Escrow is a transaction where one person delivers something of value to a third person, to be held until the happening of a specified event or condition, upon which it is delivered by the third person to another. Both parties to a real estate transaction entrust legal documents and various funds to the escrow holder, which transfers the papers and funds upon closing of the escrow. As a neutral third party, both buyer and seller are assured that all mutually agreed to terms are met before the transaction is completed.


The escrow holder acts as a common depository facilitating the buyer and seller while providing funds, deeds, inspection reports, insurance information, and other required documents. The requirements of both parties’ written instructions to an experienced escrow officer must be met before the transaction is complete. Lenders also specify their conditions for completing the loan process. The escrow officer, as a limited agent for all parties, expedites the closing process provided that the instructions are clear and mutually consistent.


The authority given to an escrow holder is strictly limited by instructions provided by the buyer and seller. The escrow officer is authorized by instructions to allocate funds for the items during the escrow period, such as real estate commissions, title insurance, liens, recording fees, and other closing costs. Instructions also specify the method of collecting funds, proration of insurance and taxes, and time limitations on settling transactions. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met. To effectively handle a transaction, your escrow officer must be instructed as to the required terms necessary to close. The officer will discuss escrow matters only with the parties directly involved, specifically the buyer, seller, lender and real estate agent. No one else has access to this information, except through proper legal procedures. The escrow officer retains impartiality and confidentiality concerning the real estate process.

Closing Escrow

Upon closing, the escrow holder causes the required documents to be recorded and disburses funds according to the instructions given to the escrow officer. Escrow fees are included in these costs, and are based on the sale price of the property, the loan amount, and services required.


The Buyer: Deposit funds to pay for the purchase price, and funds for property and closing costs. Provide deed of trust or mortgages needed to secure the loan. Arranges for borrowed funds to be deposited in escrow. Provides, if required, documents such as inspection reports, insurance policies, and lien information to verify compliance to the instructions.

The Seller: Deposits the deed to the buyer with the escrow holder. Provides evidence to meet the buyer's condition of sale, such as proof of repair work and inspections. Submits other documents, such as tax receipts, mortgage information, insurance policies, and warranties.

The Lender, when applicable: Deposits loan funds, lender instructions and other loan documents with the escrow holder.

The Escrow Holder: Serves as a central depository for funds and documents. Obtains a title insurance policy, when required. Fulfills the lender's requirements if applicable. Secures approval from the buyer on requested documents. Prorates insurance, taxes, and rents, as instructed. Fulfills buyer and seller instructions. Allocates funds for closing costs, and verifies that required funds from each party are deposited into escrow.

Once all conditions are met, the escrow holder causes the necessary documents to be recorded. Executed loan documents are forwarded to the lender. The Transaction then closes.


First American Title and Escrow
2101 Fourth Avenue, Suite 800, Seattle WA 98121
Phone 206.728.0400 Fax 866.859.0461

Chicago Title and Escrow Company
701 Fifth Ave, Suite 1800, Seattle WA 98104
Phone 206.628-9746 Fax 206.628.9739

Old Republic Escrow and Title
2806 East Madison Street, Seattle WA 98112
Phone 206.329.0366 Fax 206.329.1854

Elliott Bay Escrow, Inc.
2369 Eastlake Ave East, Seattle WA 98102
Phone 206.382.8239 Fax 206.382.8239

John Stephen Forderhase, Attorney at Law
1216 Pine Street, Seattle WA 98101
Phone 206.224.3475 Fax 206.405.2767