How Escrow Works

Escrow in Washington and Oregon

In both Washington and Oregon, escrow is a critical step that takes place after a purchase offer is accepted but before the transaction is finalized, known as closing. The term “escrow” also refers to the neutral third party, often an escrow agent or company, that manages the process and holds funds securely until closing.

When home buyers in Washington or Oregon make an offer on a property, they typically submit an earnest money deposit to show their commitment to the purchase. This deposit is placed into escrow, where it is held by a neutral party until all terms of the sale are met and the deal can be finalized. The funds are not transferred to the seller until the transaction is officially closed.

How Does the Escrow Process Work in Washington and Oregon?

After the buyer and seller sign a purchase agreement and the earnest money is deposited, the escrow process begins. Although the general process is similar in both Washington and Oregon, there are some state-specific nuances.

In Washington State:

Once escrow begins, the escrow agent prepares the necessary documents for closing, which may include title documents, tax information, property surveys (if needed), loan payoffs, and insurance details. A title search is performed to verify ownership of the property and ensure there are no liens or legal issues that could disrupt the sale. The escrow agent also collects required documents from the mortgage lender to finalize the deal.

Once all documents are processed and approved, the transaction moves to closing. During closing, the buyer and seller sign all relevant paperwork, the seller transfers the deed, and any existing loans are paid off. The buyer will sign the mortgage note if applicable, and all involved parties (including real estate agents) are compensated according to the agreement.

In Oregon State:

The escrow process in Oregon is similar to Washington but with some specific variations. For example, the escrow officer in Oregon coordinates directly with the title company to ensure a smooth title transfer. Oregon law requires that title insurance policies are typically issued during escrow to protect both the buyer and lender from any future claims against the property.

Additionally, in Oregon, real estate transactions often involve escrow agents who manage the collection and disbursement of funds, ensuring that conditions outlined in the sale contract are met. The escrow company also plays a key role in coordinating the closing process, where buyers and sellers sign closing documents and finalize the transaction.

How Long Does the Escrow Process Take in Washington and Oregon?

The length of the escrow process can vary in both states based on the specifics of the transaction. On average, escrow lasts between 30 to 60 days in both Washington and Oregon, but this timeline can differ depending on the complexity of the deal.

The buyer and seller typically agree on an escrow period and a closing date in the purchase agreement. For instance, if the closing date is set for 45 days from the signing of the contract, the escrow process will generally last about 45 days.

What Should the Home Buyer Do During Escrow?

As a home buyer in Washington or Oregon, the most important thing you can do during escrow is respond promptly to any requests for information or documentation. You may be asked to sign updated paperwork or provide additional documents to keep the process moving smoothly.

Handling these requests quickly will help ensure the process stays on schedule. Additionally, if you have any questions, ask them as they arise, rather than waiting until closing day.