Buying on the Monterey Peninsula and wondering what really happens in escrow? You are not alone. Between inspections, title reports, and signatures, the process can feel complex, especially in coastal cities like Pacific Grove. In this guide, you will learn what escrow is, who does what, typical timelines, common costs, and the local coastal factors to check before you close. Let’s dive in.
What escrow is in California
Escrow is where your signed purchase contract turns into a recorded deed in your name. Escrow is a neutral, third‑party process that holds your funds and the seller’s documents until everyone’s written instructions are met. The escrow holder then records the deed and mortgage (if any) and disburses funds.
Who is involved and their roles
- Buyer and seller: Agree to terms and sign escrow instructions consistent with the purchase contract.
- Escrow officer: Coordinates documents, holds deposits, orders payoffs, and prepares for closing.
- Title company: Researches title, issues title insurance, and handles recording protection. Many local firms provide both escrow and title services.
- Lender: If you finance, the lender sets loan conditions, orders the appraisal, and funds the loan at closing. A lender’s title policy is normally required.
- Real estate agents: Help you track deadlines, recommend inspectors, and keep the process on schedule.
For a consumer overview of escrow and roles, review guidance from the California Department of Real Estate. For title insurance basics, the American Land Title Association is a useful resource. Contract timelines and disclosures follow forms and practices from the California Association of Realtors.
How escrow closes in Monterey County
Escrow closes after all conditions are met, you sign final documents, and funds are in. The deed is recorded at the Monterey County Recorder’s office, and keys are typically released after recording. You can verify county processes and offices through the Monterey County website.
Typical timeline in Pacific Grove
Most escrows in California run about 30 to 45 days from contract acceptance. Some close faster or slower depending on financing, inspections, or negotiated terms. Coastal and older homes can require additional inspections or clearances that may extend certain contingencies.
Early deadlines to plan for
- Earnest money: Usually due to escrow within 1 to 3 business days of acceptance, per your contract.
- Inspection period: Often 5 to 17 days. You complete inspections and can request repairs or cancel within this window.
- Loan contingency: Commonly 17 to 21 days. Your lender completes underwriting and conditions.
- Appraisal: Typically ordered after loan application. Scheduling and results often take 7 to 14 days.
- Title review: You receive a preliminary title report early in escrow. Review exceptions and liens promptly.
- HOA documents: If applicable, review CC&Rs, financials, and rules before removing contingencies.
- Final walkthrough and signing: Usually a few days before closing.
Timing tips for coastal purchases
- Get a full preapproval before you write offers. It strengthens your position and keeps loan timelines tight.
- Budget time for pest, roof, sewer or septic, and any coastal or structural evaluations. Older Pacific Grove cottages and ocean‑adjacent homes often need deeper due diligence.
- Coordinate early with local lenders, escrow, and title to anticipate recording schedules at the county level.
Disclosures, title, and inspections
Buying in California means you receive a packet of disclosures and title documents. Reviewing these quickly is key to a smooth close.
Required seller disclosures
- Transfer Disclosure Statement (TDS): Seller’s statement of known property conditions in most residential sales.
- Natural Hazard Disclosure (NHD): Indicates flood zones, fire hazard severity, earthquake or seismic zones, and more.
- Lead‑based paint: For homes built before 1978.
- Megan’s Law database notice, known latent defects, and any special assessments.
- HOA resale package: CC&Rs, bylaws, budgets, and rules if the property is in an association.
- Local verifications: Confirm any city or county rules that may affect the property, such as septic, sewer lateral ordinances, or coastal improvement permits. The City of Pacific Grove and Monterey County sites are good places to start.
Title report and insurance
The preliminary title report shows liens, easements, restrictions, and matters that affect use or ownership. Review it with your agent and raise questions early. Your lender will require a lender’s title policy. You are strongly advised to purchase an owner’s title policy as well to protect your equity from unknown title defects. Learn more at the American Land Title Association.
Local inspections to consider
- General home inspection for structure and systems.
- Pest and termite inspection. Termite activity is common in coastal California.
- Roof and foundation inspections, especially for older homes.
- Septic inspection and permit review if not on a municipal sewer.
- Sewer lateral checks or connection verification where applicable.
- Hazard‑specific reviews: geological or soils reports near cliffs, coastal erosion assessments, and flood elevation checks.
- Radon and lead testing where applicable.
Coastal and hazard checks
Your NHD will flag many hazards, but you can independently verify:
- Flood risk: Use the FEMA Flood Map Service Center to check flood zones.
- Earthquake and seismic hazards: Review maps from the United States Geological Survey.
- Coastal permitting: If there are recent shoreline or bluff improvements, confirm permits with the California Coastal Commission and check local records with the city or county.
Contingencies that protect you
Contingencies give you time to investigate and the right to cancel within agreed periods if issues arise.
Inspection contingency
You can negotiate repairs, request credits, or cancel if inspections reveal significant concerns within your inspection period. Use this time to complete all inspections and review disclosures.
