on market conditions. It often ranges from a few thousand dollars to about 1 to 3 percent of the price.

• Escrow holds the funds in a trust account per written instructions.
• If the buyer cancels under a valid contingency within the agreed period, the deposit is typically returned per the contract.
• If the buyer breaches the contract without a valid reason, the seller may be entitled to the deposit under liquidated damages. Disputes can trigger mediation, arbitration, or litigation.
• Always verify wiring instructions by calling the escrow officer at a known phone number. This helps protect you from wire fraud.

Contingencies and disclosures in California

California practice includes several standard contingencies and disclosures that influence escrow:

• Inspection contingency: time to complete general and pest inspections, plus specialized inspections if needed. Repairs or credits are negotiated in this window.
• Loan and appraisal contingencies: the lender must approve the loan and be satisfied with the appraisal.
• Title review: a clear title is required to close. Liens, judgments, and easements must be addressed.
• Seller disclosures: California requires a Transfer Disclosure Statement and natural hazard information. Homes built before 1978 also require a lead-based paint disclosure. If the property is in an HOA, the seller must provide specific association documents for buyer review.
• Local note: Sacramento has areas influenced by levees and floodplains. Review flood-related disclosures and maps as part of your diligence.

For consumer mortgage timing and disclosures, see the CFPB’s Closing Disclosure overview. For recording procedures and local fees, visit the Sacramento County Clerk/Recorder.

Costs and who usually pays

Closing costs are negotiated and can vary by neighborhood custom and contract language. In Sacramento, you can expect the following categories:

• Escrow fees: charged by the escrow company for coordinating the transaction. Often split or negotiated.
• Title insurance: sellers commonly pay the owner’s policy in many California markets, while buyers usually pay the lender’s policy. Customs can vary by county and contract.
• Recording and transfer taxes: county recording fees are typically paid by the buyer or split per agreement. City and county transfer taxes depend on local rules and negotiated terms.
• Buyer closing costs: often total about 2 to 5 percent of the purchase price for financed deals, excluding the down payment. This includes lender fees, escrow, title, recording, and prepaids.
• Seller closing costs: commonly include real estate commissions, any loan or lien payoffs, the owner’s title policy if customary, escrow fees, and prorations.

Ask your escrow officer or title representative for a fee estimate early so you can plan with confidence.

Sample 30-day escrow checklist

Use this to track progress and stay on schedule:

• Days 0 to 3: Open escrow and deposit earnest money.
• Days 3 to 10: Complete inspections and deliver repair requests.
• Days 3 to 18: Lender orders appraisal and processes the loan.
• Days 10 to 17: Finalize repair agreements or credits.
• Days 17 to 25: Remove inspection and loan contingencies when ready.
• Days 25 to 30: Receive Closing Disclosure, then sign 3 business days after receipt.
• Day 30: Funding, recording, disbursement, and key handoff per the contract.

Sacramento-specific tips

• Read state-required disclosures early and ask questions as soon as they come up.
• For homes near rivers, creeks, or levees, review flood and sewer information during your inspection period.
• Confirm who pays for owner’s and lender’s title policies, escrow splits, and transfer taxes in your neighborhood. Customs can vary.
• Use a reputable escrow and title company and verify wiring instructions by phone before sending any funds.
• Plan your final walkthrough the day of, or within 24 hours before, signing to confirm agreed repairs and property condition.

When to bring in extra help

Some situations benefit from added professional support:

• Title issues, liens, or judgments beyond normal payoffs. Coordinate with the title officer and, if needed, a real estate attorney.
• Complex estates, probate, trust, or bankruptcy sales. Legal guidance can help prevent delays.
• Disputes about earnest money, repairs, or disclosure obligations. Seek legal advice to understand your options.
• Loan denials or tough underwriting conditions. Work closely with your lender and agent right away.

Make escrow smoother with a local guide

A clear plan, early document review, and steady communication keep Sacramento escrows on track. Whether you are buying in East Sac, listing a Midtown bungalow, or navigating a land or custom-build purchase, having a local expert on your side can save time and stress. If you want a calm, step-by-step path from offer to keys, connect with Lisa Rayman to map out your escrow strategy.

FAQs

What is escrow in Sacramento real estate?

• Escrow is a neutral third party that holds funds and documents and manages deadlines, then disburses money and records the deed once all contract conditions are met.

How much earnest money is typical in Sacramento?

• The amount is negotiated, often from a few thousand dollars to about 1 to 3 percent of the purchase price, depending on market conditions and your contract.

When do buyers get keys after closing in Sacramento?

• Buyers usually receive keys after the deed records with the Sacramento County Clerk/Recorder and funds are disbursed, unless the contract sets a different handoff.

What is the Closing Disclosure timing for mortgages?

• Lenders must provide the Closing Disclosure at least 3 business days before consummation for consumer mortgages, per CFPB rules.

Who chooses the escrow company in Sacramento?

• The purchase agreement names the escrow holder or states how one will be selected. Choice is negotiable and often guided by local custom and agent recommendations.

How long does an all-cash escrow take?

• All-cash deals often close in about 7 to 14 days since there is no loan approval step and title work can move faster.