You have found your house, you have written up your purchase and sale agreement, your offer was accepted and you are now headed to closing. So what is closing and when does it happen? Here in Washington most real estate transactions are handled through an escrow company.
What is Escrow
Disinterested Third Party Escrow means any transaction wherein any person or persons for the purpose of effecting and closing the sale, purchase, exchange, transfer, encumbrance, or lease of real or personal property to another person or persons, delivers any written instrument, money, evidence of title to real or personal property or thing of value to a third person to be held by such third person until the happening of a specified event or other performance of a prescribed condition or conditions, when it is then to be delivered by such third person, in compliance with instructions under which he is to act, to a grantee, grantor, promise, promisor, obligee, obligor, lessee, lessor, bailee, bailor, or any agent or employee thereof.
All of the parties in a real estate transaction seem to use the term closing in a different way. You may find a lender using the term to describe when they have released the funds to escrow. Is this closing? No, this is not closing.
You may find that others use the term when loan documents are signed usually because some call them “closing document”. So when you sign your loan documents and the other documents give to you by escrow closing? No, this is not closing.
The definition of closing is very important. To put it simple closing is when the documents that are transferring the property from one to another are recorded in the county the property is located in.
Here are some definitions from the Escrow Association of Washington
Close Date – In the State of Washington the Close Date is traditionally considered to transpire when documents are recorded.
Closing Documents - Documents that are prepared by Escrow from the information provided in writing by all parties to the transaction, i.e., Closing Instructions.
Closing Statement - A detailed individual itemization (cash accounty) of the transaction prepared by Escrow and provided to all parties in the transaction.
From my exeriance closing transactions while working at First American Title Company in California and my experiance in real estate sales since 1994, it usually works like this.
- You sign your loan documents and closing documents, you deposit your funds into escrow at the signing
- Lender uses their review process and releases funds
- Once funds have been released and the lender gives the approval to record the documents are taken to the courthouse for recording. The recording process will be complete that day which is usually the day after signing or the next.
If your purchase and sale contract states that possession be on closing, once all the parties have been notified by escrow that the documents have been recorded you will be able to receive your keys. Of course you may have in the contract the provision to give the seller 3 days to move.
