Heard the word “escrow” and wondered what actually happens between “offer accepted” and “keys in hand” in Petaluma? You are not alone. Escrow is the engine room of a California home sale, and when you understand it, you can move with confidence and avoid costly delays. This guide walks you through what escrow is, who does what, key timelines, costs, contingencies, and wire safety, all with local notes for Petaluma and Sonoma County. Let’s dive in.
Escrow basics in California
Escrow is a neutral process where a licensed third party holds funds and documents and follows the written instructions of the buyer, seller, and lender. The escrow holder coordinates each step required to transfer ownership and close on time. Escrow does not give legal advice. It simply carries out the contract and mutual instructions.
Who is in your escrow team
- Buyer: deposits earnest money, completes loan steps, signs closing documents, brings funds to close.
- Seller: provides disclosures, signs the deed, meets move-out and possession terms.
- Escrow company or agent: opens escrow, holds and disburses funds, prepares settlement statements, coordinates signing, funding, and recording.
- Title company: researches the title, clears liens or encumbrances, and issues title insurance policies.
- Lender: orders the appraisal, sets loan conditions, and issues the Closing Disclosure.
- Real estate agents: coordinate inspections, deadlines, negotiations, and communication.
- County recorder: records the deed and mortgage and indexes the documents.
Oversight and protections
Escrow companies are regulated in California by the state’s financial regulator. Title insurance is overseen by the state’s insurance regulator. Lender-required closing disclosures follow federal rules that require buyers to receive a Closing Disclosure at least 3 business days before closing. You can verify licensure and ask your escrow officer about their consumer protections and procedures.
Earnest money in Petaluma
Your earnest money deposit (EMD) shows serious intent and is placed into escrow per your contract. In many markets, a typical EMD ranges from roughly 1 to 3 percent of the purchase price, though competitive situations can push deposits higher. The exact amount is negotiated in your offer.
Escrow holds the deposit until closing or earlier release under the contract. At closing, your EMD is credited to your down payment or closing costs. If a buyer breaches the contract, remedies are controlled by the purchase agreement, which may allow the seller to keep some or all of the EMD as liquidated damages. When in doubt, review your contract and discuss your options with your agent.
Key contingencies to know
Contingencies protect you by allowing cancellation or renegotiation if certain conditions are not met. Timeframes are negotiated in the contract and can tighten in competitive markets.
- Inspection: time to inspect, request repairs or credits, or cancel if needed.
- Pest or WDO: a separate inspection for wood-destroying organisms and related repairs.
- Appraisal: if an appraisal comes in below price, you can renegotiate or cancel under the contingency.
- Loan: protects the buyer if financing cannot be secured by the agreed date.
- Title: allows cancellation if title defects cannot be cleared.
- HOA/CC&R review: for condos or planned developments, review documents and financials.
- Sale of buyer’s home: less common in competitive markets and often strict on timing.
Required seller disclosures
California sellers must disclose what they know about the property’s condition and factors that could affect value or desirability. Common items include:
- Transfer Disclosure Statement with known material facts.
- Natural Hazard Disclosure identifying whether the home is in a designated hazard zone.
- Lead-based paint disclosure for homes built before 1978.
- Known permit history, renovations, or boundary questions.
- HOA documents and financials if applicable.
These disclosures often inform your inspection and review timelines.
Escrow timeline in Petaluma
Actual timing depends on the deal, but here is a common workflow for Sonoma County residential sales.
Offer accepted and escrow opens
- Escrow is opened within a few business days using contract instructions.
- Buyer deposits earnest money, often within 1 to 3 business days.
Early escrow and document collection (days 1 to 7)
- Title company issues a preliminary title report.
- Seller assembles disclosures and any HOA packets.
- Buyer finalizes loan application if financing is needed.
Inspections and contingency removals (commonly 7 to 21 days, negotiable)
- Buyer schedules general and specialty inspections early.
- Repair requests or credits are negotiated during this window.
- Buyer removes inspection-related contingencies by the agreed date.
Appraisal and underwriting
- Lender orders appraisal, often completed within 1 to 3 weeks depending on availability.
- Underwriting conditions are cleared in time for loan funding.
- Buyers receive the Closing Disclosure at least 3 business days before closing.
Title clearance and closing prep (final week)
- Title company clears liens and obtains payoff instructions for any mortgages.
- Escrow drafts the settlement statement that lists prorations, fees, and who pays what.
- Final walkthrough is usually 24 to 48 hours before closing.
Signing and funding
- Seller signs the deed and required closing documents.
- Buyer signs loan documents and closing paperwork, then wires final funds per verified instructions.
- Lender funds the loan. Escrow disburses funds and the county records the deed and mortgage.
After recording
- Title insurance policies are issued.
