California Escrow Glossary

1031 ExchangePost-Close: A tax-deferred exchange under Section 1031 of the Internal Revenue Code allowing an investor to sell an investment property and reinvest the proceeds into a like-kind replacement property while deferring capital gains taxes.
1099-SPost-Close: An IRS form filed by escrow reporting the proceeds from the sale of real property to the IRS and the seller. Required on most real estate transactions unless a specific exemption applies.
180-Day Exchange PeriodPost-Close: The maximum time allowed to complete a 1031 exchange by closing on the replacement property. Begins on the day the relinquished property closes and cannot be extended except in certain presidentially declared disasters.
45-Day Identification PeriodPost-Close: The period in a 1031 exchange during which the exchanger must identify potential replacement properties in writing. Begins on the day the relinquished property closes and cannot be extended.
Active Contingency RemovalContingencies: The process under the California RPA where the buyer must affirmatively sign and deliver a contingency removal form to remove each contingency. Contingencies do not automatically expire in California.
Appraisal ContingencyContingencies: A provision in the purchase agreement making the sale contingent upon the property appraising at or above the purchase price. Protects the buyer from being obligated to purchase a property that does not appraise.
As-Is SaleContingencies: A transaction where the seller is unwilling to make repairs or provide credits for property condition issues. The buyer still has the right to inspect and cancel during the contingency period but accepts the property in its current condition if they proceed.
Adjustable Rate Mortgage (ARM)Financing & Loan Terms: A mortgage loan with an interest rate that changes periodically based on a benchmark index. ARMs typically offer a lower initial rate for a fixed period before adjusting at set intervals.
All-Inclusive Trust Deed (AITD)Financing & Loan Terms: A seller financing arrangement where the seller carries back a new loan that wraps around and includes the existing underlying loan. The buyer makes one payment to the seller who then makes payments on the underlying loan. Also called a wrap-around mortgage.
⚠ Risk warning: AITDs are complex seller-financing instruments that may trigger the due-on-sale clause of the underlying loan. All parties should consult with a real estate attorney before proceeding. See the Wire Fraud Checklist tutorial →
Annual Percentage Rate (APR)Financing & Loan Terms: The true annual cost of borrowing expressed as a percentage that includes the interest rate plus other loan costs such as origination fees and mortgage insurance. APR is always higher than the stated interest rate.
AppraisalFinancing & Loan Terms: A professional opinion of a property's market value conducted by a licensed appraiser. Lenders require an appraisal to ensure the property value supports the loan amount.
Assumable LoanFinancing & Loan Terms: A mortgage loan that can be transferred from the seller to the buyer, allowing the buyer to take over the existing loan terms including the interest rate. FHA and VA loans are generally assumable subject to lender approval.
Abstract of JudgmentPost-Close: A recorded document that creates a lien against all real property owned by the judgment debtor in the county where recorded. Must be paid off before or at closing if the seller has any judgments recorded against them.
Affidavit of DeathPost-Close: A notarized document recorded with the county recorder to remove a deceased joint tenant or trustor from title. Must be accompanied by a certified copy of the death certificate.
Affidavit of Surviving SpousePost-Close: A notarized document used to transfer community property or community property with right of survivorship to the surviving spouse after the death of their partner without going through probate.
Buyer's Closing CostsClosing & Funding: All expenses the buyer is responsible for paying at closing including lender fees, title insurance, escrow fees, prepaid items, and recording fees.
Buyer's Final Walk-ThroughClosing & Funding: A final inspection of the property by the buyer shortly before closing to verify the property is in the agreed-upon condition, all negotiated repairs have been completed, and seller's personal property has been removed.
Blanket LoanFinancing & Loan Terms: A single mortgage loan that covers multiple properties. Commonly used by investors and developers. A partial release clause may allow individual properties to be sold and released from the lien upon payment of a specified amount.
Bridge LoanFinancing & Loan Terms: A short-term loan that allows a homeowner to purchase a new property before selling their existing one. Bridge loans are secured by the borrower's current home and are repaid when that home sells.
Buyer Opening PackageOpening Escrow: The set of escrow documents sent to the buyer at the opening of escrow including escrow instructions, statement of information, preliminary change of ownership report, and vesting information request.
Beneficiary DemandPost-Close: A payoff statement provided by the lender (beneficiary of the deed of trust) showing the exact amount required to pay off the loan including principal, interest, and any fees or penalties.
