Once the Buyer and Seller have a contract, Buyer makes an initial deposit to escrow. In San Francisco, Escrow and Title Insurance are handled by one company.


Escrow is an independent third party between the seller, the seller’s agent, the buyer, the buyer’s agent, the lender, and other involved parties. Escrow collects, holds, and releases monies. Escrow only acts when it has matching instructions from both sides.

Title Insurance

Once escrow is opened, the escrow/title company will issue a Preliminary Title Report which contains all publicly recorded information regarding the physical description of the property, the current owner and type of ownership, and any encumbrances, encroachments, or easements of record. Before the close of escrow the title company clears financial liens of the seller. The escrow/title company will issue a title policy which insures clear title. Lenders require an additional “supplemental” title insurance policy.

Buyer’s Due Diligence: Contingencies

1. Financing: If the buyer has a financing contingency, the buyer must secure a loan at the specified rate and term.

2. Property Inspection: This contingency is to investigate the physical condition of the property and can include structural pest control inspectors, general property inspectors, architects, engineers and contractors and others. The buyer can have anyone inspect the property. Based on the findings and reports, the buyer can negotiate with the seller for a credit or request work be completed. The seller is not obligated to negotiate.

3. Appraisal: The purchase can be contingent on the property appraising (by an independent appraiser) at no less than the purchase price. The buyer must remove each contingency in compliance with the purchase contract. The buyer can remove a contingency “subject to” certain new terms being met, but that becomes a new negotiating point to which the seller must agree. Once all contingencies have been removed, the buyer will increase the deposit to 3% of the purchase price which would then become non-refundable “Liquidated Damages" assuming both parties have agreed to that provision.