Frequently Asked Questions
 

What is escrow?
Why do I need escrow?
As a buyer entering into escrow, what must I do?
As a seller entering into escrow, what must I do?
Can I get legal advice from the escrow officer?
What happens at the signing?
If the transaction does not close, is my deposit refundable? Who pays the fees?
If I still have questions about the transaction, where can I go for answers?
What fees can the buyer generally expect to pay for?
What fees can the seller generally expect to pay for?
Is the signing date the same as the closing date?
How and when do I obtain my keys?
How will I know how much money I need to bring into closing?

 

WHAT IS ESCROW?

Escrow is a deposit of funds, a deed, or other instrument by one party for the delivery to another party upon completion of a particular condition or event agreed upon by all parties to a transaction. Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The Escrow Agent has the obligation to safeguard the funds and/or documents while they are in the Escrow Agent’s possession, and to disburse funds and/or convey title only when all provisions of the transaction have been complied with. C&E Settlement is licensed and closely monitored by the Washington State Department of Financial Institutions (DFI) and acts as the neutral and independent third party.

WHY DO I NEED ESCROW?

Whether you are a Buyer or a Seller, you want the assurance that no funds or property will change hands until all of your instructions have been followed. An Escrow Agent will prepare certain legal documents and facilitate the signing of all documents, including loan documents, required to close real estate transactions. Escrow Agents make sure that the Seller receives "good funds" and that the Buyer receives clear title. The Escrow Agent makes sure that any bills, invoices, fees or other expenses in connection with the transaction are paid.

AS A BUYER ENTERING INTO ESCROW, WHAT MUST I DO?

If the transaction is contingent upon a new loan, it is your responsibility to arrange this loan. Your real estate agent can be most helpful in obtaining a lender, since he or she is knowledgeable about which lenders provide the best service and products.

AS A SELLER ENTERING INTO ESCROW, WHAT MUST I DO?

To be fully prepared when you enter the transaction, you should have sufficient information relative to your ownership available. This would include information concerning any loans, taxes, insurance and if appropriate, rental data.

CAN I GET LEGAL ADVICE FROM THE ESCROW OFFICER?

An escrow officer is not a legal counselor and cannot give you advice. Remember the purpose of escrow is to take and comply with instructions to carry out the mutual agreement of the principals. In the event of disagreement of the parties, the escrow officer must remain neutral until agreement is reached. The transaction should not be negotiated in the escrow office, nor should an escrow officer become involved in the negotiation.

WHAT HAPPENS AT THE SIGNING?

"Signing" and "Closing" are terms that are often misunderstood. In the State of Washington, the escrow definition of closing is when the documents are recorded and funds are available to the Seller. Signing is the execution of all documents relative to the closing of a real estate transaction. At this time, Buyers and Sellers will sign all documents and deposit any funds required to close. Buyers and Sellers will usually sign documents 2-3 days prior to the closing date (though this timeframe will often depend on the escrow agent’s receipt of loan documents). For a refinance, a Borrower will usually sign loan documents 4-5 business days prior to closing..

IF THE TRANSACTION DOES NOT CLOSE, IS MY DEPOSIT REFUNDABLE? WHO PAYS THE FEES?

When a transaction fails to close, an agreement must be reached between the parties and must be put in the form of written instructions, just as your contract was. Since the deposit is part of the contract, both the buyer and the seller must mutually agree to its disposition. Instructions for the disposition of this deposit should include, among other things, provision for payment of charges incurred during the escrow. This would include fees and costs incurred by the escrow agent and charges such as loan processing and title insurance fees as specified in the escrow instructions.

IF I STILL HAVE QUESTIONS ABOUT THE TRANSACTION, WHERE CAN I GO FOR ANSWERS?

If negotiations have been conducted through a real estate agent, that individual or his/her broker, should be your primary consultant. A Borrower may also contact their loan officer. The role as an independent agent prohibits the escrow officer from answering many of your questions. However, a knowledgeable escrow officer, whose responsibility is giving impartial service to all the parties, may refer you to the proper source for your answers. An escrow officer will often suggest that the customer seek the advice of legal counselor or a tax consultant.

WHAT FEES CAN THE BUYER GENERALLY EXPECT TO PAY FOR?
  • Title insurance premium for Lender’s policy.
  • Escrow fee (one half)
  • Document preparation (if applicable).
  • Notary fees.
  • Recording charges for all documents in buyer’s name(s).
  • Tax proration (from date of acquisition).
  • Homeowners transfer fee and prorations (from date of acquisition).
  • All new loan charges (except those required by lender for seller to pay) including interim interest accrued through the end of the month of closing.
  • Inspection fees (roofing, property inspection, geological, etc.).
  • Home warranty (according to contract).
  • Fire/hazard insurance premium for first year.
WHAT FEES CAN THE SELLER GENERALLY EXPECT TO PAY FOR?
  • Real estate commissions (for both listing and selling agent).
  • State and local excise taxes.
  • Document preparation, if applicable.
  • Payoff of all loans in seller’s name.
  • Interest accrued to lender being paid off, statement fees, reconveyance fees and any prepayment penalties.
  • Home warranty (according to contract).
  • Any judgments, tax liens, etc. against seller.
  • Tax proration for any taxes unpaid at time of transfer of title.
  • Any unpaid Homeowners dues.
  • Recording and/or reconveyance charges to clear all documents of record against seller.
  • Any assessments (according to contract).
  • Any and all delinquent taxes.
  • Notary fees.
  • Escrow fee (one half).
  • Title insurance premium for Owner’s Policy.
IS THE SIGNING DATE THE SAME AS THE CLOSING DATE?

No. The signing of documents usually takes place at least one to two days prior to the closing date. This allows the lender to review all documents prior to funding of the loan for quality assurance and completeness.

HOW AND WHEN DO I OBTAIN MY KEYS?

"Possession" is usually negotiated as part of the contract and is handled outside the closing of escrow. Your Realtor should coordinate this with you.

HOW WILL I KNOW HOW MUCH MONEY I NEED TO BRING IN TO CLOSING?

Prior to your signing appointment, your escrow closer will compile all of the final figures and prepare a HUD-1 Settlement Statement which itemizes all fees, charges and credits (if a loan or mortgage is being obtained, the Escrow Agent cannot provide an amount until the loan documents have been received). It is at this time that your closer will provide you the amount required to close. .Funds to close must be in the form of a cashier’s check or wire transfer. The final amount will need to be received by escrow no later than one day prior to closing.

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