Escrow closing

An escrow closing runs through a neutral third party who holds funds and documents until every condition is satisfied, then disburses and records.

In Minnesota that function is usually performed by a title company acting as closing agent.

The problem it solves#

Neither side wants to perform first.

The buyer will not release hundreds of thousands of dollars before the deed exists. The seller will not sign the deed before the money is there.

Escrow removes the standoff by holding both. Nothing moves until everything is in place, and then everything moves at once.

What the closer does#

Holds the earnest money, and later the purchase funds and loan proceeds.

Collects the documents — the deed, the mortgage, the affidavits, the disclosures.

Clears the title requirements from the commitment: satisfactions obtained, liens released, taxes confirmed paid, letters produced where an estate is selling.

Prepares the settlement statement, showing every dollar in and out.

Disburses — paying off the seller's mortgage and any liens, paying the agents, the taxes, the recording fees, and the seller's net.

Records the deed and the new mortgage, with the county recorder for abstract property or the registrar of titles for Torrens.

Where it goes wrong#

Requirements nobody actioned. The title commitment's Schedule B-I is a to-do list with an owner for each item. A requirement discovered on the closing date — a satisfaction needed from a lender that merged out of existence, an heir who has to sign and cannot be found — stops the closing.

Working through those when the commitment arrives, not the week of closing, is what prevents it.

Wire fraud. The most serious current risk in residential closings. Fraudulent emails purporting to change wiring instructions are common and the money is usually unrecoverable.

Verify wiring instructions by telephone, using a number obtained independently — not one from the email. Every time, including when the instructions look identical to the ones you already had.

Check the record afterwards#

A couple of months later, confirm your deed appears and the seller's prior mortgage was released.

Both are the closer's responsibility and both occasionally do not happen. Finding it now is an inconvenience. Finding it at the next sale, years later, is a cloud on title that costs money to clear.

Read the settlement statement before the table#

Not at it, and not afterwards.

The statement shows every dollar moving — the payoff figures, the prorations, the title charges, the recording fees, the commissions, and the net.

Two things are worth checking specifically. The payoff amounts, against what you expected, because a payoff includes interest to the payoff date plus fees and is always larger than a statement balance. And the prorations for property taxes, which in Minnesota are apportioned between the parties and are easy to get wrong on a property with a pending assessment.

Ask for it in advance. Closers expect the request, and questions raised the day before are questions; raised at the table with everyone waiting, they become pressure to sign.