If the word “escrow” makes your head spin, you are not alone. In Illinois, and especially in attorney-close markets like Winnetka, escrow can mean different things at different times. When you understand who holds your money, when it moves, and how your closing unfolds, you can avoid surprises and keep your deal on track. This guide breaks it down in plain language so you can close with confidence. Let’s dive in.
Escrow in Illinois explained
In Illinois real estate, “escrow” has two common meanings. First, there is closing escrow, which is the deposit and funds held to carry out your purchase contract and to be disbursed at closing. Second, there is a post-closing mortgage escrow account, which your lender uses to pay future property taxes and insurance. This article focuses on closing escrow so you know how your money is handled from contract to keys.
Attorney-close practice in Winnetka
Winnetka is in an attorney-close market. Attorneys and title companies often prepare documents, coordinate title work, hold and disburse funds, and manage the closing appointment. Earnest money is held by the party named in your contract. That can be a broker, an attorney, or a title company. The escrow agent follows the contract and applicable Illinois rules for safekeeping and accounting.
Step-by-step escrow timeline
Here is the typical flow from contract to funded, recorded, and disbursed closing in Cook County.
1) Contract signed and earnest money
- You sign the purchase agreement and deliver the earnest-money deposit within the timeframe in your contract, often 24 to 72 hours.
- The escrow holder issues a written receipt that shows amount, date, and where funds are held.
2) Inspection and due diligence
- You complete inspections and review results during the contingency window.
- Any agreed repairs or credits are put in writing so they appear on your closing statement.
3) Title search and commitment
- A title search is ordered and a title commitment is issued that lists requirements and exceptions.
- You and your lender review easements, liens, or judgments and clear items as needed.
4) Lender underwriting and clear to close
- If you are financing, the lender underwrites your loan. Under federal rules, the lender must deliver the Closing Disclosure at least 3 business days before you sign.
- Once you are clear to close, the lender will be ready to fund.
5) Closing appointment
- You sign documents at your attorney’s or the title company’s office.
- You provide funds to close by wire transfer or certified funds per written instructions from the escrow agent.
6) Funding and recording
- Buyer funds and lender funds are combined in escrow.
- The escrow agent pays off the seller’s mortgage, then submits the deed and mortgage for recording with Cook County. Electronic recording often allows same-day recording, but timing can vary by workload and document requirements.
7) Disbursement
- After recording, the escrow agent disburses seller proceeds, pays commissions and closing expenses, and issues title insurance policies.
8) Post-closing items
- Final recordings and statements are completed. If you have a mortgage, your servicer sets up the post-closing escrow for taxes and insurance.
Typical timing
- Many financed transactions close in 30 to 60 days from contract. Conventional deals often target 30 days. Cash deals can close sooner, sometimes 10 to 21 days, if title and municipal items are clear.
- The Closing Disclosure must be received at least 3 business days before signing. Plan around that milestone.
Who holds your funds
- Attorney trust account. Illinois attorneys often hold escrow in a client trust account and must follow state professional conduct rules for safekeeping and accounting.
- Title or escrow company. Title companies maintain escrow trust accounts and handle deposits, payoffs, and disbursements under industry standards.
- Broker trust account. Earnest money can be held by a listing or buyer broker if your contract says so.
- Lender servicing account. After closing, your lender or servicer may collect a separate escrow for taxes and insurance. This is not the same as closing escrow.
Always confirm in writing who will hold your earnest money, where, and when your deposit is due. Keep the receipt.
Protections and best practices
- Fiduciary duty. Escrow agents must safeguard funds, keep trust money separate, and account accurately as required by contract and Illinois rules.
- Title insurance. Lenders require a lender’s policy. An owner’s policy is optional but strongly recommended to protect your ownership against covered title defects that were not found before closing.
- Disputes over earnest money. If you and the other party disagree about a release, the escrow holder follows the contract. They may seek written instructions or file an interpleader with the court so a judge decides.
- Wire-fraud vigilance. Real estate wire fraud is a known risk. Verify wiring instructions by calling a known, trusted phone number for your escrow agent. Never rely on last-minute email changes. Confirm the receiving account before you send funds.