BootPost-Close: Any non-like-kind property received in a 1031 exchange including cash, debt relief, or personal property. Boot is taxable in the year of the exchange and reduces the tax deferral benefit.
Boundary DisputePost-Close: A disagreement between neighboring property owners about the location of the boundary line between their properties. May require a survey, negotiation, or legal action to resolve.
Closing CostsClosing & Funding: All fees and expenses paid by the buyer and seller at the close of escrow beyond the purchase price. Includes escrow fees, title insurance, recording fees, lender fees, prepaid items, and prorations.
Closing DateClosing & Funding: The date specified in the purchase agreement on which escrow is scheduled to close, the deed is recorded, and ownership transfers from seller to buyer. Also called the settlement date.
Closing Protection Letter (CPL)Closing & Funding: A letter issued by the title insurance underwriter that protects the lender against losses caused by the escrow or closing agent's failure to follow the lender's closing instructions or misappropriation of funds.
Closing StatementClosing & Funding: A detailed accounting document prepared by escrow showing all debits and credits to the buyer and seller in the transaction. Also called a settlement statement or HUD-1 in older transactions.
CommissionClosing & Funding: Compensation paid to real estate agents for their services in the transaction. Under the December 2024 RPA changes buyer agent compensation is negotiated separately and disclosed in the Buyer Representation and Broker Compensation Agreement.
CancellationContingencies: The termination of a purchase agreement by mutual consent or by one party exercising a contractual right. Proper cancellation procedures must be followed to ensure the earnest money deposit is returned to the buyer.
Contingency PeriodContingencies: The time period during which a buyer has the right to investigate the property and transaction and to cancel based on contingency findings. Contingency periods are specified in the purchase agreement.
Closing Disclosure (CD)Financing & Loan Terms: A standardized five-page form provided by the lender at least three business days before closing that shows final loan terms and actual closing costs. Required under TRID and must be reviewed carefully against the Loan Estimate.
Conventional LoanFinancing & Loan Terms: A mortgage loan that is not insured or guaranteed by a government agency. Conventional loans must conform to Fannie Mae or Freddie Mac guidelines for purchase on the secondary market.
Cross-CollateralizationFinancing & Loan Terms: A financing arrangement where more than one property serves as collateral for a single loan. If the borrower defaults the lender can pursue all collateralized properties.
Contact SheetOpening Escrow: An internal escrow document listing all parties to the transaction and their contact information including buyer, seller, agents, lender, and title representative.
Carbon Monoxide DetectorPost-Close: A California law requirement that residential properties with an attached garage or fossil fuel burning appliance have working carbon monoxide detectors. Sellers must certify compliance prior to closing.
CC&R ViolationPost-Close: A breach of the covenants, conditions, and restrictions recorded against a property. HOAs and neighbors may have the right to enforce CC&Rs through legal action.
Change of Ownership StatementPost-Close: A form sent by the county assessor to the new owner after a property transfer requesting information about the transaction to assist in determining the new assessed value.
Conservatorship OrderPost-Close: A court order appointing a conservator to manage the financial affairs and/or personal care of a person who is unable to manage their own affairs. Escrow requires a certified copy of the conservatorship order and court authorization to sell real property.
Corporate ResolutionPost-Close: A formal document adopted by a corporation's board of directors authorizing specific actions such as the sale or purchase of real property. Required by escrow and title when a corporation is a party to the transaction.
CC&RsTitle & Vesting: Covenants, Conditions, and Restrictions — rules recorded against a property that govern how it can be used. Common in planned developments and HOA communities. CC&Rs run with the land and bind all future owners.
Chain of TitleTitle & Vesting: The chronological history of all recorded documents affecting ownership of a property from the earliest recorded conveyance to the present. A clear chain of title is essential for marketable title.
Community PropertyTitle & Vesting: A form of co-ownership between married spouses or registered domestic partners in California where both parties have equal ownership interest in property acquired during the marriage.
Community Property with Right of SurvivorshipTitle & Vesting: A form of vesting in California combining community property ownership with automatic transfer of the deceased spouse's interest to the surviving spouse without probate.
DisbursementClosing & Funding: The distribution of funds by escrow to all parties after recording including payment of the seller's net proceeds, loan payoffs, commissions, fees, and other charges.
