Disbursement is the process of verifying incoming funds and releasing payments to all parties that are involved with the transaction. While conceptually simple, the disbursement process requires diligent work before and after closing to ensure that all funds are collected and distributed correctly.
Disbursement occurs after all documents have been executed and all funds have been received. It is the moment the seller is paid the purchase price, or in the case of a refinance transaction, the borrower is paid if any amount is due.
While transactions and companies may vary, at Peak Title Professionals, , it is the escrow officer, or an attorney where required by law, who is responsible for final disbursement accuracy. During the preliminary closing and title process, the closing team has identified certain items that must be paid based on title requirements, such as liens, homeowner’s association dues, and outside vendors that are owed, if any.
When the research and fact finding phase is complete, the escrow officer will then audit the file and prepare the final settlement statement. Your final settlement statement will be a true accounting of all costs and be used for disbursement purposes.
If lender financing is involved in the transaction, your lender may send you a closing disclosure three days prior to closing for your review and approval of the final costs. You will also sign the settlement statement prepared by your title company on the day of closing.
On the day of closing, each party will deliver their closing funds due, as determined by the final closing disclosure or settlement statement, if any. Often funds are required to be submitted to the title agency via wire, cashier check, or certified funds. Check with your title agency or attorney for maximum limits of personal funds being brought to closing. The title agency or attorney will post these funds in accordance with state law to the transaction file.
Once closing is complete and funds have been delivered, the title agency’s disbursing agent or an attorney will review all supporting documentation and disburse the funds in accordance with the executed documents and proper authorization of the parties. This will include a combination of outgoing wires and check printing and mailing, based on the instructions of the payees.
Proper disbursement of a transaction includes verifying incoming funds and ensuring all outgoing funds after closing are balanced and accurate. After disbursement, files are audited for shortages and overages. Overages are reviewed to determine the proper party owed a refund and any refunds are then disbursed and mailed to the owed party.
The information provided in Peak Title Professionals, does not, and is not intended to, constitute legal advice. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.
