Understanding the Escrow Closing Process
An escrow is “closed” on the day that the Grant Deed is recorded in the official records at the County Recorder’s office. The moment the Grant Deed is date-stamped by the County Clerk is considered the moment that ownership of the property changes hands.
It is important to realize that “closing” does not mean the day the buyer signs loan documents, and it does not mean the day the lender funds the mortgage loan.
Both of those events are essential parts of the process, and both of those events absolutely must occur before the Grant Deed is released to the county recorder for recording.
Understanding how much time to allow for the final closing process will help reduce some of the stress and frustration that can accompany closing an escrow.
After the appraisal of the property has been made; after all the buyer’s financial documents have been reviewed the Loan Processor, or Loan Officer will advise all parties that final approval has been obtained and that the lender is ready to “draw docs.” The “docs” being the note and deed of trust, and all accompanying disclosures and addendums that the buyer must sign before the lender delivers the funds.
It can take up to 48 hours from the time the final approval is given until the documents are received by the Escrow Officer.
The Escrow Officer will contact the buyer for an appointment to sign the documents. Buyers are well advised to sign loan documents as soon as possible.
After the buyer signs the documents, the Escrow Officer will “package” them with other documents from the escrow file, such as an estimated closing statement, and return all the documents to the lender. The lender will most likely receive the documents back on the day after the buyer has signed them.
After the lender receives the signed documents back, it can take up to 72 hours for the lender to check the documents in and review them. After the lender reviews the documents to be sure they have been fully and correctly signed, the lender will issue the funds.
The funds are wired by the lender to the Escrow Company. Recording of the Grant Deed is scheduled for the next business day after the funds are received.
Additionally, as stated above, an escrow is considered “closed” on the date that the Grant Deed, transferring title from seller to buyer, is recorded at the County Hall of Records.
There is no closing table and no settlement room. The Grant Deed is delivered to the County Hall of Records by a Title Insurance Representative, who waits in line at the recording window.
When the Representative reaches the window, the Grant Deed is handed to the county clerk, who stamps it with a date and document number.
The Title Insurance Representative will then notify the Title Insurance Officer that the recording is completed; the Title Officer will, in turn, notify the Escrow Officer; and the Escrow Officer will notify buyer, seller and agents that “We have confirmation”.
When the Title Insurance Company receives confirmation of recording from their representative at the hall of records, the Title Company will wire transfer all funds they are holding from the buyers lender to the Escrow Company.
At that point, the Escrow Officer will begin the process of balancing the file and disbursing funds to pay off the seller’s existing mortgages, liens, and any other payments – such as a pest control company – that the Escrow Officer has been instructed to pay through escrow.
The buyer becomes the legal owner of the property the day the Grant Deed is recorded. However, it is not unusual for a purchase contract to allow a seller any extra one or two days after the close of escrow to vacate the property.