How a California home sale works, from offer to close

01What happens after an offer is accepted?

An accepted offer becomes a signed purchase contract, and the parties open escrow with a neutral escrow holder. From that point the contract’s clock runs: the buyer delivers the deposit, the seller delivers disclosures, and the buyer investigates the property and, if borrowing, completes the loan. Each step has a deadline in the contract, and most of those deadlines are negotiable.

1. 01Acceptance and opening of escrow. Both sides sign, and escrow receives the contract and the buyer’s deposit.
2. 02Disclosures and title. The seller delivers the statutory disclosures, and the title company issues a preliminary report.
3. 03Investigation. The buyer inspects the property, reviews documents and works through the appraisal and loan.
4. 04Contingency removal. The buyer removes each contingency or cancels, following the procedure in the contract.
5. 05Final loan figures. If there is a loan, the borrower receives the Closing Disclosure at least three business days before becoming obligated on it⁹.
6. 06Signing, funding and recording. Documents and funds reach escrow, the deed records, and escrow pays out.

02What does the escrow holder do in California?

An escrow holder is a neutral third party that keeps the deposit, the deed and other documents until the conditions the parties agreed to are met, then delivers them. California Financial Code §17003 defines escrow in those terms¹. The Department of Financial Protection and Innovation (DFPI) administers the Escrow Law, which it says protects members of the public who entrust money or other assets to independent escrow agents².

Escrow can be handled by an independent escrow company licensed by DFPI, or by a controlled escrow that DFPI does not license, such as one run by an attorney, a real estate broker or a title insurance company³. Either way, escrow acts on written instructions from the parties for payoffs, prorations, recording and disbursement.

The title company works alongside escrow. Its preliminary report is an offer to issue a title policy subject to the exceptions it lists, and under Insurance Code §12340.11 it is not a representation of the condition of title⁴. Read the listed exceptions closely, because they describe what the policy would not cover.

03What are contingencies, and how long do they last?

A contingency is a condition in the purchase contract that lets the buyer cancel if something specific does not check out, such as the inspection, the appraisal, the loan or the review of documents. The contract sets each contingency period. The standard California purchase form sets default periods, and the parties can shorten, lengthen or waive them.

Form defaults can change between versions, so read the version you are signing rather than relying on a number from an older form or another state. The usual contingencies cover:

• Investigation: inspections, reports and the buyer’s review of the property’s condition.
• Appraisal: whether the property appraises at or above an agreed value.
• Loan: whether the buyer obtains the financing the contract describes.
• Documents: the seller’s disclosures, the preliminary title report and, in a condominium or planned community, the HOA resale documents listed in Civil Code §4525⁵.

If a sale is cancelled, releasing the deposit takes whatever documents the escrow holder requires from both parties. For a one-to-four-unit home the buyer intends to occupy, Civil Code §1057.3 makes a buyer or seller who fails to sign within 30 days of the other party’s written demand, without a good-faith dispute over the money, liable for the deposit, treble damages of at least $100 and at most $1,000, and reasonable attorney’s fees⁶.

04When do disclosures arrive, and can a buyer cancel?

The seller must deliver the Transfer Disclosure Statement as soon as practicable before transfer of title (Civil Code §1102.3). If it arrives after the buyer’s offer is signed, the buyer may terminate by written notice within three days of delivery in person, or five days after delivery by mail or electronic record⁷. The Natural Hazard Disclosure follows the same delivery rule and termination window⁸.

The same right applies when a material amendment to either disclosure is delivered after the offer^7,8. Sellers have a practical reason to disclose early and accurately, because a late correction gives the buyer a new window to cancel. A separate guide covers the full list of California seller disclosures, including the 2025 and 2026 additions.

05What are the lender’s disclosure deadlines?

Federal rules set two fixed lender deadlines. The Loan Estimate must be delivered or mailed no later than the third business day after the lender receives the loan application. The borrower must then receive the Closing Disclosure at least three business days before consummation (12 CFR §1026.19)⁹. These apply alongside whatever dates the purchase contract sets.

Consummation is the time the borrower becomes contractually obligated on the loan. Regulation Z leaves that point to applicable state law¹⁰. For the Closing Disclosure count, a business day is every calendar day except Sundays and federal public holidays¹⁰.

A corrected Closing Disclosure restarts the three-business-day wait only if the APR becomes inaccurate, the loan product changes or a prepayment penalty is added⁹. Other corrections can be made at or before consummation without a new waiting period.

06How long does escrow take?

Escrow takes as long as the purchase contract says. No California statute sets a standard escrow length. The close-of-escrow date is a negotiated term, and the contingency and disclosure deadlines lead up to it. Plan around the dates in your own contract and the steps that tend to set them:

• Financing. A loan adds the appraisal, underwriting and the Closing Disclosure’s three-business-day wait⁹.
• Inspections and reports. Each one has to be scheduled, completed and read before the investigation deadline.
• HOA documents. An association must deliver resale documents within 10 days of a request (Civil Code §4530)¹¹.
• Seller authority. A trustee or estate representative may need to document the authority to sell before escrow can close.

An all-cash purchase removes the loan steps but leaves the disclosure periods, and the buyer’s right to cancel after a late disclosure, in place⁷.

07What happens at closing and recording?

Escrow closes when the deed is recorded with the county recorder and the funds are disbursed. Before that, the buyer signs the loan documents and the loan funds, the seller signs the deed, and escrow sends the deed for recording. A recorded deed gives constructive notice of the transfer to later purchasers and lenders under Civil Code §1213¹².

Several items settle through escrow at closing:

• Documentary transfer tax. In Newport Beach and Irvine, the combined county and city rate is $1.10 per $1,000 of the price, excluding liens that stay on the property^13,14,15. In Orange County the seller customarily pays it, though the contract can say otherwise¹⁶.
• California withholding. Escrow withholds 3 1/3% of the sales price, or an elected alternative, for the Franchise Tax Board unless an exemption applies, such as a qualifying principal residence¹⁷.
• Prorations and payoffs. Property taxes, HOA dues and existing loans are settled as the escrow instructions direct.

After closing, the buyer should expect a supplemental property tax bill or refund. A change in ownership triggers a prorated supplemental assessment for the rest of the fiscal year, according to the State Board of Equalization¹⁸.