Debt-to-Income Ratio (DTI)Financing & Loan Terms: A measure of a borrower's monthly debt payments compared to their gross monthly income. Lenders use DTI to evaluate a borrower's ability to manage monthly payments and repay the loan.
Deed of TrustFinancing & Loan Terms: The security instrument used in California that gives the lender a lien against the property as collateral for the loan. Unlike a mortgage, a deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee.
Discount PointsFinancing & Loan Terms: Prepaid interest paid to the lender at closing to reduce the interest rate on the loan. One point equals one percent of the loan amount. Paying points makes sense if the borrower plans to keep the loan long enough to recoup the upfront cost.
Due-on-Sale ClauseFinancing & Loan Terms: A provision in most conventional mortgage loans requiring the full loan balance to be paid when the property is sold or transferred. Also called an acceleration clause. Prevents loan assumptions without lender approval.
Death CertificatePost-Close: An official government document certifying a person's death. Required by escrow and title to process title transfers involving deceased owners including survivorship transfers and estate sales.
Deed of ReconveyancePost-Close: A document recorded by the lender or trustee after a loan is paid in full that releases the deed of trust lien from the property. Evidence that the property is free and clear of that particular loan.
Demand RequestPost-Close: A written request from escrow to a lender or lienholder asking for a payoff statement showing the exact amount needed to pay off a loan or lien as of a specific date.
Earnest Money Deposit (EMD)Opening Escrow: A good-faith deposit made by the buyer at the opening of escrow to demonstrate serious intent to purchase. Typically 1–3% of the purchase price in California.
⚠ Wire fraud warning: Always verify wiring instructions by calling the escrow company directly using a phone number from their official website — never from an email. EMD wire fraud is the most common point of attack in real estate transactions. See the Wire Fraud Checklist tutorial →
EscrowOpening Escrow: A neutral third-party arrangement where an escrow holder holds funds, documents, and instructions from all parties until all conditions of a transaction are met and the escrow can close.
Escrow FeeOpening Escrow: The charge for escrow services, typically split equally between buyer and seller in Southern California unless otherwise negotiated. Usually calculated based on the purchase price.
Escrow HolderOpening Escrow: The neutral party — typically a licensed escrow company or title company — that holds funds and documents and follows the written instructions of the buyer, seller, and lender.
Escrow InstructionsOpening Escrow: Written directions signed by the buyer and seller that tell the escrow holder exactly what conditions must be met before escrow can close. These become the governing document of the transaction.
Escrow NumberOpening Escrow: A unique identification number assigned to each escrow transaction by the escrow company. Used to reference the file in all communications and documents.
Estimated Seller Net SheetOpening Escrow: A preliminary estimate prepared by escrow showing the seller an approximation of their net proceeds after deducting all costs, fees, and payoffs. Often prepared before escrow opens at the request of the listing agent.
Easement by ImplicationPost-Close: An easement created by operation of law rather than by express written agreement when the circumstances of a property transfer imply that an easement was intended. Addressed in the 2024 California Supreme Court ruling in Romero v. Shih.
EasementTitle & Vesting: A right to use another person's land for a specific purpose. Common easements include utility easements, access easements, and drainage easements. Easements are typically shown on the preliminary title report.
EncumbranceTitle & Vesting: Any claim, lien, charge, or liability attached to a property that may affect its value or transfer. Common encumbrances include mortgages, liens, easements, and CC&Rs.
Federal WireClosing & Funding: An electronic funds transfer sent through the Federal Reserve wire system. Federal wires have a cutoff of 5pm Eastern / 2pm Pacific. Wires received after cutoff are processed the next business day.
⚠ Wire fraud warning: Always verify wire instructions by calling the receiving party directly using a verified phone number before sending any funds. Never rely solely on emailed wire instructions. See the Wire Fraud Checklist tutorial →
Funding AuthorizationClosing & Funding: The lender's confirmation that all loan conditions have been satisfied and the lender is ready to wire loan funds to escrow. Escrow cannot record until funding authorization is received.
FHA LoanFinancing & Loan Terms: A mortgage loan insured by the Federal Housing Administration. FHA loans allow lower down payments and more flexible qualifying standards but require mortgage insurance premiums.
Fixed Rate MortgageFinancing & Loan Terms: A mortgage loan with an interest rate that remains constant for the entire term of the loan. Monthly principal and interest payments never change making budgeting predictable for the borrower.
