DEVELOPER CONTROLLED ESCROWS - PROHIBITION
Civil Code Section 2995 prohibits any real estate developer (defined as any person or entity having an
ownership interest in real property which is improved by such person or entity with single-family dwellings
which are offered for sale to the public) from requiring, as a condition precedent to the transfer of real property
containing a single-family residential dwelling, that escrow services effecting such transfer be provided by an
escrow entity in which the developer has a “financial interest.” The phrase “financial interest” means ownership
or control of 5 percent or more of the escrow entity. A developer who violates this statute is liable for damages
of $250 or three times the charge for escrow services, whichever is greater, plus attorney’s fees and costs. Any
waiver of this prohibition is against public policy and therefore void.