The round table closing is an actual event. Here, the parties meet face to face to exchange documents and transfer money. The escrow closing is a legal fiction. It is a process by which the parties may never meet and documents may be executed at different times and at different places.

The round table closing establishes an actual time and place for all parties to work toward to close. People are encouraged to accomplish their tasks with a specific deadline confronting them. The buyer and seller are present at the closing to work out any last minute details and unforeseen difficulties.

The escrow closing can avoid some of the disadvantages of the round table closing. There is an orderly recording of the documents and transfer of the funds. In the round table closing there is often a gap between the time of the closing and the recording of the documents and the update of title. The seller may actually walk away from the round table closing with a check in hand before the deed is recorded. The risk of this “gap” is eliminated in the escrow closing.

The escrow closing encourages the parties to work out all details beforehand. Here, the parties may execute an escrow agreement outlining how the escrow agent is to proceed in closing. The round table closing on the other hand can encourage parties to work out the final details at the closing table. This can encourage last minute renegotiation of matters previously placed to rest.

The contract or community custom will determine whether the closing is a round table closing or an escrow closing. Circumstances may require a variation from the community custom.

Whether or not the closing is an escrow closing or a round table closing, the lender may provide the settlement agent with a closing package, escrow instructions or closing instructions. These documents are the closing agent’s instructions as to how to proceed through the closing. There may be a list of the documents being submitted or to be prepared in the package and a list of the additional documents required or conditions that must be satisfied by the various parties to the transaction. The funding check may be enclosed with the package or sent when the transaction closes. Instead of a check, the funds may be wired into the settlement agent’s escrow account.

A closing protection letter from the title company may be required by a lender when a title agency of a title company is closing the transaction. This letter will usually insure that the title company will reimburse the party to whom the letter is issued for a loss incurred by the title agency’s failure to comply with the written closing instructions that relate to: (a) the status of the title to the land or the validity, enforceability and priority of the mortgage, including the obtaining of documents and the disbursement of funds necessary to establish such status of title or lien; (b) the obtaining of any other document, specifically required by the party to whom the letter is issued, but not to the extent that the instructions require a determination of the validity, enforceability or effectiveness of such document; or (c) the collection and payment of funds due. The closing protection letter will also insure that the title company will reimburse for a loss arising out of fraud or dishonesty of the issuing agent in handling the funds or documents in connection with the closing.

Articles appearing herein are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek the advice of a licensed attorney.

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