Once a Purchase and Sale Agreement(sometimes called an Earnest Money Agreement) is completed, the real estate agent deposits the earnest money in their Brokers trust account or Escrow company’s trust account along with a full copy of the purchase and sale agreement.
Arranged by: Lender, Real Estate Agent, Seller or Buyer
The escrow closer is a neutral party who holds and disburses the parties’ funds, prepares an accounting of the transaction, prepares certain documents to effect title transfer all in accordance with the terms of the purchase and sale agreement. The escrow closer reviews the purchase and sale agreement and title commitment for necessary information to comply with parties’ requirements for closing. The escrow closer orders payoffs on underlying mortgages, contracts and or any other monetary liens encumbering the property. The escrow closer sends opening letters to the buyer and seller requesting information relative to the underlying encumbrances and other pertinent information not disclosed by the purchase and sale agreement.
3. Title Insurance
Ordered by: Lender, Real Estate Agent, Seller, Buyer, or Escrow Closer
The seller provides an owner’s title insurance policy to buyer; buyer provides a lender’s title insurance policy to lender. The title company searches the records of the County Auditor, County Assessor and other government agencies to locate any documents that might affect title to the subject property. A search of the general index (county clerk) will disclose bankruptcies, divorces, name changes, judgements, probates, or other cases entered into the public records of the court. A preliminary commitment or report is then issued revealing all matters of public record affecting subject property and involved parties. A copy of the commitment will be distributed to all parties of the transaction. It is the responsibility of the escrow closer to clear title of all unapproved encumbrances to title.
4. Financing & Processing
Arranged by: Buyer
The lender processes (underwrites)the loan to include review of buyer’s verification of funds to close, employment history, credit report, and appraisal of the property. Upon loan approval, lender’s closing department prepares the loan package (loan documents) with specific instructions to escrow. The loan package is delivered to the escrow closer to prepare final statements, escrow instructions and transfer documents for closing.
After the escrow closer has reviewed the loan package, prepared the closing statements and transfer documents, appointments will be made with the buyer and seller to sign. Each buyer and seller will have the opportunity to review the documents and ask questions of the escrow closer. Once each is satisfied, they will sign the documents and the escrow closer will notarize them. The buyer’s closing funds are deposited with escrow at this time, in the form of a wire transfer or cashier’s check drawn on a Washington State bank. Due to Washington State’s Collected Funds Law, a cashier’s check must be deposited with escrow24 hours prior to disbursement.(Signing and closing are two different events, many people confuse the two. Closing takes place after signing has occurred. See step 7.)
6. Lender Review
When all documents are signed, the escrow closer returns the loan documents to the lender for final review. Lenders ask that we allow 24-48 hours for this process. The escrow closer also requests loan funds from the lender at this time, usually in the form of a wire transfer.
Upon approval by the lender, the deed and deed of trust (mortgage) are delivered to the title company for recording with the County Auditor. Verification of recording is given to the escrow closer who then “closes” the transaction.
1. Confirm receipt of lender’s funds into the escrow account.
2. Disburse all escrow funds in accordance with all parties’ instructions as follows: A. Pay all underlying debts or encumbrances on property and bills submitted to escrow (pest inspections, septic pumping, chimney cleaning, roof repairs, etc.). B. Pay real estate agent commissions. C. Pay Seller the net proceeds of the sale.
3. Verbally notifies seller, buyer, and their real estate agents that the transaction is CLOSED. The buyer is now allowed possession of the property (unless otherwise agreed upon).
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