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Several things happen during escrow closing, here’s a little guide for the first time (or more likely “rusty” borrower).

1) During a purchase, the Purchase Agreement may provide the buyer with the opportunity to walk through the property (Final Condition Check) where a final inspection of the buildings is completed (sometimes for agreed upon repairs prior to closing). The timing of this is typically within five days of the COE.

2) The Lender will send the Loan Documents to the Title Company. The Custodial Officer will prepare these and other documents for his signature.

3) In commercial transactions, borrowers can meet the broker at a specified location, or an escrow will send a traveling notary to a location of the borrower’s choosing to sign the closing documents. In most cases, an escrow officer will accompany the notary to guide the borrower through the Loan Documents, explaining the purpose of each document. (Here is a list of loan documents that include various ways title can be granted.) In most cases, a borrower will receive a draft Settlement Statement for review prior to closing to make adjustments. At the time of signing, a final “Settlement Statement” detailing the various closing costs (title company fees, bank charges, broker fees, etc.) and credits (your deposit, your loan, etc. .) will be part of the loan documents. needed to be signed. The second is the “Note,” which shows the interest rate and other terms of your loan. The other loan documents are usually redundant, through the lender you are working with. In some cases, an attorney can review these documents, but most lenders do not allow changes to these documents, so they are non-negotiable. It is important that you bring a photo ID, as some of the documents will need to be notarized. The lender also requires that you sign his name exactly as written below the signature line. No funds required at signing. If there is a “gap” in the purchase price vs. loan amount + closing costs shown on the Settlement Statement, which requires the borrower to bring cash to close (Good Funds), will be collected in the following days per Title.

4) After the loan documents have been signed, the Escrow Officer will prepare the documentation and send it back to the Lender. The lender then reviews the loan documents (which can take up to three days). When the lender has approved the loan documents, he notifies the Title Company that he is ready to finance (transfer the proceeds of your loan to the Title Company). Funding from the lender occurs the business day before the escrow closes. Title will request that any cash required by the borrower be sent to Escrow on or before this day. Keep in mind that, as the borrower, you are responsible for interest payments beginning the day the lender’s funds are transferred to the escrow.

5) On the day of Escrow Closing, the Title Company will send a representative to the County Recorder’s Office to record a Deed showing transfer of title (either to a new owner on purchase) and/or record the Deed of Trust for the new loan. Each recording generates a “serial number” from the County Recorder’s Office. After recording all deeds for the day, the Title Company representative faxes the list of serial numbers to the Title Company, confirming the recordings. Once the Deed has been recorded, the transfer is complete. In one purchase, the transfer of all utilities, bills, etc. is generally completed at this time as well under the provisions of the Purchase Agreement.

Day 1: Loan Documents arrive at the Title Company. You sign and the Documents are returned to the Lender via an overnight delivery service.

Day 2: The Lender receives the Documents and begins the review process.

Day 3: The review process is complete and the Lender notifies the Title Company that they will transfer the loan proceeds the next day.

Day 4: The Lender transfers the loan proceeds to the Title Company.

Day 5: Title change is recorded with the County Recorder. The trust is closed.