Like many professional agencies like engineers, doctors and lawyers, escrow firms are regulated in a variety of ways. This is a good way to keep the general public from being scammed, cheated or taken advantage of by an unscrupulous Realtor, bank, selling or buying party.

In the great state of California, every escrow company falls into one of two types: "Licensed" or "Controlled." The California Department of Business Oversight provides the imprimatur of a license to independent businesses like Sterling West Escrow, which allows the enforcement of stringent requirements enacted by the lawmakers to protect people in one of the largest financial transactions they'll ever make.

Anyone who has ever purchased a house is familiar with the number of documents that must be signed in order to complete the transaction and obtain the keys to the property after the escrow process is finalized (read more on how to choose a trustworthy escrow company first). First-time buyers, however, are often surprised by the amount of paperwork that is involved and may be confused about the purpose of each document. Buying a house in Los Angeles is certainly very exciting. Still, it is important to know what to expect in terms of necessary paperwork in order to be sure you are fully prepared for the process you are about to undertake.

Real estate transactions involve large sums of money and collateral property. They are subject to legislative statutes, local ordinances, case law and physical inspections. These deals usually also involve credit checks, employment verifications and asset evaluations. Needless to say, all parties involved, i.e. buyers, sellers, borrowers and lenders, must fulfill their respective contractual obligations before funds are disbursed and property is conveyed. Because of all these variables, another party is contracted to hold deposit and loan funds, releasing them only when agreed-upon duties are performed. This final player is known as the escrow agent, whose own performance is governed by the escrow agreement.

When looking to buy a house, many people take out a loan. It is uncommon for people to pay for houses up front, simply because today’s housing prices are so high. When you take out a loan from the bank in order to buy a house in Los Angeles, it is so you can pay the sticker price of the house. However, the price of a house is not the only cost associated with owning property. You pay these additional costs on a monthly basis, as well as interest on the loan you took out. In the real estate world, all of your monthly mortgage costs are commonly referred to as “PITI.” Many times, funding for your PITI payment is placed in an escrow account, which the bank withdraws money from each month. Below, we break down this acronym into simpler terms so that you can understand exactly what your real-estate agent or escrow agent is referring to when they use this acronym.