Financing and appraisal contingencies
If your loan approval falls through within the loan contingency, you may cancel and recover your deposit under the contract. If the appraisal comes in below the purchase price, you can renegotiate, bring in additional funds, or cancel within the contingency period.
Title and HOA contingencies
Title contingencies allow you to object to title defects and require cures or provide a right to cancel. HOA review contingencies give you time to read association rules and financials before you commit.
If a dispute arises over deposits, escrow will hold funds and follow the final written instructions of the parties or a court order. Escrow does not decide legal disputes.
Closing costs and who pays what
Closing funds include your down payment, lender fees, title and escrow charges, inspections, and prorated items. Exact costs vary by contract and loan.
Common buyer costs
- Earnest money deposit, credited at closing.
- Remaining down payment and closing funds via wire or cashier’s check.
- Lender fees: origination, underwriting, and appraisal.
- Title and escrow charges: escrow fee, title search, title insurance premiums, recording, notary, and couriers.
- Inspections: home, pest, septic, roof, and specialty reports.
- Homeowner’s insurance: your first year or binder, as required by your lender.
- HOA fees: transfer and document fees where applicable.
- Prepaids and reserves: property tax prorations, prepaid interest, insurance impounds, and HOA dues prorations.
- Transfer taxes and documentary fees: Amounts and who pays vary by county and city. Verify with Monterey County and the City of Pacific Grove.
Prorations and taxes
Escrow prorates property taxes, HOA dues, and certain utilities as of your close date. In California, a change in ownership often triggers a supplemental assessment. Expect a supplemental property tax bill after closing from the county.
Who pays which fees
Many items are custom or negotiable. Escrow fees are often split. One common approach is the seller covers the owner’s title policy while the buyer pays the lender’s policy, though practices vary. Recording fees are typically split by document type. Confirm local customs with your escrow officer and check city or county rules on transfer taxes through Monterey County and the City of Pacific Grove.
A practical escrow checklist
Use this step‑by‑step list to stay on track:
- Get full mortgage preapproval before making offers.
- Deliver your earnest money to escrow as your contract requires.
- Order a thorough home inspection immediately.
- Add pest, septic, roof, HVAC, and needed specialty inspections.
- Review the TDS, NHD, and any HOA packet right away; request repairs or ask questions within your contingency window.
- Read the preliminary title report and raise any concerns early.
- Ask escrow or title for a detailed fee estimate and clarify who pays what.
- Verify local hazards and permit history, including coastal permits, flood zone, seismic, and any special assessments.
- Work with your lender to order the appraisal and clear conditions on time.
- Do a final walkthrough to confirm condition and agreed repairs.
- Prepare closing funds and confirm wiring instructions directly with escrow to avoid fraud.
- After recording, confirm you received your deed and that title insurance is in place.
Local resources and red flags
- City rules and permits: Check zoning, permits, and local ordinances with the City of Pacific Grove.
- County offices: Taxes, recording, and permits at Monterey County.
- Flood zones: Confirm status on the FEMA Flood Map Service Center.
- Earthquake and seismic data: Review maps from the USGS.
- Coastal permits: Research coastal records with the California Coastal Commission.
Watch for coastal erosion concerns, bluff setbacks, tsunami evacuation zones, septic system status, sewer lateral requirements, historic home restrictions, and short‑term rental rules if you plan to rent. Your disclosures and NHD will flag many of these, but it is smart to verify with the city and county.
Final thoughts and local help
Escrow does not have to be stressful. With clear timelines, complete inspections, and strong coordination between your lender, escrow, title, and agent, you can move from acceptance to recording with confidence. If you are weighing a charming Pacific Grove cottage or a larger coastal home, careful due diligence and a local guide make all the difference.
Pebble Beach Realty offers a concierge, hands‑on approach across the Monterey Peninsula. Broker Juan Mancheno brings 30 years of full‑time local experience to help you understand disclosures, coordinate inspections, and keep your escrow on track. Ready to talk next steps? Schedule a personalized consultation with Unknown Company.
FAQs
Who chooses the escrow or title company in Pacific Grove?
- Either party can propose a provider, and the choice is negotiable. Your agent often recommends local options, and the agreement is set in the purchase contract.
How much earnest money should a Monterey Peninsula buyer expect to deposit?
- There is no fixed amount. Buyers offer a good‑faith deposit appropriate to the price and market, and the amount is negotiated in the contract.
Can escrow hold my deposit if there is a dispute after I cancel?
- Yes. Escrow holds funds per written instructions but does not decide disputes. Release follows a written agreement of the parties or a court order.
Do I need an owner’s title insurance policy as a buyer?
- It is strongly recommended. A lender’s policy protects the lender, while an owner’s policy protects your equity from certain unknown title defects.
What are my options if the appraisal comes in low in Monterey County?
- You can renegotiate the price, bring additional cash to cover the gap, or cancel within the appraisal or loan contingency period if allowed by your contract.
Will my property taxes go up after I buy in Pacific Grove?
- Possibly. A change in ownership can trigger a supplemental assessment, and you may receive a supplemental tax bill from the county after closing.
