What's the difference between escrow and attorney closing?

Escrow closing (CA, AZ, NV, WA, OR, others) — an independent escrow company or title company's escrow department handles closing as a neutral fiduciary; attorneys may be involved but are not required. Attorney closing (NY, NJ, MA, CT, IL, others) — attorneys representing each side handle closing; an escrow component may exist for funds. In NY particularly, attorney involvement is customary even for routine purchases due to complex title and tax issues. Hybrid states (FL, GA, others) — title agent or attorney, depending on local custom and complexity.

When does the buyer need cash at closing?

Funds must be in the escrow account before recordation. Typical timing: buyer wires cash to close 1-2 business days before closing date so that funds clear (wire transfers are typically same-day or next-day, but cashier's checks may take longer). Lender funds the loan amount on the day of closing, usually wired the morning of closing. Recording happens after all funds are confirmed in the escrow account. Federal RESPA / TRID rules require buyer to receive Closing Disclosure 3 business days before closing.

What happens if the deal falls apart and we disagree on the earnest money?

Escrow holder cannot release funds without joint instructions from both parties. If parties dispute (e.g., buyer claims valid contingency termination, seller claims buyer in breach), escrow holder will: (a) request joint written instructions; (b) if not received, hold funds indefinitely pending agreement; (c) potentially interplead the funds with a court (filing a lawsuit and depositing the funds; the parties then litigate). Most disputes resolve through negotiation; litigation over earnest money is rare given the typical $5K-$30K stakes vs. $5K+ in legal fees.

Foreign Investment in Real Property Tax Act (IRC §1445). When a foreign person (non-resident alien individual or foreign entity) sells U.S. real property, the buyer is required to withhold 15% of the gross sale price (10% if sale ≤ $1M and buyer intends to use as residence). The withheld amount is forwarded to IRS as a credit against the foreign seller's tax liability. Buyer is LIABLE if they fail to withhold from a foreign seller. Most transactions resolve via a Seller's FIRPTA Affidavit (under penalty of perjury, seller is not a foreign person), which the buyer can rely on. Escrow holder typically obtains the affidavit at closing.

Escrow Instructions

Joint instructions to the escrow holder governing handling of funds and documents during a real estate transaction. State-aware (CA, TX, FL, NY).

Customise

Escrow opened date

Escrow / file number

Escrow holder (title or escrow company)

Escrow officer name + contact

Buyer name(s)

Seller name(s) (as on title)

Property address

APN / parcel number

Property state

Purchase price (USD)

Earnest money on deposit (USD)

Loan amount (USD)

Buyer's lender

Estimated closing date

Title insurance — who pays

Items to prorate at closing

Special instructions

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ESCROW INSTRUCTIONS

Escrow holder: Pacific Title & Escrow, Inc.
Escrow officer: Sandra Whitfield, Senior Escrow Officer — sandra@pacifictitle.example.com / +1 503 555 0277
File / escrow #: PT-2026-007719
Escrow opened: May 11, 2026

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1. PARTIES AND PROPERTY
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BUYER: Jordan Alex Taylor and Miguel Angel Garcia, husband and wife as community property with right of survivorship
(vesting as indicated)

SELLER: Eleanor Margaret Hayes, an unmarried woman

PROPERTY: 4112 SE Hawthorne Blvd, Portland, OR 97214
APN: R-285-2294-118
State: Oregon

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2. FINANCIAL TERMS
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Total purchase price: $685,000.00

Earnest money on deposit: $20,000.00
(held by escrow holder pending closing or earlier disbursement
per these instructions)

Buyer's loan amount: $548,000.00
Lender: Pacific Northwest Mortgage Co. — Kim Park, Loan Officer

Buyer's cash to close (estimated): $117,000.00
(subject to adjustments for prorations, lender fees, title
insurance, recording fees, transfer taxes, and other closing
costs allocated per the purchase agreement and state custom)

Estimated closing date: July 15, 2026

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3. CONDITIONS PRECEDENT TO CLOSING
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Escrow holder shall close the transaction (record documents and
disburse funds) only when ALL of the following conditions are
satisfied:

(a) Buyer has deposited all required cash to close.
(b) Lender has funded the loan and delivered loan documents.
(c) All Buyer contingencies have been removed in writing (inspection,
financing, appraisal, title) or have expired without termination.
(d) All Seller obligations have been met (including statutory
disclosures, repairs called for in any inspection-response
addendum).
(e) Title is clear of all liens and encumbrances except those
Buyer has agreed to accept.
(f) Hazard / homeowner's insurance binder delivered for first year.
(g) Seller has executed the deed and any required affidavits
(FIRPTA, transfer-tax, residence, etc.).
(h) HOA estoppel letter delivered (if applicable).
(i) All recording documents are signed, notarized, and ready for
recordation.

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4. TITLE INSURANCE
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Per state custom (see state-specific section below)

State custom for title insurance:
• California — split per local custom (Northern: Seller pays
owner's; Buyer pays lender's; Southern: opposite).
• Texas — Seller customarily pays owner's title policy.
• Florida — split or buyer's choice depending on county.
• New York — Buyer typically pays both policies.

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5. PRORATIONS
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The following items shall be prorated as of the closing date:

Property taxes (most recent paid period); HOA dues (if any); rent (if leased); fuel (oil tank if propane/oil heat); pre-paid utilities. Standard 365-day proration (or 30/360 in some states); calculation as of closing date.

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6. DISBURSEMENT OF PROCEEDS
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Upon recordation of the deed, escrow holder shall disburse:

(a) To Seller: net sale proceeds after deduction of:
- Existing mortgage payoff(s)
- Real estate commissions per listing/buyer-broker agreements
- Seller's share of closing costs and prorations
- Seller-paid concessions to Buyer
- HOA transfer fees if Seller's responsibility
- Any judgments, liens, or required payoffs identified in title
report

(b) To lender(s) being paid off: full payoff per demand statement.

(c) To real estate brokers: commissions per listing agreement and
Buyer-broker agreement (typically 5-6% of purchase price split
between agents).

(d) To recording office: recording fees and transfer/deed-tax
(allocated per purchase contract and state custom).

(e) To escrow holder: escrow fees per fee schedule.

(f) To Buyer: any refund of overage at closing.

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7. STATE-SPECIFIC PROVISIONS
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CALIFORNIA: Escrow governed by Cal. Financial Code §17000 et seq.
(Department of Financial Protection and Innovation regulates
independent escrow companies). Mello-Roos / 1915 Act bond
disclosures must be provided. Documentary transfer tax at recording
($1.10 per $1,000 of consideration plus county and city additions).
Withholding under Cal. Rev. & Tax. Code §18662 (3 1/3% of sale
price for Sellers selling at over $100,000 unless exemption applies
— principal residence, loss, etc.). FIRPTA (federal) for foreign
sellers (15% withholding under IRC §1445).

TEXAS: Texas does not have a "true" escrow process — closings are
typically handled by title companies acting as fiduciaries under
Tex. Ins. Code Title 11. Seller customarily pays owner's title
policy. No state income tax (no state withholding); FIRPTA applies
to foreign sellers.

FLORIDA: Title agents licensed under Fla. Stat. §626.8419 et seq.
Closings often handled by title agents or attorneys. Documentary
stamp tax on deed: $0.70 per $100 of consideration (Miami-Dade:
$0.60 plus surtax). FIRPTA applies for foreign sellers. Florida
real estate may be subject to homestead protections affecting
title and deed.

NEW YORK: New York is an attorney state — closings typically handled
by attorneys for both parties; an escrow agent may also be involved.
NY State Mortgage Recording Tax (Tax Law §253 et seq.): on $500,000+
loans, 1.05-2.175% depending on county; NYC adds Real Property
Transfer Tax (1% under $500K; 1.425% over). Mansion Tax for sales
$1M+ (1% to 4.15% progressive). Significant pre-closing review of
title required.