- Seller receives net proceeds and any existing liens are paid off.
- Keys are released per the contract.
Most financed transactions in California close in about 30 to 45 days. Cash deals can close faster if inspections, title work, and funds move quickly.
Timing caveats and tips
- Weekends, holidays, and county recording schedules can shift the closing day.
- Appraisal disputes, underwriting conditions, or title issues can extend escrow.
- Negotiations over repairs or credits may push contingency removal dates.
Title and closing costs
Title search and insurance
The title company reviews public records for liens, easements, judgments, or other issues that could affect ownership. Two policies are common at closing: a lender’s policy that protects the lender, and an owner’s policy that protects the buyer. Who pays for each policy can vary by county custom and negotiation. In Sonoma County, confirm current practice with your escrow or title provider and review your purchase contract.
Common closing cost line items
- Escrow fee
- Title search and title insurance premiums
- Lender charges such as origination, underwriting, and appraisal
- Recording fees and any transfer taxes
- Natural hazard report and HOA document fees if applicable
- Property tax prorations and prepaid items like insurance
- Home warranty if selected
- Notary and courier fees
Payment responsibilities are negotiable and are clearly shown on your settlement statement.
Transfer taxes and recording
County and city transfer taxes may apply. The Sonoma County Recorder handles document recording and timing. Check your escrow officer’s guidance on current procedures and fees so you can plan your closing day with confidence.
Wire fraud safety
Real estate wire fraud remains a serious threat. Criminals try to trick buyers and sellers into sending funds to fraudulent accounts by spoofing emails or creating look-alike domains.
- Never rely on email alone for wiring instructions. Always verify by calling a known, trusted phone number from your initial escrow package or business card.
- Confirm any changes directly with your escrow officer or agent using previously verified contact information.
- Ask your escrow company about secure wiring portals or multi-factor verification.
- If something looks off, stop and verify. Report suspicious activity to local authorities and the appropriate federal channels if needed.
Buyer escrow checklist
Use this quick list to stay on track.
- Provide a valid photo ID and sign escrow instructions promptly.
- Deposit earnest money by the contract deadline.
- Complete your loan application and submit documents quickly.
- Schedule general and specialty inspections early in the contingency window.
- Review seller disclosures and any HOA materials right away.
- Arrange homeowner’s insurance and plan your final funds transfer. Always verify wiring instructions by phone.
- Attend the final walkthrough and confirm any agreed repairs or credits.
Seller escrow checklist
Prepare early so you can close smoothly.
- Complete all required disclosures, including TDS and NHD.
- Provide HOA documents and any lease or tenant information if applicable.
- Sign the deed and any payoff statements as soon as they are ready.
- Provide easy access for inspections and agreed repairs.
- Plan your move per the possession terms and leave agreed items.
- Share a forwarding address for tax statements and final documents.
Local insights for Petaluma
Petaluma escrows run through local title and escrow teams that coordinate closely with the Sonoma County Recorder. In busier or more competitive periods that mirror Bay Area trends, you may see shorter contingency windows and quicker overall timelines. Clear communication with your agent and escrow team, plus early scheduling of inspections and appraisal, can keep your closing on track.
When you are selling, strong presentation and a well-structured offer process can support a cleaner escrow with fewer surprises. When you are buying, early underwriting and prompt document delivery are your best tools for a timely, low-stress close.
Ready to make your next move in Petaluma or anywhere in Sonoma County? You deserve expert guidance from contract to close, plus a calm, proactive team to keep the details on time. For sellers, professional staging and premium marketing can set you up for smoother negotiations and a confident path through escrow. For buyers, clear expectations and steady communication make all the difference. If you are planning to sell or buy, connect with Rhonda Alderman for a friendly, no-pressure conversation about your goals.
FAQs
What is escrow in a California home sale?
- Escrow is a neutral third party that holds funds and documents, follows the written contract, and coordinates the steps that transfer ownership at closing.
How much earnest money is typical in Petaluma?
- Amounts are negotiable, but many California markets see roughly 1 to 3 percent of the purchase price. Competitive situations can increase deposits.
How long does escrow usually take in Sonoma County?
- Many financed purchases close in about 30 to 45 days, while cash transactions can close faster if inspections and title work finish quickly.
What contingencies should I expect as a buyer?
- Common contingencies include inspection, pest, appraisal, loan, title, and HOA review. Timeframes are negotiated in the contract and may tighten in competitive markets.
Who pays for title insurance and escrow fees?
- Payment is set by negotiation and local custom. In Sonoma County, confirm current practice with your escrow or title provider and review your contract.
How do I avoid wire fraud during closing?
- Verify all wiring instructions by calling your escrow officer or agent using a known, trusted number. Do not rely on email alone for any changes.
