When Does Escrow Actually Close?

Escrow won't close until you sign on the dotted line.
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When you buy or sell a home, the ultimate goal is the close of escrow. An escrow is a third party that holds onto all of the cash and documents in a transaction until all people and parties involved has held up their end of the deal. Escrow officially closes after the documents are signed and the money changes hands.

Financial Requirements

Before escrow can close, you and the other people involved in the transaction must put any money you owe into the escrow holder's account. For the seller, this includes any seller-paid closing costs and unpaid property taxes. For buyers taking out a mortgage, this includes the down payment and any remaining closing costs. If you're buying the home without a mortgage, however, you will need to deposit the home's entire purchase price plus closing costs. Lenders involved in the transaction must also transfer loan funds to this account before closing.

Documentation Requirements

When the escrow holder is ready to close the account, you and everyone else involved in the transaction will meet to sign all of the required documents. Documents that the buyer must sign include the mortgage, promissory note and first payment letter. Sellers will sign the deed to the home and a copy of IRS Form 1099. Both the seller and buyer must sign affidavits confirming their identities, as well as the HUD settlement statement.

Dry Closings

In most cases, money changes hands immediately after you sign the paperwork. In fact, the seller often leaves the closing meeting with a check in hand. However, if the meeting takes place on a Friday, or if the meeting takes place before everyone has made their deposits into the escrow account, you may have a "dry" closing. This means that money doesn't change hands until the next business day after all of the funds are in the account.


The exact documents you sign before escrow closes depend on the specifics of your transaction, so you may sign additional paperwork. In purchase transactions, closing usually takes place in the escrow holder's office. In refinance transactions, however, closing may take place at your home. If one of the people involved in the transaction doesn't meet all the conditions of escrow, escrow won't close, and the escrow company will refund any money you already deposited.

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