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8. AMENDMENT AND TERMINATION
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These Escrow Instructions may be amended only by a writing signed by
both Buyer and Seller. If the underlying purchase contract is
terminated, the parties shall jointly instruct escrow holder on
disposition of funds (e.g., return of earnest money to Buyer for a
contingency-period termination). If parties dispute disposition,
escrow holder may either: (a) hold funds pending mutual instructions
or court order; or (b) interplead the funds with a court of
competent jurisdiction.

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9. SPECIAL INSTRUCTIONS
═══════════════════════════════════════════════════════════════════════

1. Disburse Seller's net proceeds by wire transfer to Seller's account at First Pacific Credit Union, ABA 123456789, account ending 4421 (full account info on separate authorization).
2. Buyer to be responsible for any FIRPTA withholding if Seller is a foreign person (verify on Seller's affidavit).
3. Recording: deed, deed of trust, and HOA transfer document to record concurrently at Multnomah County, OR.
4. Pre-closing walkthrough must occur within 24 hours of closing; written confirmation required from Buyer.

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10. ESCROW HOLDER LIABILITY
═══════════════════════════════════════════════════════════════════════

Escrow holder is a neutral fiduciary, not an advocate for either
party. Escrow holder is not responsible for:

• Validity, enforceability, or performance of the underlying
purchase contract.
• Quality, condition, or value of the property.
• Discovery of defects in title beyond the title commitment.
• Tax consequences of the transaction.
• Sufficiency of insurance.

Escrow holder is responsible for following these instructions in
accordance with applicable state law and customary fiduciary
standards.

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11. SIGNATURES
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_____________________________________ May 11, 2026
Buyer signature Date

_____________________________________ May 11, 2026
Seller signature Date

_____________________________________ May 11, 2026
Escrow holder — accepted Date

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RETAIN COPIES — SUPPLEMENTAL INSTRUCTIONS BY SEPARATE AMENDMENT
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About this template

Escrow Instructions are the operating manual for the escrow holder (or, in some states, the closing attorney or title company) during a real estate transaction. They convert the high-level purchase contract into specific, actionable instructions about how to handle funds, documents, and conditions before, at, and after closing. Escrow vs. attorney closing: U.S. real estate closings divide into broadly three models. (1) Escrow states (CA, AZ, NV, WA, OR, others) — an independent escrow company or title company's escrow department holds funds and documents and disburses at closing. The escrow officer is a neutral fiduciary. (2) Title-company-led states (TX, FL, GA, others) — title companies handle closings; in some states (TX particularly), they have specific statutory roles (Tex. Ins. Code Title 11). Often functionally similar to escrow but with differences in licensing and regulation. (3) Attorney states (NY, NJ, MA, CT, IL, GA, others) — closings are handled by attorneys representing the parties; an escrow component may exist for funds but the legal closing is attorney-driven. Some states are hybrid (FL — title agent or attorney). The instructions document varies in form by state but addresses the same substantive items: (a) Identification of parties, property, and transaction terms. (b) Conditions precedent — what must happen before escrow can close. (c) Title insurance allocation — who pays for owner's and lender's policies. (d) Prorations — how taxes, HOA dues, rent, and other items are split between buyer and seller. (e) Disbursement — how proceeds are paid out (mortgage payoffs, commissions, transfer taxes, recording fees, net to seller). (f) Special instructions — anything outside standard handling. State-specific complexities: California — Cal. Financial Code §17000 et seq. regulates independent escrow companies; documentary transfer tax (Cal. Rev. & Tax. Code §11911 et seq.) at $1.10 per $1,000 plus county/city additions; Cal. Withholding (§18662) at 3 1/3% of sale price for sales over $100,000 unless exemption (principal residence, loss, etc.); Mello-Roos disclosure; significant local custom variation North vs. South. Texas — title-company led; Seller customarily pays owner's policy; no state income tax. Florida — title agents licensed under §626.8419 et seq.; documentary stamp tax $0.70 per $100 ($0.60 in Miami-Dade plus surtax); homestead protections; significant flood and coastal disclosures. New York — attorney-led; Mortgage Recording Tax (Tax Law §253 et seq.) at 1.05-2.175% on loans $500,000+; NYC Real Property Transfer Tax 1% under $500K, 1.425% over; Mansion Tax for sales $1M+ at 1-4.15% progressive (NY Tax Law §1402); CEMA (Consolidation, Extension and Modification Agreement) often used to reduce mortgage tax on refinances. Federal: FIRPTA (Foreign Investment in Real Property Tax Act, IRC §1445) — 15% withholding on foreign sellers (10% if sale ≤ $1M and primary residence); seller affidavit required; buyer is liable if withholding fails. RESPA (12 USC §2601) governs settlement statements (now Closing Disclosure under TRID); requires 3 business days between final CD and closing. Funds handling: escrow holder is a fiduciary; misappropriation is a serious crime and triggers state insurance fund coverage in many states. Wire fraud is a major issue in real estate (FBI estimates $400M+ annual losses); escrow holders should verify wire instructions by phone with known parties before disbursing. Disputes over disposition of earnest money are common when transactions terminate. The escrow holder generally cannot release funds without joint instructions; in dispute, the escrow holder may hold pending mutual instructions or interplead the funds with a court (filing a lawsuit and depositing funds with the court so the parties can litigate over them). Best practice: detailed, written escrow instructions with clear conditions precedent; periodic review by closing officer; verified wire instructions; signature blocks for both parties accepting the instructions; clear special-instruction section for non-standard items.

