In Texas, a common question Sellers ask is "when do I get my money?"
What is Closing?
Closing is the process of signing the paperwork. In Texas, it is customary for Buyer and Seller to each have their own closing appointment scheduled with Title, and to meet individually with the Escrow Officer or mobile notary to complete their document set. Closing is one step in the process that must be completed before funding can occur.
But, Title Said They Have The Wire Funds?
Yes, it is possible at any time during the transaction process a Buyer or Lender party could wire funds to Title. It isn't uncommon for a Lender to wire the Buyer's loan monies to Title in preparation for closing on the morning of the big day... but receiving a wire doesn't give Title permission to disburse funds. The closing paperwork must first be completed, and then if the Buyer is using financing for the purchase, the closing documents must be sent back to the lender for review. Once approved, the Lender issues a Funding Number.
What is a Funding Number?
The money may be available in the escrow account, but until the Funding Number is issued by the Buyer's Lender, Title does not have permission to access those funds. The Funding Number is usually the "trigger" for Title to announce that funding has occurred on a transaction, thus officially completing the contractual obligations to transfer ownership from Seller to Buyer, In Texas, possession is customarily conveyed after closing AND funding have occurred, unless there is a leaseback agreement in place.
When Does The Seller Get Paid?
Once the Funding Number has been issued, Title is granted permission to access the funds in the account and proceed with disbursements (payouts) to Seller, Seller's Mortgage Lienholder(s), Realtors, and any other party that is scheduled to receive payments from the settlement event. Frequently, this occurs on the same day that closing occurs, but it must always follow funding, and the funds must also be available in the account for Title to disburse.
My Realtor Said They Missed The Wire Cutoff?
When either closing, available funds, or the Funding Number occur late in the day, disbursements must also be made prior to wire transfer cutoff times governed by federal regulations. If any party receiving disbursements expects to receive them by wire, it is possible to have met all other requirements, and still have payouts bumped to the next business day. Sellers also have the option to have check disbursements, putting deposit activity under their direct control.
The Seller gets paid after Buyer and Seller parties have closed (signed documents), the funds have been provided to Title, and the file receives funding approval.