How Escrow Works In Arizona Real Estate

Have you heard people talk about “escrow” and wondered what actually happens between signing a contract and getting the keys? You are not alone. Escrow is the behind-the-scenes engine that keeps your Arizona home sale or purchase moving. When you understand the steps, the costs, and the common speed bumps, you can plan with confidence. This guide walks you through how escrow works in Scottsdale and Maricopa County from offer to recording. Let’s dive in.

Escrow in Arizona: plain-English definition

In Arizona, escrow is a neutral third-party process where an escrow agent holds funds and documents while everyone completes the contract instructions. The escrow agent coordinates tasks, collects and pays out money at closing, and arranges for the deed and loan documents to be recorded once conditions are satisfied.

It is important to distinguish closing escrow from a mortgage escrow account. Closing escrow is the process of handling your transaction. A mortgage escrow, sometimes called an impound account, is set up after closing by your lender to collect property taxes and insurance with your monthly payment.

In Arizona, title companies and independent escrow companies commonly act as escrow holders. Some law firms may provide escrow services in specific situations. Many buyers and sellers choose the same title and escrow company to streamline coordination.

The Scottsdale escrow timeline

Every transaction is unique, but the sequence is fairly consistent. Here is what you can expect.

Open escrow and deposit earnest money

Escrow opens when the seller accepts your offer and the earnest money is delivered. The escrow company creates an escrow file, deposits your funds, and assigns an escrow number. Deadlines for inspections, financing, and closing all come from the signed purchase contract.

Title search and title commitment

Your escrow or title company orders a title search to identify liens, easements, judgments, assessments, and ownership history. The title company then issues a title commitment that lists the conditions to provide title insurance. Any title exceptions or defects must be cleared before closing.

Inspections, disclosures, and contingencies

During the inspection period, buyers schedule inspections such as home, pest, or septic if applicable. Sellers provide required disclosures. You may negotiate repairs or credits based on inspection results. Contingencies in the contract, including inspection, appraisal, financing, or the sale of a current home, control whether escrow continues or can be canceled.

Loan underwriting and federal disclosures

If you finance the purchase, your lender underwrites the loan and issues a clear to close once conditions are met. Federal disclosure rules require the Loan Estimate and Closing Disclosure to be delivered on specific timelines, and these timelines affect when you can sign and close.

Final walkthrough, signing, and funding

After contingencies are removed, buyers typically complete a final walkthrough to confirm the property condition. You and the seller sign the closing documents, which include the deed, loan package, and the settlement statement. The lender sends closing funds to escrow after documents are signed and conditions are satisfied.

Recording and disbursement

The county recorder records the deed to place your ownership in the public record. After recording, the escrow holder pays off the seller’s mortgage and any liens, releases funds to the seller and service providers, issues title insurance policies, and closes the file.

Who pays what in Scottsdale closings

Escrow conveniently collects and disburses almost all closing-related charges. Typical items include:

• Escrow or closing fees
• Title insurance premiums for the owner and the lender
• Recording fees and any county-required charges
• Prorations for property taxes, HOA dues, and utilities
• Payoffs for existing mortgages or liens
• Broker commissions if applicable
• Notary, courier, and wire fees

Who pays which items is negotiable and guided by the purchase contract and local custom. In Arizona, allocations vary by metro area. For example, payment of the owner’s title policy, how the escrow fee is split, and certain transfer-related items are often negotiated. Always confirm your cost allocation in your signed contract and your preliminary settlement statement.

Title insurance basics

If you take a mortgage, the lender will require a lender’s title policy that protects the lender’s interest. Buyers commonly pay for this policy, though you can negotiate. An owner’s title policy protects the buyer’s ownership interest. In many Arizona transactions the party paying for the owner’s policy is negotiated as part of the offer. Confirm the terms so you know what to expect on your closing statement.

Property taxes and proration in Maricopa County

Property taxes in Arizona are generally paid in arrears and are prorated at closing based on the contract date and the county tax calendar. Your escrow officer will apply the local schedule so each side pays its fair share for the closing period. If the property is within an HOA, dues are also prorated, and any HOA transfer fees and estoppel fees are typically handled through escrow.

Community property and vesting matters

Arizona is a community property state. Marital property rights can affect how title is held and whose signatures are required on documents. Disclose marital status early so your escrow and title teams can verify proper vesting and collect any needed consents. If a seller is an estate, trust, or non-resident owner, expect the title search to drive additional documentation requests.

Common escrow hurdles and how to avoid them

Even smooth transactions can hit a snag. Here are the most common issues and practical ways to stay ahead of them.

