The Differences in Real Estate Closings

When it comes to real estate settlements in the United States, there is no one-size-fits-all approach. The processes involved in closing a real estate transaction can vary significantly from state to state and even from county to county. Understanding these differences is crucial for both home buyers and sellers to ensure a smooth and successful transaction.

Before we begin let’s also acknowledge the difference between title companies and escrow companies.

What Is an Escrow Company?

An escrow company is a neutral third-party that provides escrow services to protect the financial interests of both buyers and mortgage lenders throughout a sales transaction. The escrow process involves holding the buyer’s funds in a regulated third-party account until all conditions of the sale are met. This ensures that both the buyer and seller meet their obligations, with the escrow officer overseeing the financial transactions to protect both parties.

What Is a Title Company?

Title companies, or title insurance companies, play a crucial role in the home purchase process by researching the property’s title to ensure it is unencumbered and ready for sale. They conduct a thorough title search to confirm the seller’s legal right to sell the property and to identify any liens or title issues. Additionally, title companies provide title insurance policies to protect buyers and lenders against future title disputes and assist with the completion of necessary paperwork during the closing process.

Many states, particularly in the Midwest and East Coast, may combine title and escrow services or involve attorneys heavily in the closing process. In these regions, it is common for title companies to handle both the title search and the escrow process, sometimes with significant attorney involvement to oversee the transaction and ensure legal compliance.

Here is a list of how closings are handled in every state. As a reminder, the regulations of each area can change at any time. 

1. Alabama: Traditionally an attorney-state.

2. Alaska: Both attorneys and title companies can handle settlements.

3. Arizona: Title company state.

4. Arkansas: Title agents handle escrow and attorneys handle settlements.

5. California: Regulations differ depending on the area.

6. Colorado: Both attorneys and title companies can handle settlements.

7. Connecticut: Attorney state.

8. Delaware: Traditionally an attorney-state.

9. District of Columbia: Both attorneys and title companies can handle settlements.

10. Florida: Both attorneys and title companies can handle settlements.

11. Georgia: Traditionally an attorney-state.

12. Hawaii: Traditionally an attorney-state. Only attorneys can prepare the transfer documents. However, some escrow companies are available.

13. Idaho: Title and escrow must be handled by different companies.

14.  Illinois: Both attorneys and title companies can handle settlements. Only attorneys can prepare the settlement documents.

15. Indiana: Both attorneys and title companies can handle settlements.

16. Iowa: Traditionally an attorney-state.

17. Kansas: Both attorneys and title companies can handle settlements.

18. Kentucky: Both attorneys and title companies can handle settlements.

19. Louisiana: Both attorneys and title companies can handle settlements.

20. Maine: Attorney-state.

21. Maryland: Both attorneys and title companies can handle settlements.

22. Massachusetts: Traditionally an attorney-state.

23. Michigan: Both attorneys and title companies can handle settlements.

24. Minnesota: Both attorneys and title companies can handle settlements.

25. Mississippi: Traditionally an attorney-state.

26. Missouri: Both attorneys and title companies can handle settlements.

27. Montana: Title and escrow must be handled by different companies.

28. Nebraska: Both attorneys and title companies can handle settlements.

29. Nevada: Both attorneys and title companies can handle settlements.

30. New Hampshire: Attorney-state.

31. New Jersey: Regulations differ depending on the area.

32. New Mexico: Title and escrow must be handled by different companies.

33. New York: Traditionally an ttorney-state.

34. North Carolina: Attorney-state.

35. North Dakota: Traditionally an attorney-state.

36. Ohio: Both attorneys and title companies can handle settlements.

37. Oklahoma: Both attorneys and title companies can handle settlements.

38. Oregon: Title and escrow must be handled by different companies.

39. Pennsylvania: Both attorneys and title companies can handle settlements.

40. Rhode Island: Traditionally an attorney-state.

41. South Carolina: Traditionally an attorney-state.

42. Tennessee: Both attorneys and title companies can handle settlements.

43. Texas: Both attorneys and title companies can handle settlements.

44. Utah: Both attorneys and title companies can handle settlements.

45. Vermont: Attorney-state.

46. Virginia: Both attorneys and title companies can handle settlements.

47. Washington: Both attorneys and title companies can handle settlements.

48. West Virginia: Traditionally an attorney-state.

49. Wyoming: Both attorneys and title companies can handle settlements.

The standards and practices for real estate settlements are not static; they change frequently. This variability underscores the importance of researching the specific practices in your area or consulting with a knowledgeable real estate agent or attorney. These professionals can provide insights into local customs and regulations, helping you navigate the complexities of your real estate transaction.

Real estate settlements in the United States are not handled uniformly. The differences in practices, whether requiring attorneys at closing or separating title and escrow services, highlight the need for localized knowledge. Home buyers and sellers should take the time to understand the practices in their area or seek advice from real estate professionals to ensure a smooth and legally compliant transaction.

Buyers and sellers are always welcome to reach out to our team to see how we can best service their transaction. We practice in 38 states and have satellite offices all over the United States. Our experienced team is ready to help you navigate your local real estate closing process.