“Escrow” is one of the most misunderstood parts of the Texas real estate process.
In some states, attorneys handle the transaction…
In others, escrow companies do…
But in Texas, title companies run the escrow process.
When I represent buyers and sellers in North Texas, I make sure everyone understands what’s happening from the moment the contract is executed until the keys change hands.
Here’s exactly how escrow works in a Texas real estate transaction.
1. What Is Escrow in Texas?
Escrow is a neutral, third-party service that holds:
✔️ Earnest money
✔️ Option money (if delivered to title instead of seller)
✔️ Contract documents
✔️ Loan documents
✔️ Closing funds
In Texas, the title company is the escrow agent.
They protect both sides by making sure:
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Money is handled correctly
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All contract obligations are met
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Title is clear
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The lender is satisfied
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Closing happens legally and accurately
2. Who Chooses the Title Company?
Either side can propose a title company, but:
✔️ The party paying the title policy typically chooses
✔️ Builders almost always require their preferred title company
✔️ In competitive markets, buyers may allow seller to choose
I help clients select reputable, experienced title companies in North Texas.
3. Earnest Money Deposit (Step One of Escrow)
Once the contract is executed:
✔️ Buyer must deliver earnest money to the title company
✔️ Within 3 days (business days)
✔️ Usually 1–3% of the purchase price
The title company holds this in an escrow account until closing.
If the buyer terminates under a valid contingency, title returns the earnest money.
If the buyer defaults, the seller may receive it.
4. Option Fee (Also Part of Escrow)
Option money is:
✔️ Paid to the seller (sometimes delivered to title)
✔️ Non-refundable (credited at closing)
✔️ Buyer’s right to terminate for any reason
✔️ Due within 3 days
Title companies increasingly handle the delivery electronically.
5. What the Title Company Does During Escrow
✔️ Opens an escrow account
✔️ Collects earnest/option money
✔️ Orders the title search
✔️ Issues the title commitment
✔️ Orders HOA resale docs (if requested)
✔️ Reviews survey & T-47
✔️ Works with your lender
✔️ Prepares the Closing Disclosure
✔️ Holds all funds
✔️ Sends documents to the county after closing
Behind the scenes, title companies do more than most people realize.
6. The Title Commitment (Critical Part of Escrow)
The title commitment includes four schedules:
Schedule A — Basic info
Schedule B — Exceptions
Schedule C — Requirements
Schedule D — Disclosures / parties involved
During escrow, I help you review:
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Easements
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Encroachments
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Liens
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Mineral reservations
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Deed restrictions
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HOA concerns
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Survey issues
Anything on Schedule C must be cleared before closing.
7. The Lender’s Role in Escrow
If you’re financing, your lender plays a major role.
They:
✔️ Order the appraisal
✔️ Issue underwriting conditions
✔️ Review title documents
✔️ Approve insurance
✔️ Approve the Closing Disclosure
✔️ Send closing instructions to title
✔️ Transfer loan funds at closing
Title cannot close until the lender signs off on everything.
8. Inspections Happen During Escrow
This includes:
✔️ General inspection
✔️ Roof inspection
✔️ Foundation evaluation
✔️ HVAC inspection
✔️ Sewer scope
✔️ WDI/termite inspection
✔️ Pool inspection
Inspection reports are shared with me—not the title company.
9. Repair Negotiations Happen During Escrow
Using the Amendment to Contract, we may negotiate:
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Repairs
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Seller concessions
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Price reductions
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Home warranties
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Credits
Title does not enforce repairs—they only prepare the paperwork and check amounts.
10. Final Loan Approval (Clear-to-Close)
As escrow progresses, the lender issues:
✔️ Conditional approval
✔️ Final approval (Clear-to-Close)
Once we get “CTC,” the title company schedules closing.
11. Closing Day (How Funding Works)
Texas is a wet funding state, meaning:
✔️ Lender must fund the loan before the buyer gets keys
✔️ Title must confirm funding before seller is paid
✔️ Deed must be recorded after funding
Closings typically happen at:
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Title offices
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Mobile notary visits
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Remote online notarization (if allowed)
Buyers sign their loan docs; sellers sign their deed and financial forms.
12. When Do You Get the Keys?
In Texas:
✔️ You get keys AFTER funding,
not immediately after signing.
Funding usually happens:
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A few hours after signing
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Same day if earlier signing
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Next business day for late signings
I coordinate timing to minimize your wait.
13. What Happens After Closing?
Title:
✔️ Records the deed
✔️ Sends the title policy
✔️ Pays off seller’s mortgage
✔️ Distributes funds
✔️ Sends final documents
Escrow officially closes when funding and recording are complete.
14. Why Texas Escrow Is Different
Texas is unique because:
✔️ Title companies—not attorneys—handle closings
✔️ We use promulgated TREC contracts
✔️ Earnest & option money are separate
✔️ Funding is required before possession
✔️ Appraisal waivers are common
✔️ Option Period happens within escrow
If you’ve bought homes in other states, the process can feel very different.
Bottom Line: Escrow in Texas Is a Structured, Secure Process
The title company plays a huge role in protecting both sides.
My role is to guide you through timelines, documents, deadlines, and decision-making so the entire escrow process is smooth and predictable.
Buying or Selling in North Texas?
If you want a Realtor who knows the escrow process inside and out—and who keeps every detail on track from contract to closing—I’d love to help.
