The Life of an Escrow

The following summary of aspects common to most escrow transactions is quite lengthy. It is not our goal to overwhelm you, but rather our hope to give you an idea of the many tasks performed during most escrows. An escrow agent acts as a neutral, third party who processes documents and moneys necessary to close a real estate transaction. The agent acts only upon instructions agreed to by the principals to the transaction.

1. Completed Purchase and Sale Agreement deposited with Escrow Agent by selling real estate agent or by a principal to the transaction.
2. Escrow Agent places order for Preliminary Title Commitment with Chicago Title Insurance Company. Escrow Agent requests a commission disbursement form if not received with Purchase and Sale Agreement. Earnest money in excess of the commission due is requested by Escrow Agent.
3. Escrow Agent prepares and distributes applicable notices and instructions necessary to be disclosed at the opening of an escrow. These might include, among others, the APR 12 notification and opening Escrow Instructions. Please note that the transfer of utilities and responsibility for final utility bills is not handled by the Escrow Agent.
4. Upon receipt of the Chicago Title Insurance Preliminary Title Commitment, the Escrow Agent verifies that the information in the Purchase & Sale Agreement matches the public record information. This includes ownership and legal description of the property.
5. Using information in the Preliminary Title Commitment, the Escrow Agent orders payoffs of any existing liens. These include mortgages, deeds of trust, judgments, tax liens, homeowners association dues and leased equipment payoffs. If the Agreement calls for an assumption of an existing loan, an assumption package is requested from the current lender.
6. If any extraordinary circumstances are disclosed by the Preliminary Title Commitment, the Escrow Agent determines what steps must be taken in order to close the Escrow Agent determines what steps must be taken in order to close the Escrow as instructed. This might include bankruptcies, probates, divorces or other Superior Court cases which involve the property in question. The Escrow Agent will work with the attorneys involved in the court appropriate course of action to clear title.
7. The Escrow Agent reviews Lender's Instructions. If so requested, the Escrow Agent will order a Hazard Insurance Binder Policy. This binder will show the new lender as an additional insured party.
8. The Escrow Agent receives a completed Loan Package from the new lender. This package contains documents required by the lender and generally prepared by the lender, including the Note and Deed of Trust.
9. The Escrow Agent prepares all documents necessary to close the transaction as instructed. The most commonly required documents are as follow:>

• Escrow Instructions
• Limited Practice Officer Disclosure (APR 12)
• Settlement Statement
• Statutory Warranty Deed
• Excise Tax Affidavit
• Sale Reporting Form for Internal Revenue Service

• Escrow Instructions
• Limited Practice Officer Disclosure (APR 12)
• Settlement Statement
• Statutory Warranty Deed (for review only)
• Excise Tax Affidavit
• Lender's Documents as required

1. The Escrow Agent schedules appointments for all parties to sign closing documents. This signing date is generally 3-5 days prior to the actual closing date of the transaction. At this time, the purchaser is given the final amount of funds to be deposited at closing. Because of Washington State's Collected Funds Bill (SSB 5340), moneys may only be disbursed the same day if they are in the form of cash, electronic wire or a cashier check drawn on the financial institution used by the closing agent, in this case Bank Of American. Any other funds, including cashier checks may not be disbursed for at least 24 hours.
2. The Escrow Agent oversees the signing of the documents, generally serving as a Notary Public.
3. The Escrow Agent packages the loan documents according to the specific lender's requirements and returns to the lender for review. Most lenders require a 48 hour review period after signing and before the documents may be recorded and funds disbursed.
4. The Escrow Agent sends the original Deed, Excise Affidavit, Deed of Trust (and other documents as required) to Chicago Title Insurance to hold for recording.
5. When the Escrow Agent has satisfied all conditions of the Purchase and Sale Agreement and Escrow Instructions (including Lender's Escrow Instructions) the Escrow Agent authorizes Chicago Title Insurance to record the documents.
6. After Chicago Title Insurance calls the Escrow Agent with verification of recording, the Escrow Agent calls the lender and requests funds. Some lenders will send funds to the Escrow Agent prior to recording, but many will not wire the funds until verification of recording is received. For this reason and because of the Collected Funds Act mentioned earlier, proceeds may not be available to the seller until the business day after the transaction is recorded. The funds will be held in a trust account, with no interest accruing.
7. Escrow Agent disburses funds for payoffs and agreed-upon fees. Escrow Agent calls principals and agents to inform them of closing. Final settlement statements are forwarded to the parties. Federal notices are processed as required.
8. The original deed will be forwarded to the purchaser by the county. This can routinely take 4-6 weeks for processing.
9. The final Policy of Title Insurance will be sent directly to the Lender and Purchaser from Chicago Title Insurance upon instructions of an Escrow Agent.
10. The Escrow Agent verifies that releases or reconveyances are recorded as appropriate.
11. Escrow agent verifies a zero balance in the trust account and closes the escrow file. The escrow file is stored for 10 years.

Chicago Title Insurance would like to thank Betsy Weyer for writing The Life of an Escrow for us. She is an Associate Broker at a real estate company in Bellevue, Washington. You may contact her at (206) 450-5279 or by e-mail at Betsyw@wolfenet.com