Escrow is typically closed when:
Question & Answer
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The buyer signs the purchase agreement
The buyer signing the purchase agreement (Answer A) merely opens escrow or establishes the contract — it is the beginning of the transaction process, not the end, and no transfer of title or funds has yet occurred.
The loan is approved
Loan approval (Answer B) is an important milestone and a common contingency in purchase agreements, but it is only one of potentially many conditions that must be satisfied before escrow can close; approval alone does not close escrow.
All conditions have been met and documents are recorded
The buyer pays the deposit
The buyer paying the deposit, or earnest money (Answer D), is typically one of the first steps after the purchase agreement is executed and escrow is opened, but it represents the initiation of the escrow process, not its completion.
Why is this correct?
Escrow closes when all conditions of the purchase agreement have been satisfied, all funds have been collected and disbursed, and the grant deed (and deed of trust, if applicable) have been recorded with the county recorder's office, as described in Answer C. Recording is the legally decisive act in California because it provides constructive notice to the world of the change in ownership under California Civil Code Section 1213. Until the deed is recorded, the transfer of title is not complete, regardless of whether funds have changed hands.
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