Closing and Escrow in Missouri

MO Rev Stat § 381.022.5 states that a title insurance agent may only handle escrow if it is being done in connection with issuing a title insurance policy. In other words, a title insurance agent cannot do any uninsured closings. No CPLs can be issued unless the title insurance agent is handling the funds.

381.410 of the MO Title Insurance law actually contains a definition for settlement agents that may be used in conjunction with a closing which includes banks, lawyers, or “a person licensed under chapter 339” (which is basically real estate brokers). All of the provisions describing the duties of a settlement agent have been repealed. It can either be speculated that the legislature did this because they wanted that practice to stop or that these authorized parties could not be regulated under the title insurance law because they were already governed by other rules.

The broker may be correct that nothing prohibits them from handling escrow, but I would still think that does not make it mandatory on anyone’s part absent a contract that requires it.

There is a case about this from the early 90s where real estate brokers were holding themselves out as escrow companies. The court basically said they could act as escrow companies and fill in standardized forms, but were otherwise engaging in the practice of law if they drafted deeds or any other customized forms. In re First Escrow, Inc., 840 S.W.2d 839, 841 (Mo. 1992)

Title companies, lenders, real estate agents, and attorneys may conduct closings. In the St. Louis area, title company closings predominate. In the Kansas City area, an escrow company or a title company generally conducts the closing. Conveyance is by warranty deed. Deeds of trust are the customary security instruments and allow private power of sale. The trustee must be named in the deed of trust and must be a Missouri resident. Foreclosure involves publication of a sale notice for 21 days, during which time the debtor may redeem the property or file a notice of redemption. The foreclosure sale buyer receives a trustee’s deed. Missourians use ALTA policies and endorsements. Buyers and sellers generally split the closing costs. Sellers in western Missouri usually pay for the title insurance polices, while elsewhere the buyers pay. There are no documentary, mortgage, or transfer taxes. Property taxes are payable annually and become delinquent January 1st for the previous year. [1]

State regulations

There is no state agency that regulates real estate closings. However, Missouri has a good funds law that establishes the type of funds which can be accepted for closing. (Section 381.412 Missouri Revised Statutes)

Who can conduct a closing on residential property

Title companies normally provide closing services for residential properties. A title order is opened with a title company, and a title commitment is produced. The closer uses the title commitment as well as a copy of the sales contract as a basis to determine the documents needed for closing. Closers can prepare standard forms for closings where they are required to "complete the blanks" in forms such as deeds, deeds of trust, and affidavits. More complicated documents such as party wall agreements or joint driveway agreements need to be prepared by an attorney. Funds are usually disbursed "at the table" before documents are recorded.

Who can conduct a closing on commercial or industrial property

Title company closers may close commercial or industrial transactions. Often, attorneys provide closing instruction letters for the benefit of the clients. Sometimes attorneys close transactions in the law offices and ask that a title company representative be present to mark up the title commitment.

Licensing

Escrow closing comes within the definition of "title insurance business. (Section 381.031 (19)(b)(c) Missouri Revised Statutes) Therefore, title company closers need to have a title insurance license issued by the Department of Insurance. No license is required for attorneys and closers for independent closing companies.

Escrow or settlement

In residential transactions, closers work from the sales contract. Settlements are conducted "at the table." Funds are normally disbursed at the table. The transaction is considered closed at disbursement.

Collected funds (wet settlement)

Missouri has a "good funds" law. (Section 381.412 Missouri Revised Statutes)

Payment Customs

(02/11/2015)

• Seller pays for the Owner’s policy in Western MO; Buyer pays for the Owner’s policy in Eastern MO.
• No Transfer tax in MO; Recording fees are paid by the Buyer for the deed, by the Borrower for the deed of trust, unless the contract specifies otherwise.
• Borrower pays for Survey if required by Lender. Buyer also pays for Survey if required for Buyer unless contract specifies otherwise.
• Closing fees generally split between Buyer and Seller.