What is an escrow closing?

Closing in escrow means that the lawyers involved in the transaction have made an agreement (typically before 6:00 p.m.) that although the transfer has not yet been registered, the buyers have permission to enter into the home. The lawyer acting on behalf of the seller will then hold the funds in their trust account until the registry office opens again and the registration can be completed. This situation occurs as a result of the Land Registry Office closing at 5:00 p.m. sharp, in which case the Transfer/Deed cannot be registered until the earliest time of 8:30 a.m. the next business day. When an escrow closing occurs your title insurance company, such as Stewart Title Guaranty Company, would offer a benefit called “Gap Coverage” for those situations in which you close in escrow and the transfer and/or mortgage is unable to be registered. Gap Coverage provides the lender and homeowner with coverage during the gap that exists between closing and the registration of documents. When a transaction is required to be closed in escrow, the lawyers acting on behalf of the buyers/sellers enter into an ‘Escrow Closing Agreement’, which would contain important information related to the terms of the escrow closing such as: (a) the day/time before which the registration will take place; (b) permission for the buyers to take immediate possession of the property; and (c) an agreement that the seller’s lawyer will hold all money received from the buyer in escrow until registration is complete. This Agreement also means that all terms and conditions of the agreement of purchase and sale will remain the same as intended, in full force and effect. The only difference is that the registration will be taking place on a day later than the original closing date.