What Is a Payoff / Sub–Escrow?
Sub–escrow (loan payoff) is an extremely important service provided by title companies to facilitate the handling of money in the closing of a real estate transaction. The performance of the payoff function, exclusive of escrow services, is unique to Southern California. This is because the majority of our customers are independent escrow companies, and the majority of our title orders require payoff service.
The Sub–escrow department does not draw escrow instructions or documents (i.e. Grant Deeds, Trust Deeds, etc.) They do not order demands for payoff, but do make the payoffs at the close of escrow. Sub–escrow has a language of its own — note the following brief definitions of commonly used terms, intended to answer some of the questions you may have regarding the sub–escrow (payoff) function.
The receipt of funds from buyer and the payment of the obligations of the seller in conjunction with a real estate transaction. The payoff function is performed by the title company.
Corinthian Title Company fees for handling a payoff vary slightly from county to county. The fee is strictly a processing charge and does not cover special handling charges or potential shortages.
Estimated payoff figures calculated and given prior to closing upon request. These figures are only valid through the date given and are based on the information provided at that time.
The title company must be in receipt of “good funds” prior to disbursing on a payoff. Types of good funds include:
- Funds wired into the title company’s sub–escrow account
- A cashier’s, teller’s or certified check will provide next day availability after deposit, to comply with AB512
- All other local checks will provide availability of funds two days after deposit.
- Out–of–area checks will provide availability of funds five days after deposit
Wire Transfers – Funds can be wired into and out of the Corinthian Title Company offices with our bank.
Demands must include specific payoff information concerning the particular property and must be signed. It is the responsibility of the escrow to order and provide all necessary demands including any updates of changes on a timely basis.
Outstanding property taxes can be paid out of the payoff proceeds.
Any overpayment of demands will be refunded to the escrow upon receipt from the lender. Refunds typically take two to six weeks to process.
Corinthian Title Company will contact the escrow if there is a shortage of the necessary funds to cover the outstanding obligation. The shortages must be received prior to payoff.
Checks are delivered locally to lending institutions by a contracted messenger service. Checks to individuals and to out–of–area lenders are typically sent via an overnight delivery company.
Corinthian Title Company can receive and disburse payoff funds through any of our offices. Corinthian Title Company designs all of its services, including payoffs, to serve its customers in a fast, friendly and accurate manner.
All information contained herein is for informational purposes only and is not intended to offer advice -- legal, financial or otherwise -- about specific situations or problems. Information is deemed reliable but not guaranteed. Always consult a professional before making decisions about your real estate situation. Intended for distribution to only one per individual for marketing purposes only on behalf of Corinthian Title Company. Not for reproduction. For consumer use only.