Mortgage brokers, private escrow or title insurance companies, and lawyers usually provide escrow services. Under Washington state's limited practice rule, certified non-lawyers can prepare and complete certain court-approved forms for use in closing a loan, extending credit and the sale or other transfer of real or personal property. Many buyers and sellers mistakenly believe an escrow agent guarantees the protection of their rights. This individual is a neutral third party who cannot and will not attempt to represent the rights of either the buyer or seller.
Escrow services by a neutral third party are essential to the proper closing and recording of instruments and delivery of monies. It should be remembered, however, that escrow agents obtain information and take their instruction from the parties; they do not guarantee or protect the rights of either party in assuring that documents are consistent with purchase and sale agreements or either party's understanding of the transaction.
The escrow agent must often prepare and obtain approval by the parties of "truth in lending" and "closing" statements as required by the federal Real Estate Settlement Procedures Act (RESPA). These forms and disclosures are required to advise borrowers of the costs and interest rates in the transaction.
One of the most important instruments executed for a closing is a deed. This document transfers ownership of property from the seller to the buyer. There are several types of deeds, such as "warranty deed," "special warranty deed," "bargain and sale deed," and "quit claim deed." The type of deed affects the buyer's rights against the seller. The manner in which the buyer's name appears on the document is also important, since it may affect the form of ownership and the tax liability of the owner.