FundingFinancing & Loan Terms: The disbursement of loan proceeds by the lender to escrow. Funding typically occurs on the day of or day before recording. Escrow cannot record until funding is confirmed.
Final Closing StatementPost-Close: The completed accounting of all funds in the escrow transaction issued after recording and disbursement. Shows all actual charges, credits, and the final amount received or paid by each party.
FIRPTAPost-Close: The Foreign Investment in Real Property Tax Act — a federal law requiring withholding of federal income tax when a foreign person sells U.S. real property. Escrow must withhold 15% of the gross sales price unless an exemption applies.
Form 593Post-Close: California Franchise Tax Board form used to report and remit state income tax withholding on the sale of California real property. Escrow is responsible for withholding and remitting unless a valid exemption applies.
Grant Deed RecordingPost-Close: The official recording of the grant deed with the county recorder that transfers legal ownership from seller to buyer. The recorded deed becomes part of the public record and establishes the new owner's title.
General Index (GI)Title & Vesting: A public records database searched by the title company using the names from the Statement of Information to identify any judgments, liens, or other matters recorded against the parties to the transaction.
Grant DeedTitle & Vesting: The most common deed used in California to transfer title from seller to buyer. It contains an implied warranty that the grantor has not previously conveyed the property and that the title is free from encumbrances made by the grantor.
HoldbackClosing & Funding: Funds retained in escrow after closing to cover a specific obligation such as completion of repairs or construction. Released to the appropriate party when the condition is satisfied.
Homeowner's InsuranceClosing & Funding: Property insurance required by lenders that protects against losses from fire, theft, and other covered perils. Evidence of insurance must be provided to escrow before closing. The first year's premium is typically prepaid at closing.
Hard Money LoanFinancing & Loan Terms: A short-term loan secured by real property made by private investors or companies rather than traditional lenders. Hard money loans are based primarily on property value rather than borrower creditworthiness and carry higher interest rates and fees.
HOA DemandOpening Escrow: A statement from a homeowners association showing all amounts owed by the seller including dues, special assessments, fines, and transfer fees that must be paid through escrow at closing.
HOA Transfer FeePost-Close: A fee charged by a homeowners association when a property is sold to cover the cost of transferring the account from the seller to the buyer and providing required disclosure documents.
Homeowners Association (HOA)Post-Close: An organization in a planned community, condominium, or subdivision that enforces CC&Rs and manages common areas. HOA membership is mandatory for properties within the association and dues are collected monthly or annually.
Homestead ExemptionPost-Close: A California property tax exemption that reduces the assessed value of an owner-occupied primary residence for tax purposes. Homeowners must apply through their county assessor's office.
Inspection ContingencyContingencies: A provision in the purchase agreement giving the buyer the right to conduct physical inspections of the property and to request repairs, credits, or cancellation based on the findings. Under the December 2024 RPA the default inspection period is 17 days.
Impound AccountFinancing & Loan Terms: An account held by the lender where the borrower deposits monthly amounts for property taxes and insurance. The lender pays these expenses on behalf of the borrower when they come due. Also called an escrow account by lenders.
Indemnification AgreementPost-Close: An agreement in which one party agrees to protect another party from specified losses or claims. Used in escrow when a party requests an exception to standard requirements such as closing without a required document.
Interspousal DeedTitle & Vesting: A deed used to transfer property between spouses or registered domestic partners, commonly used to add or remove a spouse from title or to confirm separate property status.
Jumbo LoanFinancing & Loan Terms: A mortgage loan that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. Jumbo loans typically require larger down payments, higher credit scores, and more stringent underwriting.
Joint TenancyTitle & Vesting: A form of co-ownership where two or more persons hold equal shares with the right of survivorship. When one joint tenant dies their interest automatically passes to the surviving joint tenant(s) without probate.
Keys and PossessionClosing & Funding: The transfer of physical possession of the property from seller to buyer. Under the California RPA possession typically occurs at close of escrow unless otherwise negotiated.
Loan Documents PackageClosing & Funding: The complete set of documents sent by the lender to escrow for the borrower to sign at closing. Escrow reviews the loan documents against the closing disclosure before scheduling the signing appointment.
Liquidated DamagesContingencies: A provision in the California RPA limiting the seller's remedy to the earnest money deposit if the buyer defaults after removing all contingencies. Must be initialed by both parties to be enforceable.
