Escrow 101: The Escrow Closes

The escrow closing day is the conclusion of a process which, over days, weeks, or perhaps months, has required the cooperation and energy of many professionals and the Buyer and Seller. It is the final moment when the Escrow Officer, much like the “hub of a wheel”, ties together the various parts of the transaction and makes final arrangements for the transfer of title from Seller to Buyer.

Closing day unfolds like this for the Escrow Officer:

  • Just prior to closing, the Escrow Officer audits the entire escrow file, provides instructions to the Title Company, and formally authorizes recordable documents to be sent to the County Clerk’s office for recording. This can only be done after the Buyer’s loan funding has been confirmed and the Escrow Officer has received the buyer’s final deposit in clear funds.

  • On closing day, the Escrow Officer must wait for confirmation of the recording. For a typical recording which takes place at 8:00 AM, the Title Company will phone with confirmation in the late morning. Regional differences may affect this timing.

  • The officer will phone the Real Estate Agents to give them the good news, and the Buyer and Seller are usually notified by their agents. This is the phone call for which everyone has been waiting!

  • The Title Company finalizes its charges and computes any loan payoffs which must be made. These figures are then provided to the Escrow Officer sometime during the day of closing. The escrow file can not be fully balanced until every last figure is provided by the Title Company, checked for accuracy, and entered into the escrow.

  • Checks and final closing statements are prepared, usually by the end of the business day, but it is not uncommon for the final closing packages to be distributed on the day following the close of escrow. These packages contain the closing statement and other important paperwork which Seller and Buyer will want to retain for future tax purposes.

  • A Seller may provide wiring instructions to the Escrow Officer so that the sale proceeds can be wired directly into the Seller’s bank account. This is a convenience for the Seller, because he receives immediate credit on his funds. Sometimes a Seller’s wire will be sent out on the day of closing, but this process may not be completed until the following morning. Any outgoing wire is subject to the Federal Reserve’s cut-off times and the rules which control the electronic transfer of funds.

  • Any checks which are issued must be personally endorsed by all payees named on the check and are subject to the check clearing policies of the bank where they are deposited.

Sellers and Buyers may expect the following post-closing activities:

  • If the circumstances of the escrow require that funds must be held after closing, these funds will be disbursed as soon as the requirements of that hold are satisfied.

  • The Buyer will receive a Policy of Title Insurance directly from the Title Company. This is an important document which should be saved.

  • The Buyer will receive the original recorded Grant Deed.
  • The Buyer may receive a Supplemental Property Tax Bill.
  • The Buyer is responsible for all property expenses as of the closing date. Contact the new lender and homeowner’s association if payment information is not received.