What Is The Title Company Settlement Process?
What is the Escrow Process?
Excalibur Title & Escrow, LLC is a licensed, bonded, and insured Maryland title company with its headquarters conveniently located in Frederick, in central Maryland. As a part of our licensing and bonding we are authorized to receive and disburse funds pursuant to the terms of any contract for the sale of real property and the instructions provided by lenders. We can do this for any transaction that closes anywhere in the State of Maryland, not just in Frederick. Receiving and disbursing funds is an integral part of the settlement and closing process. Funds from a buyer’s lender, or an owner’s lender, in the case of a refinance, must be received and held by a third party for settlement. Title companies perform this function. The funds are held in escrow until the day of settlement, at which time they are disbursed to various local and state authorities, as payoffs to lenders, for liens and taxes, to pay fees and closing costs, and as net proceeds to sellers, and in the case of a refinance, to the borrowers. All funds are received and disbursed according to the contract, lenders’ instructions, and the HUD-1 settlement statement which is reviewed and approved by all parties prior to signing any other closing documents.
What are the duties of the escrow/settlement company?
The escrow/settlement company is responsible for carrying out the instructions from the various parties involved including lenders, other financial institutions, real estate agents, and borrowers. The responsibilities include but are not limited to receiving funds, wiring funds, ordering payoffs and surveys, examining the title abstract and clearing title, preparing and issuing a title commitment, preparing and distributing a preliminary HUD-1, recording deeds, mortgages, and deeds of trust, preparing and issuing a policy of title insurance, and returning all documentation to the correct companies/government agencies. The escrow/settlement company is also responsible for disbursing funds to lenders (payoffs), sellers (proceeds), and third parties as instructed.
What does the escrow/settlement company need from you?
We need a title order from a lender, and for purchases a copy of the contract. Once we have received an order, we will open a file and begin preparing to close the transaction, including ordering payoffs and an abstract of title. We will request additional information as needed from the borrower, realtor, and lender. In most cases a transaction is financed; thus, when the borrower is approved for a loan the lender will then provide all of the loan documentation and instructions to the escrow/settlement company. The loan documentation and instructions must be processed by the escrow/settlement company before the closing and any transfer of property can occur.
What happens next?
When we have completed our file and document preparation, as well as the examination of title, and have issued a title insurance commitment to the lender, we are ready to close the transaction. This does not however, always mean closing can occur. Sometimes there are conditions imposed by the lender over which the title company has no control. If all lender conditions have been satisfied and the lender gives a clear to close, a closing date is set, or a previously set closing date is confirmed.
How do I know what fees are involved in my transaction?
A settlement company will provide to you in advance a HUD -1 for your review, and the final HUD-1 will be signed at the closing table. (Click here for Sample HUD -1) The HUD-1 is broken down into numbered sections, each of which corresponds to a particular type of fee or cost. Most fees should correspond to a previously disclosed fee either in a contract or good faith estimate, or be a fee directly related to closing or required by the lender.
Things to look for on the HUD-1:
- Real estate commissions payable
- Lender fees and points
- Inspections, including water/sewer and termite
- Title examination and settlement
- Compare purchase price to contract price on HUD-1