Loan ContingencyContingencies: A provision making the purchase contingent upon the buyer obtaining financing on specified terms. If the buyer cannot obtain the specified financing they may cancel the contract and recover their earnest money deposit.
Loan CommitmentFinancing & Loan Terms: A formal written offer from a lender to provide a mortgage loan under specific terms and conditions. A loan commitment indicates the lender has completed underwriting and is prepared to fund the loan.
Loan ContingencyFinancing & Loan Terms: A provision in the purchase agreement that makes the buyer's obligation to purchase contingent upon obtaining financing on specified terms. Also called a financing contingency.
Loan DocumentsFinancing & Loan Terms: The complete package of documents prepared by the lender that the borrower signs at closing including the promissory note, deed of trust, and various required disclosures. Also called loan docs.
Loan Estimate (LE)Financing & Loan Terms: A standardized three-page form provided by the lender within three business days of receiving a loan application that discloses key loan terms and estimated closing costs. Required under TRID.
Loan-to-Value Ratio (LTV)Financing & Loan Terms: The ratio of the loan amount to the appraised value or purchase price of the property, whichever is lower. Expressed as a percentage. A lower LTV generally results in better loan terms and lower risk for the lender.
Letters TestamentaryPost-Close: A court document issued to the executor of an estate authorizing them to act on behalf of the estate including selling estate property. Required by escrow and title when a property is being sold by an estate.
Lis PendensPost-Close: A recorded notice that a lawsuit has been filed affecting title to real property. A lis pendens clouds title and must be resolved before the property can be sold or refinanced.
LLC Operating AgreementPost-Close: The governing document of a limited liability company that establishes ownership, management structure, and member rights. Escrow and title review the operating agreement to confirm authority to sell or purchase real property.
Lender's Title PolicyTitle & Vesting: A title insurance policy that protects the lender against covered title defects. Required by virtually all institutional lenders. The buyer typically pays for this policy.
LienTitle & Vesting: A legal claim against a property as security for a debt or obligation. Liens must generally be paid off before or at closing. Common types include mortgage liens, tax liens, and mechanic's liens.
Mobile NotaryClosing & Funding: A notary public who travels to the signer's location to witness document signatures. Commonly used when parties cannot travel to the escrow office or when documents must be signed outside of business hours.
Mello-RoosPost-Close: A special tax assessment levied on properties in a Community Facilities District to fund public infrastructure and services. Mello-Roos taxes are in addition to regular property taxes and must be disclosed to buyers.
Marketable TitleTitle & Vesting: Title that is free from reasonable doubt, liens, and encumbrances that would allow the property to be sold or mortgaged at its fair market value. A title company must be willing to insure marketable title.
Mechanic's LienTitle & Vesting: A claim filed by a contractor, subcontractor, or supplier who provided labor or materials to improve a property and has not been paid. Mechanic's liens can cloud title and must be resolved before closing.
Net ProceedsClosing & Funding: The amount the seller receives after all costs, fees, loan payoffs, and other charges are deducted from the sale price. Shown on the seller's closing statement.
Notary FeesClosing & Funding: Fees charged by a notary public for witnessing and authenticating signatures on legal documents. In California notary fees are set by state law at a maximum of $15 per signature notarized.
Notice to Perform (NTP)Contingencies: A written notice from one party to the other requiring them to perform a contractual obligation within a specified time period, typically 2 days under the California RPA. Failure to perform after an NTP can be grounds for cancellation.
Natural Hazard Disclosure (NHD)Opening Escrow: A report required in California disclosing whether a property is located in any state or locally mapped hazard zones including flood, fire, earthquake fault, seismic hazard, and wildland fire areas. Ordered by the seller or agent — not by escrow.
Notary PublicTitle & Vesting: A state-appointed official who verifies the identity of document signers and witnesses their signatures. Most real estate documents including grant deeds and deeds of trust must be notarized before recording.
Origination FeeFinancing & Loan Terms: A fee charged by the lender for processing and originating the loan. Typically expressed as a percentage of the loan amount and disclosed on the Loan Estimate and Closing Disclosure.
Open Order SheetOpening Escrow: An internal escrow document created when escrow is opened that captures all key transaction details including parties, property address, purchase price, loan amount, and important dates.
