THE ESCROW PROCESS

Escrow is set up once mutual agreement is reached between the buyer and seller.

Escrow can be set up by the real estate agents, buyer, seller or lender.

Earnest money can be deposited with the real estate broker, the escrow company and, in some cases, directly with the seller.

Next, escrow will make sure that a preliminary title report has been initiated at the title company designated on the purchase and sale agreement. In most cases, the real estate agent or lender has already ordered this report.

Escrow will review and send out a copy of the preliminary title report to buyers and sellers. We will obtain necessary information and documentation from the appropriate parties in order to clear any title issues. Some common title issues are:

Clouds on title due to “common or similar names” names. In these cases we will forward a “Statement of Identity” for completion. Title will use this information to eliminate our party of having any liens, judgments, etc. against their name that could affect the title.

Deceased person still showing on title. In these cases escrow might ask the seller to provide an original, certified copy of a death certificate, a copy of the will and/or a community property agreement and in some cases a lack of probate affidavit. The title company will use this information to pass title through to the appropriate heirs or parties.

Trusts, Corporations, LLC’s. Sellers holding title as any of these entities should be prepared to provide a copy of the trust agreement, copies of Articles of Incorporation and corporate charter or other corporate documentation. Title needs this information in order to identify who has the authority to sign on behalf of the entity holding title.

Paid off loans still showing on title. This is a very common situation. Escrow will ask for information regarding the circumstances surrounding the payoff. For example when it was paid off and who paid if off. Escrow will, in many cases, need to contact the company that paid off the loan and work with them to resolve the issue. In some cases we will need supporting documentation from the seller in order to assist clearing the issue. A final closing statement or reconveyance documentation that may have been received and filed away will usually to the trick. In some cases it may be necessary to go back to the lender that has been paid and obtain reconveyance documentation directly from them.


These are some of the most common issues that come up in title searches but there are a myriad of situations that can occur. Escrow will work closely with the title company and the appropriate parties involved to identify and clear these issues as quickly and efficiently as possible so as to not impede the closing schedule.

Along with the title report, escrow will send a set of Escrow Instructions. It is very important that these instructions be read, understood and acknowledged by both buyers and sellers. The escrow company needs to be instructed to participate in the transaction and to work on and prepare the file for closing.

Sellers will be asked to complete a form providing names of their current mortgage holders, loan numbers and contact phone numbers, in addition to contact information for any condo or homeowner’s associations. This form will include verbage authorizing escrow to obtain this information on behalf of seller. The sellers’ social security number will also be asked for in order to get payoff statements from the appropriate lenders. The lenders ask us to provide this in order to verify that our request is valid.

While contingencies to the purchase and sale agreement are being cleared and the lender is underwriting and clearing loan conditions, escrow is obtaining all necessary information and documentation required to prepare the final closing documents.

Once the buyers final loan documents are received in escrow the escrow company is in a position to prepare the settlement statement and conveyance documents necessary to complete the transaction. In most cases the lender documents are sent via email, but they can also be sent via over night or courier to the escrow company, depending on the lender.

Escrow typically receives the loan documents several days prior to the projected closing date, but often the time frame is considerably tighter. The settlement statement will reflect the purchase price, the loan amount, any deposits made on behalf of the buyer, all costs associated with the loan transaction, any credits toward costs being paid by the seller, a pro-ration for property taxes, commission due to real estate agents, excise tax in addition to any property tax payment, homeowners warranty, invoices due to contractors, oil tank measurement reimbursements, etc. that may be applicable to the transaction. Prior to signing escrow will typically forward a copy of the estimated closing statement to the loan officer, processor, real estate agents and, if requested, to the buyer and seller for review. Reviewing the settlement statement, prior to signing, helps to ensure that all of the monies pertaining to the transaction are accounted for which, in turn, helps the signings go smoother and makes for fewer questions at the signing table.

Washington State has a “Collected Funds Law”, therefore, the buyers’ funds to close will need to be brought to closing either in the form of a cashiers check drawn on a Washington State bank or a wire transfer. The cashiers check will be payable to the escrow company. Wire instructions can be provided to the appropriate party as needed. Sellers will be asked how they would like to receive the proceeds of the sale. A check drawn on the escrow companies trust account can be issued or a wire transfer can be initiated. The wire transfer is a good option because it usually will allow for immediate access to the funds upon receipt at the receivers bank.


A voided check or deposit slip for sellers account should be brought to the signing. If the funds are going into an investment account, wire instructions should be obtained directly from the investment company and provided to the escrow company. The wire transfer will be initiated by the next business day after closing. Escrow, in most cases, will need a day in order to coordinate the wire transfer out of their account and into sellers account.

All buyers and sellers will be required to show picture identification at signing. A valid state issued driver license and/or a government issued passport should be sufficient.

Signing is not closing. Once all documents are signed the “funding package” is prepared and returned to the lender. In most cases, lenders require a 24 to 48 hour review period.
The lender will contact escrow upon completion of their funding review and advise escrow that they are in a position to fund the loan and authorize recording of the transaction. On occasion, lenders will want a document corrected or additional documentation signed or provided to them as part of this funding review. Escrow will contact the appropriate party in the event this occurs to resolve any last minute issues presented by the lender. It is a good idea to provide the escrow company with all cell numbers, just in case.

Once the lender has authorized escrow to record they will initiate the loan proceeds wire. Escrow will contact the title company to “release recording”. The title company has been sent the documents that are to be recorded and they will take the documents to the county and facilitate the recording of the documents. It usually takes several hours to complete this phase of the closing. Recording numbers will be called to escrow by the title company once the recording is complete.

Once escrow has received the loan proceeds from the lender and the recording numbers from the title company the transaction is considered closed. Escrow will contact the parties to the transaction and advise them.

Final closing statements will be mailed to the parties. The original, recorded conveyance document will be forwarded directly to the buyer by the county and the Owners Title Insurance Policy will be forwarded to the buyer by the title company or escrow company. This can take several weeks.

There are many different types of transactions and factors that can affect a closing. 1031 exchanges, power of attorneys, out of state buyers and/or sellers, etc. all require special handling and need to be brought to the attention of the escrow company as early as possible.