Title & Escrow



Escrow is an arrangement in which a disinterested third party (an escrow holder), holds legal documents and disburses funds on behalf of a buyer and seller, and distributes them according to the buyer and seller’s instructions.

People buying and selling real estate often open escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to faithfully carry out their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.

Escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments, funds, deeds, and many other items, using the escrow holder as the central deposit point. If the instructions from all parties to escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions without further consultation. This saves much time and facilitates a smooth closing of the transaction.


The Seller
Deposits the executed deed to the buyer with the escrow holder.
Deposits evidence of pest inspection and any required repair work, per the
purchase and sale agreement.
Deposits required documents such as addresses of mortgage holders.
The Buyer
Deposits the funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder.
Deposits funds sufficient for home and title insurance.
Approves any inspection reports, title insurance commitments, etc. called for by the purchase and sale agreement.
Fulfills any other conditions specified in the escrow instructions.
The Lender (if applicable)
Deposits proceeds of the loan to the purchaser.
Directs the escrow holder on the conditions under which the loan funds may be used.
The Escrow Holder
Opens the order for title insurance.
Obtains approvals from the buyer on title insurance report, pest and other inspections.
Receives funds from the buyer and/or any lender.
Prorates insurance, taxes, rents, etc.
Disburses funds for title insurance, recording fees, real estate commissions, lien clearance, etc.
Prepares a final statement for each party, indicating amounts to be disbursed for services and any further amounts necessary to close escrow.
Records deed and loan documents, delivers the deed to the buyer, loan documents to the lender and funds to the seller, closing the escrow


Once all terms and conditions of the instructions of both parties have been fulfilled, and all closing conditions satisfied, the escrow is closed and the safe and accurate transfer of property and money has been accomplished.


The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by:

• Acting as the impartial “stakeholder,” or depository of documents and funds.
• Processing and coordinating the flow of documents and funds.
• Keeping all parties informed of progress on the escrow.
• Responding to the lender’s requirements.
• Securing a title insurance policy.
• Obtaining approvals of reports and documents from the parties as required.
• Prorating and adjusting insurance, taxes, rents, etc.
• Recording the deed and loan documents.
• Maintaining security and accountability of monies owed and owing.


A man or woman who is not legally married (i.e. John Doe, a Single Man).

When a married man or woman wishes to acquire title in his / her name also, the spouse must consent by signing a quitclaim deed or other similar instrument, thereby relinquishing all rights, title and interest in the property (i.e. John Doe, A Married Man, as His Sole and Separate Property).

The Washington Civil code defines Community Property as property acquired by husband and wife, or either, during marriage, when not acquired as the separate property of either. Real property conveyed to a married man or woman is presumed to be community property unless otherwise stated.

Holding property as Community Property can have certain tax advantages upon the death of a spouse. See your attorney or accountant for details.

Under community property, both spouses have the right to dispose of one-half to the community property by will, but all of it will go to the surviving spouse without administration, if the other spouse dies without a will. If a spouse exercises his/her right to dispose of one-half, that half is subject to administration in the estate (i.e. John Doe and Jane Doe, Husband and Wife, as Community Property).

A joint tenancy estate is defined in the Civil Code as follows: “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy.: A chief characteristic of joint tenancy property is the right of survivorship. When a joint tenant dies, title to the property immediately vests in the survivor or surviving joint tenants. As a consequence, joint tenancy property is not subject to disposition by will (i.e. John Doe and Jane doe, Husband and Wife, as Joint Tenants).

Under tenancy in common, the co-owners own undivided interests, but unlike joint tenancy, these interests need not be equal in quantity or duration, and may arise from different times. There is no right of survivorship; each tenant owns an interest which on his or her death vests in his or her heirs or devisees (i.e. John Doe, a Single Man, as to an undivided 3/4 interest, and George Smith, a Single man, as to an undivided 1/4 interest as Tenants in Common.).




You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for:

  • Down payment
  • Loan origination
  • Points, or loan discount fees, which you pay to receive a lower interest rate
  • Home inspection
  • Appraisal
  • Credit report
  • Private mortgage insurance premium
  • Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage
  • Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
  • Deed recording
  • Title insurance policy premiums
  • Land survey
  • Notary fees
  • Prorations for your share of costs, such as utility bills and property taxes

    A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.


VISIT: www.REALTOR.org for other helpful articles.