As a real estate broker in Washington State you’re likely familiar with the many moving parts of a transaction. But do you know who can legally handle your closings—and the key differences between them? Whether you’re representing buyers or sellers, understand the differences for escrow and closing services.
In Washington State, real estate closings can be handled by:
- Attorneys
- Banks or Lenders
- Independent Escrow Companies
- Title & Escrow Companies
Each option has distinct advantages and regulations. Let’s break them down.
- Attorneys: The Legal Expertise
Unlike some states that require attorneys for real estate closings, Washington does not mandate attorney involvement. However, attorneys can still act as escrow agents and facilitate closings, especially in complex transactions.
Why May an Attorney be used for a Closing?
- Needed for legal disputes, contract interpretation, or estate sales.
- Can offer legal advice, unlike escrow officers or title companies.
- Beneficial for commercial or high-value residential transactions.
Potential Downsides:
- Higher costs than other closing options.
- Not always necessary for standard residential transactions.
- Attorneys may not offer title insurance, requiring coordination with a title company.
- Banks & Lenders: Handling Their Own Closings
Some banks and lenders can handle the escrow and closing process in-house. This is more common with larger financial institutions that offer portfolio loans or handle large volumes of refinances.
Why May a Bank or Lender Chose to Close a Transaction?
- They want control over the process to ensure compliance and minimize risk.
- Can bundle escrow fees with loan services, potentially reducing costs.
- Provides streamlined communication between loan processing and escrow.
Potential Downsides
- Potential conflict of interest if the lender is also the escrow holder.
- Not as common for purchase transactions, as many lenders prefer independent escrow providers.
- May lack expertise in title research and insurance, requiring outside title services.
- Independent Escrow Companies: The Neutral Third Party
An independent escrow company is a standalone business that only handles escrow and closing services. They are not affiliated with a title company, bank, or real estate brokerage, making them a truly neutral third party.
Why Use an Independent Escrow Company?
- Offers strict neutrality, which can be beneficial in transactions where unbiased handling is essential.
- Specialized in escrow services only, meaning a high level of expertise in transaction management.
- Often preferred for For Sale By Owner (FSBO) transactions or private-party sales.
Potential Downsides:
- Requires separate coordination with a title company for title insurance.
- Can be more expensive since they operate independently.
- Not as widely used as title & escrow companies for standard real estate closings.
- Title & Escrow Companies: The Most Common Closing Choice
In Washington State, the majority of real estate transactions are closed by title companies that also have an escrow department. These companies handle both the title insurance and escrow services, offering an all-in-one closing solution.
Why Use a Title & Escrow Company?
- Seamless integration of title research, title insurance, and escrow services.
- Typically more cost-effective than separate title and escrow providers.
- Preferred by most brokers, lenders, and homebuyers due to familiarity and efficiency.
Potential Downsides:
- Less neutral than an independent escrow company, as they also issue title insurance.
- May have stronger relationships with certain real estate brokerages and lenders, creating potential bias.
- Some states have stricter regulations on title and escrow integration, but Washington allows it.
Which Closing Option is Best for Your Transaction?
| Closing Option | Best For… | Key Benefits | Potential Downsides |
| Attorney | Legal disputes, high-value transactions | Can provide legal advice, contract expertise | Higher cost, not necessary for most residential closings |
| Bank or Lender | Refinances, lender-controlled transactions | Direct control, cost bundling | Conflict of interest, limited experience in title research |
| Independent Escrow Company | FSBO, private-party sales, neutral handling | Highly specialized, unbiased | Requires separate title coordination, possibly higher fees |
| Title & Escrow Company | Most standard real estate transactions | Efficient, integrated services, cost savings | Less neutral than an independent escrow company |
Understanding the differences between who can close your transactions allows you to guide your clients appropriately. While title and escrow companies handle the majority of closings in Washington, knowing when to use an attorney, an independent escrow company, or even a lender’s in-house services can help you navigate unique transaction situations.
Want to discuss the best closing options for your next deal? Reach out to our escrow staff at Land Title Company for guidance!
Sources:
- Washington State Office of the Insurance Commissioner – https://www.insurance.wa.gov
- Washington State Bar Association – https://www.wsba.org
- Washington State Department of Financial Institutions (DFI) – https://dfi.wa.gov
- Northwest Multiple Listing Service (NWMLS) – https://www.nwmls.com
- Real Estate Settlement Procedures Act (RESPA) – https://www.consumerfinance.gov