Opening EscrowOpening Escrow: The process of establishing an escrow by depositing the signed purchase agreement and earnest money deposit with the escrow holder, officially starting the transaction timeline.
Owner's Title PolicyTitle & Vesting: A title insurance policy that protects the buyer against covered title defects. In California the seller typically pays for the owner's policy. It remains in effect for as long as the owner or their heirs hold title.
Per Diem InterestClosing & Funding: Daily interest charged on a mortgage loan. Buyers prepay per diem interest from the closing date through the end of the month at closing so that their first full mortgage payment covers a complete month.
ProrationsClosing & Funding: The division of ongoing property expenses between buyer and seller based on the closing date. Common prorations include property taxes, HOA dues, and prepaid rents on income properties.
Passive Contingency RemovalContingencies: A contingency removal method where the contingency is deemed removed after a specified period unless the buyer takes action to cancel. Not the default method under the California RPA which requires active removal.
Prepaid ItemsFinancing & Loan Terms: Expenses the buyer must pay at closing that are not fees but rather advance payments for ongoing costs including prepaid interest, homeowner's insurance premium, and initial impound account deposits.
Private Mortgage Insurance (PMI)Financing & Loan Terms: Insurance required by conventional lenders when the borrower's down payment is less than 20% of the purchase price. PMI protects the lender against default and is typically paid monthly by the borrower.
Promissory NoteFinancing & Loan Terms: The borrower's written promise to repay the loan under specific terms including interest rate, payment schedule, and maturity date. The promissory note is the personal obligation of the borrower.
Payoff DemandOpening Escrow: A written statement from an existing lender showing the exact amount required to pay off a loan as of a specific date, including principal, interest, and any fees. Ordered by escrow after the preliminary title report is received and the seller opening package is returned.
Preliminary Title Report (Prelim)Opening Escrow: A report issued by the title company early in escrow that shows the current state of title including ownership, legal description, and any liens, encumbrances, or exceptions that affect the property.
Purchase AgreementOpening Escrow: The signed contract between buyer and seller that outlines the terms of the sale including price, contingencies, and closing date. Also called the Residential Purchase Agreement (RPA) in California.
Partnership AgreementPost-Close: The governing document of a partnership that establishes the rights and obligations of the partners. Escrow and title review the partnership agreement to confirm authority to sell or purchase real property.
Post-Close EscrowPost-Close: Escrow work that continues after recording and disbursement including filing tax forms, releasing holdbacks, resolving outstanding title issues, and ensuring all post-closing obligations are fulfilled.
Pre-Escrow Seller Net SheetPost-Close: An estimate of the seller's net proceeds prepared by the listing agent or escrow officer before escrow is formally opened. Helps the seller understand their expected proceeds before accepting an offer.
ProbatePost-Close: The court-supervised process of administering a deceased person's estate including validating their will, paying debts, and distributing assets. Property held in a living trust avoids probate.
Property Tax ProrationPost-Close: The division of property taxes between buyer and seller based on the closing date. California property taxes are paid in arrears so prorations must account for taxes already due but not yet paid.
Power of Attorney (POA)Title & Vesting: A legal document authorizing one person to act on behalf of another in legal and financial matters. A durable POA remains effective if the principal becomes incapacitated. Must be approved by the title company before use in escrow.
Preliminary Change of Ownership Report (PCOR)Title & Vesting: A form required by California law to be filed with the county recorder at the time of recording a transfer of real property. It provides information used by the county assessor to determine if a property tax reassessment is required.
Property Tax ReassessmentTitle & Vesting: The revaluation of a property for tax purposes triggered by a change of ownership. Under Proposition 13 properties are reassessed to current market value upon sale which can significantly increase property taxes.
Proposition 19Title & Vesting: A California constitutional amendment effective February 2021 that allows eligible homeowners 55 or older, severely disabled, or disaster victims to transfer their property tax base to a replacement home anywhere in California. It also significantly limits the parent-child exclusion for inherited properties.
Qualified Intermediary (QI)Post-Close: A neutral third party required in a 1031 exchange who holds the sale proceeds and facilitates the exchange. The seller cannot receive or control the funds during the exchange period.
Quiet Title ActionPost-Close: A court proceeding to establish clear title to real property by resolving competing claims or interests. Used to clear title defects that cannot be resolved through standard escrow procedures.
Quitclaim DeedTitle & Vesting: A deed that transfers whatever interest the grantor may have in a property without making any warranties about the quality of title. Commonly used between family members or to clear title issues.
Recording DateClosing & Funding: The date the grant deed and deed of trust are officially recorded with the county recorder. Recording is the final step that transfers legal ownership and establishes the lender's lien priority.
Recording FeesClosing & Funding: Fees charged by the county recorder to record documents in the public record. Recording fees vary by county and are based on the number of pages recorded.
Recording PackageClosing & Funding: The set of documents submitted to the county recorder at closing including the grant deed, deed of trust, and any other documents that need to be in the public record.
Rescission PeriodClosing & Funding: The three business day period after signing during which a borrower may cancel a refinance on their primary residence. Saturdays count as business days for rescission purposes but Sundays and federal holidays do not.
Right of RescissionClosing & Funding: The borrower's right to cancel a refinance transaction within three business days of signing loan documents. Applies to owner-occupied refinances only — not purchases. Escrow cannot disburse funds until the rescission period expires.
Repair RequestContingencies: A formal written request from the buyer to the seller asking for specific repairs, replacements, or credits based on inspection findings. Submitted on a Request for Repair form under the California RPA.
Rate LockFinancing & Loan Terms: A lender's commitment to honor a specific interest rate for a set period while the loan is being processed. Rate locks typically range from 15 to 60 days and protect the borrower from rate increases during the escrow period.
Residential Purchase Agreement (RPA)Opening Escrow: The California Association of REALTORS® standard purchase contract used in most California residential transactions. The December 2024 version includes updated contingency and commission terms.
ReconveyancePost-Close: The process by which a lender releases their deed of trust lien after the loan is paid in full by recording a deed of reconveyance. Confirms the property is free and clear of that lien.
Retrofit CompliancePost-Close: California-required property upgrades that sellers must complete or disclose prior to closing. Common retrofit requirements include water heater strapping, smoke detectors, carbon monoxide detectors, and low-flow water fixtures.
RecordingTitle & Vesting: The process of filing documents with the county recorder's office to give public notice of a transaction. Recording the grant deed and deed of trust is the final step that transfers ownership and secures the lender's interest.
Same Day FundingClosing & Funding: When the lender wires funds and recording occurs on the same day. Requires the wire to arrive and recording to be confirmed before the county recorder's cutoff time, typically by noon for same-day disbursement.
Seller CreditClosing & Funding: An amount the seller agrees to pay toward the buyer's closing costs or prepaid items. Seller credits must be disclosed to the lender and may be limited based on loan type and LTV ratio.
Seller's Closing CostsClosing & Funding: All expenses the seller is responsible for paying at closing including real estate commissions, title insurance, escrow fees, transfer taxes, payoff costs, and any negotiated credits to the buyer.
Signing AppointmentClosing & Funding: The meeting at which the buyer and/or seller sign all required escrow and loan documents. May take place at the escrow office, title company, or with a mobile notary at a location convenient to the signer.
Sub-EscrowClosing & Funding: A service provided by the title company to handle the financial aspects of closing including receiving loan funds, paying off existing loans, and coordinating the recording of documents.
Seller DisclosureContingencies: The seller's legal obligation to disclose known material facts about the property that might affect its value or desirability. In California sellers must complete a Transfer Disclosure Statement and Seller Property Questionnaire.
Seller Property Questionnaire (SPQ)Contingencies: A California Association of REALTORS® form that supplements the TDS by asking the seller more detailed questions about the property condition, history, and any known defects.
Subject-To FinancingFinancing & Loan Terms: A creative financing arrangement where the buyer takes title to the property subject to the existing mortgage without formally assuming the loan. The original borrower remains liable on the note while the buyer makes the payments.
⚠ Risk warning: Subject-to financing carries significant risk for both parties. The seller remains liable on the loan and the due-on-sale clause may be triggered. Both parties should consult a real estate attorney before proceeding. See the Wire Fraud Checklist tutorial →
Seller Opening PackageOpening Escrow: The set of escrow documents sent to the seller at the opening of escrow including escrow instructions, statement of information, preliminary change of ownership report, and other required forms.
Statement of Information (SI)Opening Escrow: A form completed by buyers and sellers providing personal identifying information used by the title company to distinguish the parties from others with similar names in public records.
