The mysterious world of escrow marks the last step of the home-buying maze , and glitches do happen

Sign up for Weekday J and get the latest on what's happening in the Jewish Bay Area.

If you can buy a car in a matter of hours, why is it that the home-buying process stretches out to weeks and sometimes months?

The answer lies somewhere in the mysterious world of escrows.

Taken from the French word for scroll, escrow is simply a way station where legal papers (hence "scrolls" of documents) and money are held until a deal closes. The escrow officer is the disinterested party, appointed by both seller and buyer as a traffic cop to direct information and funds where they need to go.

Escrow is simply the last step in the home-buying maze. It can go smoothly or end abruptly.

The good news is that you're not alone. The seller, agents, banks, tax collector and several other parties all need the escrow to close before they get paid.

And so, a smooth escrow depends on all parties and their agents working together to untangle the glitches that inevitably pop up.

According to Bill McCloskey, vice president of Allison-McCloskey Escrow Co. in San Diego, glitches from minor to maddening happen about half the time. In most cases, he said, cool heads and detail-minded escrow officers find a way out of every seemingly impossible snafu.

Real estate escrows were made for Murphy's Law writ big: Anything that can go wrong, at one time or another, does go wrong. Escrow agents trade horror stories at conventions and seminars. But even the most experienced can never anticipate every possible thing that complicates or sabotages a sale.

Consider these cases remembered by McCloskey:

*All the papers had been signed and the documents were due to be filed at the county recorder's office on Monday. The sellers voluntarily agreed to give the buyers access over the weekend to do some cleaning. Some cleaning fluid got too close to a water heater, a fire broke out and the house burned down.

Despite frantic calls, there was nothing that could be done legally. The papers were recorded at 8 a.m. before anyone could reach the recorder's office and the buyers had legal title to a heap of ash.

"I contacted my attorney," McCloskey said, "and the attorney said, 'You disburse the funds accordingly and let the two insurance companies of the seller and buyer work it out.'"

*A single buyer took off on his motorcycle on the weekend before escrow was to close on his house. He had an accident and died. The papers were automatically recorded Monday morning, even though common sense told McCloskey that with no buyer, there should be no sale. But escrow officers cannot override escrow instructions that say to close an escrow when all contingencies have been removed. In this case, the house went to the deceased's heirs, who were left with an empty house as part of the estate.

More often, the issues delaying a close of escrow are little, nettlesome matters that can be cleared up relatively easily with varying amounts of money, memory and negotiation.

Most transactions begin with a purchase agreement signed by a buyer and seller. The document lists the accepted price, addresses and names of the parties involved.

Also attached are terms and conditions, which can include: the target date for completing the sale, disposition of appliances and other personal property, repairs required and a rent-back provision to allow the seller to rent the property back from the buyer after escrow closes.

The seller's first job usually is to obtain a termite clearance of the property. If there is evidence of infestation, the seller is responsible for making repairs, including fumigating the house if necessary. Without a clearance, most lenders will not approve a loan and, with no loan, there will be no sale.

The buyer must apply for a loan. That requires a credit check, submission of tax and employment records and an appraisal of the property. Any unexplained credit problems, records of bankruptcy actions and other items can disqualify the buyer within days of opening escrow.

The buyer usually commissions a home-inspection report to identify any physical problems that might exist, from a cracked slab to a leaky roof.

The escrow company orders a preliminary title report on the property to determine any outstanding liens or encumbrances. Those could involve deed restrictions and easements placed by earlier owners or unpaid fines and payments due ex-spouses, business partners, governmental agencies or companies.

If a property is a condominium or part of a master-planned community, the escrow company contacts the homeowners' association to check on outstanding bills, litigation and other issues.

The escrow company also obtains a statement from the seller's lender to determine any outstanding loan balance. A similar bill is needed from the county tax collector for the property taxes due at the time escrow closes.

For these and many other issues, there are chances for mix-up, miscommunication, mishap and assorted messes.

Glenda Noyes, who handles agents' escrow matters at Realty Executives' office in Vista, north of San Diego, said her "escrow from hell" involved an elderly woman who, during the sales period, left the windows open in good weather and bad, and scented the air with potpourri.

But when the buyer moved in, the windows had been shut and there was a new stench emanating from behind a light switch. Investigation turned up chemicals from a methamphetamine lab in the attic that had seeped into the insulation of the walls and ceilings.

"The seller insisted she didn't know about it," Noyes said, and inspectors guessed that the problem originated with a previous owner who had defaulted on a V.A. loan.

The problem surfaced after escrow closed and the buyers had to spend their own money to rip out walls and ceilings to remove the odor.

One of the few items that the seller controls, Noyes said, is the response to an inspection report. If the seller refuses to make one or more repairs recommended in the report, the buyer must accept the property as-is or cancel the purchase.

But eager and cooperative (industry insiders call them "motivated") sellers are often at the mercy of buyers. A bad credit report can force cancellation of escrow. Income may be insufficient to qualify for the desired loan.

Buyers may not be able to sell their existing home and if the purchase was contingent on that sale, sellers have to look for new buyers. What if buyers lose their jobs or are suddenly transferred out of town? Sellers have no recourse in most cases, unless they have provided for such a situation in the escrow instructions.

Occasionally, escrow is suspended out of no fault of the buyer and seller. Banks, mortgage companies and other lending institutions have suddenly closed their doors, leaving borrowers to wonder what will happen to their loan application.

Escrow and title companies also are occasionally shut down without notice. Buyers and sellers then must find a way to transfer their escrow to another company.

"I've been in the escrow business for 30 years," said Jean Loscher, an owner of Mission Valley Escrow in San Diego, "and for the most part, escrows go through very smoothly. It's only a few that have problems that are beyond the scope of the escrow holder."

The good news, Loscher said, is that cancellations are rare, only 1 percent in her company.

Allison-McCloskey Escrow Co. offers these tips for making escrow a smooth process for home buyers and sellers:

*Seller, eliminate surprises. If you have judgments against your property and don't say anything, you should know that a search of public records is automatic and will reveal any liens. If you don't let your broker or escrow officer know about potential problems in advance, your escrow will most definitely be delayed.

*Buyer, be prepared to eliminate surprises. If you have questionable credit, tell your broker or mortgage lender. They know the steps you need to take to clean up your credit.

*Be responsive. The escrow officer may periodically contact you requesting pertinent information. Get the information as soon as you can. Don't think, "If I don't respond, maybe they'll forget about it."

*Be prompt. If you are not on time, the officer may well move on to the next appointment and you may be left waiting. Remember, signing documents is at least a 60-minute affair.

*Address insurance needs. Select an insurance agent and inform your escrow officer in advance. Make sure you have all the required policies. Your lender will require the name and address of your insurance agent.

*Complete walk-throughs, inspections and other contingencies, such as termite inspections and any required city or county permits.

*Bring these documents to your meeting with an escrow officer. Driver's license or passport (for photo identification); name and address of homeowner's insurance agent (for buyers) or for sellers, if applicable; homeowners' association information, including name and address of management company or other responsible party.