Signing vs. Closing
When people talk about a real estate purchase or refinance, they sometimes use the terms “signing” and “closing” interchangeably in reference to the event when the buyers sign documents with Escrow. However, there are several events that take place between the buyer’s signing appointment and the actual closing of the real estate transaction. Let’s take a moment and review that process.
Signing of Documents.
Escrow prepares the settlement statement according to the terms of the transaction. When a loan is involved, the lender provides a ‘Closing Disclosure’ to the buyer/borrower for acceptance and signature. There is a three-day waiting period after acceptance, during which Escrow prepares the necessary escrow and title transfer documents. After the required waiting period, the lender will then forward the documents for signature to Escrow, so that the signing appointments can be scheduled. There is no required waiting period if a loan is not involved.
Lender Reviews Documents & Funds the Loan
Once the loan documents have been signed, the Escrow officer delivers
them back to the lender either by email, fax, or physical delivery for review.
When the lender is satisfied that all required documents have been signed and all outstanding loan conditions have been met, the lender will notify Escrow that they are ready to disburse the loan funds to Escrow. Upon receipt of the wire transfer of funds from the lender, Escrow is authorized to send the transfer documents to the county for recording. The time frame for lender review is normally 24 to 48 hours.
Excise Tax
Real estate transactions in Washington State that involve conveyance or transfer of property require consideration of Excise Tax. All appropriate tax amounts must be paid before the county will allow the Warranty Deed conveying title to be recorded.
Recording is Authorized
Once recording is authorized by the lender, and all funds have been received, documents are either electronically recorded or hand-carried to the county recorder’s office by the title insurance company. If there are any liens to be paid off, they are recorded first, then the Warranty Deed showing the transfer of the property to the buyer, with the Deed of Trust recorded next. Recording the Deed of Trust just after the Warranty Deed insures the lender’s first lien position on the property. In a refinance, there is no Warranty Deed to be recorded.
Closed and Recorded
Recording numbers are the unique and specific numbers given by the county recorder’s office to a properly executed legal document, thereby making it part of the public record. In other words, when recording numbers are received by Escrow, the buyer is “on record” as holding title to the property and, based on the possession date in the purchase agreement, the new owner may take possession and proceeds may be disbursed to the seller.
One of the best information sources we’ve come across for explaining the concepts of title and escrow is a guide to selling and buying from Ticor. You can see it and download it HERE.