Smoke Detector CompliancePost-Close: A California law requirement that residential properties have working smoke detectors in specified locations. Sellers must provide a written statement of compliance to the buyer prior to closing.
Subordination AgreementPost-Close: An agreement in which a lienholder agrees to make their lien junior to another lien. Commonly used when refinancing to allow a new first trust deed to maintain priority over an existing second lien.
Supplemental Tax BillPost-Close: An additional property tax bill issued by the county assessor after a change of ownership reflecting the difference between the old assessed value and the new assessed value from the date of transfer through the end of the tax year.
SurveyPost-Close: A professional measurement and mapping of a property's boundaries and physical features conducted by a licensed land surveyor. May be required by the lender or title company or to resolve boundary disputes.
Sole and Separate PropertyTitle & Vesting: Property owned entirely by one individual with no co-owners. A married person taking title as sole and separate property must have their spouse sign a quitclaim deed or interspousal deed relinquishing any community property interest.
Transfer TaxClosing & Funding: A tax imposed by the county and sometimes the city on the transfer of real property. In California the county transfer tax is $1.10 per $1,000 of value. Some cities impose additional transfer taxes.
Title ContingencyContingencies: A provision allowing the buyer to review and approve the preliminary title report and cancel if title issues are unacceptable. The buyer typically has a specified number of days to review the prelim after receipt.
Transfer Disclosure Statement (TDS)Contingencies: A California-required form completed by the seller disclosing the known condition of the property. The buyer has three days after receipt to review and cancel if unsatisfied.
TRIDFinancing & Loan Terms: The TILA-RESPA Integrated Disclosure rule that combined the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures into the Loan Estimate and Closing Disclosure forms. Effective October 2015.
Title SearchPost-Close: A review of public records to trace the history of ownership and identify any liens, encumbrances, or defects affecting title to a property. Performed by the title company as part of the title insurance process.
Tenancy in CommonTitle & Vesting: A form of co-ownership where two or more persons each hold an undivided interest in a property. Interests do not have to be equal and there is no right of survivorship — each owner's interest passes through their estate upon death.
TitleTitle & Vesting: Legal ownership of real property. Title represents the right to own, use, and transfer real estate and is evidenced by a deed recorded in the county where the property is located.
Title InsuranceTitle & Vesting: Insurance that protects against losses arising from defects in title that existed before the policy date but were unknown at the time of purchase. There are two types: owner's policy and lender's policy.
Title SupplementTitle & Vesting: A document issued by the title company after the preliminary title report that updates the status of title items. A supplement can show one of three outcomes: an item has been eliminated, a requirement has been satisfied, or a new item has been added with details of any associated debt.
TrustTitle & Vesting: A legal arrangement where a trustee holds and manages property for the benefit of beneficiaries. Property held in trust passes outside of probate upon the death of the trustor.
Trust CertificationTitle & Vesting: A shortened document that confirms the existence of a trust and identifies the trustee's authority to act without requiring disclosure of the full trust agreement. Used by escrow and title in lieu of the complete trust document.
TrusteeTitle & Vesting: The person or entity that holds legal title to property in a trust and manages it according to the terms of the trust agreement for the benefit of the beneficiaries.
UnderwritingFinancing & Loan Terms: The process by which a lender evaluates the risk of making a mortgage loan by reviewing the borrower's creditworthiness, income, assets, and the property value.
VA LoanFinancing & Loan Terms: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. VA loans typically require no down payment and no private mortgage insurance.
VestingTitle & Vesting: The manner in which a buyer or borrower holds legal title to real property. Vesting determines ownership rights, survivorship, and how the property can be transferred or encumbered.
Wiring InstructionsOpening Escrow: Official bank transfer instructions provided by the escrow company telling the buyer where to send the earnest money deposit and closing funds.
⚠ Wire fraud warning: Never send funds based on wiring instructions received by email without first calling the escrow company directly to verify. Fraudsters intercept emails and substitute fake wiring instructions. See the Wire Fraud Checklist tutorial →
Water Heater StrappingPost-Close: A California law requirement that water heaters be strapped or braced to resist earthquake movement. Sellers must certify compliance on the TDS and escrow may require written certification.
Withholding ExemptionPost-Close: A qualifying condition that eliminates the requirement to withhold taxes on a real estate sale. Common exemptions include the principal residence exemption for Form 593 and the primary residence exclusion for FIRPTA.

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