Upon all parties meeting the necessary conditions, the escrow agent will move forward the transaction. To move forward the real estate transaction, the agent will transfer the necessary finalized documents and funds. One of the last steps of a real estate transaction is the close of escrow, which involves the transfer of finalized funds and documentation.
The close of escrow will then proceed with a settlement statement, which is a statement that details all the fees and charges for which a homeowner is responsible. Typically, it will take one to five business days for escrow to close, assuming all conditions are met. With all the funds and documentation already complete, neither party needs to physically be present to close the transaction.
Closing escrow means funds will be transferred to the proper parties and the title of property will be exchanged. Once this occurs the transaction will be closed. Upon closing, the escrow officer will send closing statements labeling the close of the sale to the buyer and seller. Once the transaction is fully executed, the transaction will be recorded.
The escrow agent will send a settlement statement to the buyer and seller. The settlement statement includes the costs of the transaction for both the buyer and seller. The settlement statement will be given immediately following the opening of escrow, before signing loan documents and right before the close of escrow. Closing statements are given multiple times to indicate the changes in calculations dependent on the date of close and if any new charges were added.
Prorating and Close of Escrow
Prorating is the process of distributing property expenses amongst principals at the close of escrow. Expenses that are typically prorated include: property taxes, deposits, HOA fees, rental income, interest, and insurance. Individual prorations can be negotiated between principals.
The purpose of proration is to make expenses more equitable between principals in accordance with the buyer and seller’s respective periods of ownership. For example, if a transaction closes in the middle of the month, escrow may prorate the costs of the property taxes between the buyer and seller.