Title defects, liens, and payoffs

Old mortgages, HOA liens, judgment liens, or unclear ownership can delay closing. These items show up on the title commitment. Solutions often include obtaining payoff letters, recording releases, or using corrective deeds. Promptly provide payoff information and respond to the escrow officer’s requests so clearance can stay on schedule.

Earnest money disputes

Disagreements about who gets the earnest money can arise if a party misses a deadline or a contingency is unclear. The escrow holder follows the written instructions in the contract. Keep communications and approvals in writing, and coordinate changes through escrow so there is a clear paper trail.

Financing or appraisal shortfalls

If financing is denied or the appraisal comes in low, the contract contingency timelines govern your options. You may be able to cancel within the contingency period or renegotiate. Track your contingency deadlines closely and keep your agent and lender aligned on timing.

Delayed funding or recording

Late wire transfers, missing payoff information, or recording backlogs can push closing. Avoid last-minute changes to wiring plans or signing appointments. Confirm wiring instructions directly with your escrow officer and plan for a realistic window between signing, funding, and recording.

Fraud and wire scams

Email compromise and fraudulent wiring instructions are a serious risk. Protect yourself by verifying all wiring instructions by phone using a known, independently verified number. Use multi-factor authentication when possible, and confirm final amounts and account details directly with your escrow officer before you send any funds.

HOA and master-planned community steps

Many Scottsdale homes are in HOAs or master-planned communities. Your escrow officer will request an HOA estoppel or equivalent statement to confirm dues status, assessments, and any pending violations. These documents can take time to obtain. Build the HOA timeline into your escrow period, especially for large master-plan associations.

Typical closing timeline in Scottsdale

For financed purchases, a 30 to 45 day escrow period is common. Cash purchases can close faster. The actual timing depends on loan processing, inspections, appraisal scheduling, HOA document delivery, and clearing any title issues. Your purchase contract sets the dates, so align your lender, inspectors, and escrow officer to meet them.

Buyer checklist for a smooth escrow

• Confirm your earnest money deposit was received and get your escrow contact info
• Review the title commitment and ask about any exceptions you do not understand
• Clarify who pays which closing costs based on your contract
• Request an estimated closing statement early and review it line by line
• Ask about HOA estoppel timelines and any related fees
• Verify wiring instructions directly with your escrow officer before sending funds

Seller checklist to stay on track

• Complete all required disclosure forms and provide access for inspections
• Gather payoff details for your mortgage and any liens or judgments
• Provide HOA documents as requested by escrow and keep HOA contact info handy
• Confirm vesting, names, and any spouse or co-owner signatures that may be required
• Plan the handoff of keys, remotes, warranties, and service records

Smart questions to ask your escrow officer

• What is our estimated closing date, and what items could delay it?
• Which title commitment items still need to be cleared?
• What ID and documents should each party bring to signing?
• How will funds be transferred, and what anti-fraud procedures are in place?
• After funding, how long until recording and when will possession occur?

Local resources to know in Maricopa County

• Maricopa County Recorder for recording procedures and timelines
• Maricopa County Assessor and Treasurer for tax schedules, due dates, and proration guidance
• City of Scottsdale or your HOA for transfer requirements, estoppel requests, and fee schedules
• A local title and escrow company for current practices and customary fee splits

Ready to move in Scottsdale?

You deserve a calm, well-orchestrated closing that protects your interests and your time. With personalized, one-on-one guidance and strong local relationships, you can navigate escrow with clarity from day one through recording. If you are planning to buy or sell in Scottsdale or across Phoenix, reach out to Katy White for step-by-step support and a smooth, on-time closing. Let’s connect. I will be your guide.

FAQs

How long does escrow take in Scottsdale?

• Financed transactions often close in 30 to 45 days. Cash deals can close faster. Timing depends on inspections, appraisal, loan processing, HOA estoppels, and title clearance.

Who chooses the escrow or title company in Arizona?

• The buyer often selects the title and escrow company, but the decision is negotiable and set in the purchase contract. Local customs can vary across the Phoenix metro.

What happens if a title defect is found during escrow?

• The title commitment will list defects. Escrow and the parties work to clear items with payoffs, corrective deeds, or endorsements. If an issue cannot be resolved, the contract controls whether you can renegotiate or cancel.

Is there a state transfer tax on Arizona home sales?

• Arizona does not have a statewide real estate transfer tax. You will see local recording fees and county-required forms. Your escrow officer will confirm the current requirements.

What is the difference between closing escrow and a mortgage escrow?

• Closing escrow is the neutral process that holds funds and documents until the sale closes. A mortgage escrow, or impound account, is a lender-held account used after closing to pay property taxes and insurance.