When to use it

Opening escrow on a residential or commercial real estate transaction.
Coordinating with title company / escrow company on closing logistics.
Documenting agreed disposition of earnest money for early disbursement.
When parties want to memorialize special closing instructions outside the purchase contract.
When transaction has unusual elements (FIRPTA, foreign seller, multiple parties, contemporaneous transactions).

What to include

Escrow holder identification with file number.
Buyer and Seller names with vesting (how Buyer takes title).
Property address and APN.
Total purchase price and breakdown (earnest, loan, cash to close).
Estimated closing date.
Title insurance allocation (state custom).
Prorations list with calculation method.
Conditions precedent to closing.
Disbursement instructions (mortgage payoffs, commissions, fees, net to seller).
State-specific provisions (CA Mello-Roos / withholding; TX title custom; FL doc-stamp tax; NY mortgage tax).
Amendment and termination procedures.
Special instructions for non-standard items.
Signatures of both parties and escrow holder acceptance.

Frequently asked

Custom and contract govern. Typically the buyer's purchase offer specifies the escrow holder; the seller can counter to specify a different one. If silent, local custom often applies (e.g., listing agent suggests). Some lenders require specific approved title companies. The escrow holder should be a neutral fiduciary, not affiliated with one party (RESPA, 12 USC §2607, prohibits kickbacks for closing-service referrals). Pricing varies; shopping multiple title companies for owner's title policy can save money.

⚠ Legal disclaimer. Escrow handling and closing procedures are governed by state law (each state has its own framework — CA Financial Code §17000 et seq. for independent escrow companies; TX Ins. Code Title 11 for title agent fiduciary duties; FL Stat. §626.8419 for title agent licensure; NY Tax Law §253 et seq. for mortgage recording tax). Federal: RESPA (12 USC §2601 et seq.), TRID (TILA-RESPA Integrated Disclosure rule, 12 CFR Part 1026), FIRPTA (IRC §1445), Bank Secrecy Act (anti-money-laundering rules apply to title insurance/escrow companies in some areas — Geographic Targeting Orders by FinCEN). Mansion Tax NY Tax Law §1402. State withholding (e.g., CA Rev. & Tax. Code §18662). Wire fraud is a major risk; verify all wire instructions before disbursement. Not legal advice — engage a licensed real estate attorney for state-specific guidance.

Jurisdiction: United States — federal RESPA (12 U.S.C. §2601+); TILA-RESPA Integrated Disclosure (TRID) Reg Z 12 CFR §1026; state real-property statutes (CA Civ. Code §§1090-1133; Tex. Prop. Code; Fla. Stat. Ch. 689-718; NY RPL; 21 P.S.) + state Real Estate License Law; HOA covenants.

Last reviewed: 2026-05

Reviewed by ScoutMyTool — consult a licensed attorney for binding use.