In the real estate industry the titles Settlement Agent, Escrow Officer, and Officer (LPO) are sometimes used interchangeably, but they have distinct responsibilities that impact how a transaction is handled.
Settlement Agent: The Big Picture Coordinator
A Settlement Agent is the general term for the party responsible for managing the closing process of a real estate transaction. Depending on the company structure, this role may be filled by an Escrow Officer, a Designated Escrow Officer, an LPO, or an attorney.
Their responsibilities include:
* Ensuring all documents are properly executed.
* Managing funds, including collecting deposits and distributing closing proceeds.
* Verifying that title conditions are met before closing.
* Recording necessary documents with the county.
Who acts as a Settlement Agent?
- In Washington State, title and escrow companies typically act as settlement agents.
- If an independent escrow company (not affiliated with a title company) is handling the transaction, a Designated Escrow Officer oversees the process.
Escrow Officer: The Transaction Facilitator
An Escrow Officer is responsible for handling the escrow portion of a real estate transaction. They:* Manage contracts, funds, and closing documents.
* Ensure all terms of the purchase and sale agreement are fulfilled before closing.
* Work closely with lenders, title officers, real estate agents, and buyers/sellers.
Important Limitation: Escrow Officers who are not LPOs cannot prepare legal documents (such as Excise Tax Affidavits). They can only complete standard escrow instructions based on the agreements provided to them.
Limited Practice Officer (LPO): The Document Preparer
A Limited Practice Officer (LPO) is a specialized professional licensed by the Washington State Supreme Court under APR-12. This designation allows them to:
1. Prepare legal documents related to real estate closings (e.g., Deeds, Excise Tax Affidavits, and Seller Financing documents).
2. Ensure documents comply with state laws and regulations.
3. Provide standardized forms approved by the Washington Supreme Court.
What LPOs cannot do:
- They cannot provide legal advice—only attorneys can do that.
- They can only prepare documents within their approved scope, meaning they cannot draft contracts beyond state-approved templates.
How Do These Roles Affect Your Real Estate Transaction?
As a real estate broker, knowing who is handling your transaction helps you set the right expectations. If legal document preparation is needed, ensure the escrow company has an LPO or an attorney on staff. If you’re working with an independent escrow company, verify that a Designated Escrow Officer is overseeing the process.
To summarize:
- Settlement Agents manage the overall closing.
- Escrow Officers facilitate the transaction but cannot draft legal documents unless they are also a LPO.
- LPOs can prepare closing documents but cannot provide legal advice.
Understanding these distinctions ensures smoother transactions and helps protect your clients’ interests. Need clarification on a specific deal? Reach out to our escrow departments at Land Title Company:
