Closing is the final stretch: contingencies are removed, loan documents are signed, and the numbers on the closing statement are confirmed by everyone before money moves. The buyer completes a final walk-through, closing costs are itemized and paid, and once the lender wires funds and the escrow holder confirms good funds, disbursement pays out the seller, agents' commissions, and any liens against the property. A closing protection letter backs the escrow holder's handling of these funds. This category is where every earlier category converges — the contingencies are gone, the loan has funded, and title is ready to transfer — and it ends with the recording that makes the sale official.
- Buyer's Closing Costs
- All expenses the buyer is responsible for paying at closing including lender fees, title insurance, escrow fees, prepaid items, and recording fees.
- Buyer's Final Walk-Through
- A final inspection of the property by the buyer shortly before closing to verify the property is in the agreed-upon condition, all negotiated repairs have been completed, and seller's personal property has been removed.
- Closing Costs
- All fees and expenses paid by the buyer and seller at the close of escrow beyond the purchase price. Includes escrow fees, title insurance, recording fees, lender fees, prepaid items, and prorations.
- Closing Date
- The date specified in the purchase agreement on which escrow is scheduled to close, the deed is recorded, and ownership transfers from seller to buyer. Also called the settlement date.
- Closing Protection Letter (CPL)
- A letter issued by the title insurance underwriter that protects the lender against losses caused by the escrow or closing agent's failure to follow the lender's closing instructions or misappropriation of funds.
- Closing Statement
- A detailed accounting document prepared by escrow showing all debits and credits to the buyer and seller in the transaction. Also called a settlement statement or HUD-1 in older transactions.
- Commission
- Compensation paid to real estate agents for their services in the transaction. Under the December 2024 RPA changes buyer agent compensation is negotiated separately and disclosed in the Buyer Representation and Broker Compensation Agreement.
- Disbursement
- The distribution of funds by escrow to all parties after recording including payment of the seller's net proceeds, loan payoffs, commissions, fees, and other charges.
- Federal Wire
- An electronic funds transfer sent through the Federal Reserve wire system. Federal wires have a cutoff of 5pm Eastern / 2pm Pacific. Wires received after cutoff are processed the next business day.
⚠ Wire fraud warning: Always verify wire instructions by calling the receiving party directly using a verified phone number before sending any funds. Never rely solely on emailed wire instructions. See the Wire Fraud Checklist tutorial →
- Funding Authorization
- The lender's confirmation that all loan conditions have been satisfied and the lender is ready to wire loan funds to escrow. Escrow cannot record until funding authorization is received.
- Holdback
- Funds retained in escrow after closing to cover a specific obligation such as completion of repairs or construction. Released to the appropriate party when the condition is satisfied.
- Homeowner's Insurance
- Property insurance required by lenders that protects against losses from fire, theft, and other covered perils. Evidence of insurance must be provided to escrow before closing. The first year's premium is typically prepaid at closing.
- Keys and Possession
- The transfer of physical possession of the property from seller to buyer. Under the California RPA possession typically occurs at close of escrow unless otherwise negotiated.
- Loan Documents Package
- The complete set of documents sent by the lender to escrow for the borrower to sign at closing. Escrow reviews the loan documents against the closing disclosure before scheduling the signing appointment.
- Mobile Notary
- A notary public who travels to the signer's location to witness document signatures. Commonly used when parties cannot travel to the escrow office or when documents must be signed outside of business hours.
- Net Proceeds
- The amount the seller receives after all costs, fees, loan payoffs, and other charges are deducted from the sale price. Shown on the seller's closing statement.
- Notary Fees
- Fees charged by a notary public for witnessing and authenticating signatures on legal documents. In California notary fees are set by state law at a maximum of $15 per signature notarized.
- Per Diem Interest
- Daily interest charged on a mortgage loan. Buyers prepay per diem interest from the closing date through the end of the month at closing so that their first full mortgage payment covers a complete month.
- Prorations
- The division of ongoing property expenses between buyer and seller based on the closing date. Common prorations include property taxes, HOA dues, and prepaid rents on income properties.
- Recording Date
- The date the grant deed and deed of trust are officially recorded with the county recorder. Recording is the final step that transfers legal ownership and establishes the lender's lien priority.
- Recording Fees
- Fees charged by the county recorder to record documents in the public record. Recording fees vary by county and are based on the number of pages recorded.
- Recording Package
- The set of documents submitted to the county recorder at closing including the grant deed, deed of trust, and any other documents that need to be in the public record.
- Rescission Period
- The three business day period after signing during which a borrower may cancel a refinance on their primary residence. Saturdays count as business days for rescission purposes but Sundays and federal holidays do not.
- Right of Rescission
- The borrower's right to cancel a refinance transaction within three business days of signing loan documents. Applies to owner-occupied refinances only — not purchases. Escrow cannot disburse funds until the rescission period expires.
- Same Day Funding
- When the lender wires funds and recording occurs on the same day. Requires the wire to arrive and recording to be confirmed before the county recorder's cutoff time, typically by noon for same-day disbursement.
- Seller Credit
- An amount the seller agrees to pay toward the buyer's closing costs or prepaid items. Seller credits must be disclosed to the lender and may be limited based on loan type and LTV ratio.
- Seller's Closing Costs
- All expenses the seller is responsible for paying at closing including real estate commissions, title insurance, escrow fees, transfer taxes, payoff costs, and any negotiated credits to the buyer.
- Signing Appointment
- The meeting at which the buyer and/or seller sign all required escrow and loan documents. May take place at the escrow office, title company, or with a mobile notary at a location convenient to the signer.
- Sub-Escrow
- A service provided by the title company to handle the financial aspects of closing including receiving loan funds, paying off existing loans, and coordinating the recording of documents.
- Transfer Tax
- A tax imposed by the county and sometimes the city on the transfer of real property. In California the county transfer tax is $1.10 per $1,000 of value. Some cities impose additional transfer taxes.