What is Attorney State Vs. Escrow State? (2024)

FAQs

What does escrow state mean? ›

An escrow state is a jurisdiction in which real estate transactions like mortgage loans and other loan documents for the real estate industry (e.g., home equity lines and other documents affecting real estate) are handled by an escrow company or agent rather than a real estate attorney.

Much like California, Arizona, and Washington, Texas is also an escrow state.

Several east coast states are attorney states: Georgia, South Carolina and North Carolina. Some states, such as Florida, are “Title Company States” that do not require an attorney to close loans or purchases as long as the closing includes title insurance.

​For instance, if you are a loan signing agent in New York (an attorney state) it's possible to be called upon to notarize a set of loan documents for a property located in California (an escrow state) if the borrower resides in or is visiting New York.

No, you don't have to pay your homeowners insurance through escrow. However, if you're going to carry a loan on your home and still owe money to the lender, many lenders will require you to have an escrow account set up.

States that require attorney involvement or where attorney involvement is customary: Connecticut, Delaware, Georgia, Massachusetts, South Carolina, Vermont and West Virginia. In Illinois, North New Jersey, New York, North Carolina and Ohio, attorney involvement in a real estate closing may be customary.

Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met – such as the fulfillment of a purchase agreement.

Your title company will most likely charge escrow fees, which go to third parties involved in the transaction. These fees are largely negotiable between the buyer and seller. You may split them evenly or one party might end up paying for all of them. Typically, they cost between 1% and 2% of the home sale price.

(a) The collector for a taxing unit may enter a contract with a property owner under which the property owner deposits money in an escrow account maintained by the collector to provide for the payment of property taxes collected by the collector on any property the person owns.

In short, in Hawaii, the closing process generally is conducted through escrow. In Hawaii, escrow services are typically provided by title insurance companies, but escrow can also be done through trust companies, lenders, Hawaii attorneys, or Hawaii real estate brokers.

Is New York an attorney state for real estate? ›

If you are buying or selling a home in the state of New York, it is required that you work with an attorney to process all contracts and represent you at the closing.

North Carolina is an attorney state.

As the name implies, the Seller and Buyer may sit at the table together, and the loan is closed while the borrowers sit at the table with the loan officer or closer agent. Colorado is a table closing state, not an escrow closing state, and the closing agent closes the real estate transaction and the loans.

As one of the eight escrow states in America, Arizona has a slightly different process for buying homes than elsewhere: it relies on an escrow process, where a neutral third party holds funds, such as cash or assets until the transaction is complete.

Some states require an attorney to be involved with the closing, though that list does not include Tennessee. But even in states where it is not required there are several advantages to using an attorney to do your closing.

"In escrow" is a type of legal holding account for items, which can't be released until predetermined conditions are satisfied. Typically, items are held in escrow until the process involving a financial transaction has been completed. Valuables held in escrow can include real estate, money, stocks, and securities.

Generally, mortgage escrow accounts are used to collect and pay property taxes and insurance payments on a home. Lenders want to make sure that your property is insured and that the taxes are paid on time, reducing the risk to the bank that you will default on the loan or incur liens on the property.

Escrow is a legal contract that involves custody of an asset until all conditions are met. Once all conditions are met by both the buyer and the seller, escrow is closed. Closing of escrow can differ from your closing date. There are situations that could delay or prevent closing escrow.

An escrow refund is a payment your mortgage servicer issues when there are excess funds in your escrow account following an annual account review. Your escrow account is used to hold funds for payment of homeowner's insurance and property tax.