- Always get a final statement. Review your ALTA settlement statement or Closing Disclosure. It should itemize deposits, credits, payoffs, prorations, and fees.
Closing costs in Cook County
Actual amounts depend on your contract, lender requirements, and municipal charges. Here is what most buyers and sellers should expect to see.
Common cost categories
- Earnest money. Applied to your down payment or closing costs, or returned if the contract ends within allowed contingencies.
- Title services. Title search and title insurance premiums for owner and lender policies.
- Escrow or closing fee. Charged by the attorney or title company for handling funds and settlement.
- Attorney fees. Common in attorney-close markets for document preparation and closing management.
- Lender fees. Origination, appraisal, underwriting, and credit report for buyers using financing.
- Recording and transfer charges. County recording fees, transfer taxes, and any local forms or fees.
- Prorations. Property taxes, HOA dues, and utilities are prorated as of the closing date.
Who typically pays what
- Seller. Customarily pays broker commission. In many Chicago-area deals, the seller often pays for the buyer’s owner’s title policy, but this is negotiable.
- Buyer. Typically pays lender fees, appraisal and inspection costs, plus their portion of title and escrow fees unless negotiated otherwise.
Helpful ranges to frame expectations
- Buyer closing costs, excluding down payment. Industry estimates often fall around 2 to 5 percent of the purchase price.
- Seller total costs. Often 6 to 10 percent of the sale price when commission is included.
- Escrow or closing fee. Usually a modest flat fee in the hundreds of dollars, depending on the firm and complexity.
- Title insurance. One-time premium scaled to the purchase price. Ask your title company for exact rates.
Always request written estimates. Buyers should compare their Loan Estimate and Closing Disclosure. Sellers should ask for a pro forma closing statement early and update it as payoffs, credits, and prorations change.
Documents checklist
Track these items from contract to close so nothing stalls your funding or recording.
- Executed purchase agreement and any addenda
- Earnest-money receipt with holder and account details
- Title commitment and listed exceptions or requirements
- Survey or plat of survey, plus any title survey exceptions
- Seller property disclosures as required
- Home inspection report and signed repair addenda or credits
- Appraisal report, if you are financing
- Lender documents, including the Loan Estimate and Closing Disclosure
- Homeowners insurance binder, naming the lender if applicable
- Payoff statements for any seller mortgages or liens
- HOA or condo documents and estoppel letters, if applicable
- Government IDs for all signers
- Verified wiring instructions for any funds you will send
- Final ALTA settlement statement and proof of recording
- Recorded deed and your owner’s title policy after closing
Pro tips for a smooth close
- Ask in writing who holds your earnest money, where it is held, and when it is due.
- Keep every receipt and your Closing Disclosure in one secure folder.
- Call to verify wiring instructions using a phone number you find independently.
- Request a pro forma closing statement early if you are a seller. Review line items and payoffs.
- Choose an experienced local attorney or title team that regularly records in Cook County and handles Winnetka closings.
A clear plan, clean documents, and verified wiring details will keep your Winnetka closing calm and predictable. If you want seasoned guidance from offer to recording, reach out to Nicole Fabiano for local insight and a smooth path to the finish line.
FAQs
Who holds earnest money in a Winnetka deal?
- The party named in your contract holds it, commonly a title company, a broker’s trust account, or an attorney trust account. Get a written receipt and confirm the account.
When are my closing funds due in Illinois?
- Your Closing Disclosure or settlement statement shows the final amount due. Most buyers wire certified funds before or on closing day. Always verify wiring instructions by phone.
How long from signing to recording in Cook County?
- Many closings fund and record the same day, especially with e-recording. It can take a few business days if workloads are heavy or originals are required.
What happens if we dispute the earnest money release?
- The escrow holder follows the contract’s dispute process. If no agreement is reached, they can interplead the funds with the court for a decision.
Do I need owner’s title insurance as a buyer?
- A lender will require a lender’s policy if you finance. An owner’s policy is optional but strongly recommended to protect your ownership against covered title issues.
