Key Takeaways
- Arizona uses escrow companies rather than attorneys for most residential closings
- Escrow is a neutral third party holding documents and funds until conditions are met
- Title insurance is typically purchased through the escrow/title company
- The escrow company prepares the closing statement and disburses funds
- Arizona is a title theory state where the lender holds legal title via a deed of trust
Last updated: January 2026
Arizona Escrow and Closing Procedures
Arizona uses escrow companies for most real estate closings, which differs from attorney states.
What is Escrow?
Escrow is a neutral third party that:
- Holds documents and funds
- Ensures all conditions are met
- Facilitates the closing process
- Disburses funds to appropriate parties
Escrow Agent
The escrow agent:
- Is neutral—does not represent buyer or seller
- Follows written escrow instructions
- Cannot give legal advice
- Must be licensed (title company, attorney, or escrow company)
Escrow Process
Opening Escrow
Escrow opens when:
- Contract is executed
- Earnest money is deposited
- Escrow instructions are signed
During Escrow
The escrow company:
| Task | Description |
|---|---|
| Order title search | Examine chain of title |
| Receive documents | From lender, parties, etc. |
| Prepare closing docs | Settlement statement, deed |
| Coordinate payoffs | Existing loans, liens |
| Schedule closing | Set date for signing |
Close of Escrow (COE)
At closing:
- All documents are signed
- Funds are collected
- Documents are recorded
- Funds are disbursed
Title Insurance
Types of Title Insurance
| Policy | Protects |
|---|---|
| Owner's Policy | Buyer's interest in property |
| Lender's Policy | Lender's interest (required by most lenders) |
What Title Insurance Covers
- Unknown liens or encumbrances
- Errors in public records
- Forged documents
- Undisclosed heirs
- Title defects
Who Pays
Typically:
- Seller pays owner's policy (negotiable)
- Buyer pays lender's policy
Deed of Trust
Arizona is a title theory state using deeds of trust:
| Document | Purpose |
|---|---|
| Deed of Trust | Security instrument for loan |
| Trustor | Borrower |
| Trustee | Neutral third party (holds title) |
| Beneficiary | Lender |
Foreclosure
Arizona allows:
- Non-judicial foreclosure (trustee sale) - Most common
- Judicial foreclosure - Court supervised
Prorations
Common prorations at closing:
| Item | Proration Method |
|---|---|
| Property taxes | Based on tax year |
| HOA dues | Monthly |
| Rent (if applicable) | Daily |
| Interest | Per diem |
Arizona Property Taxes
- Paid in arrears (after the period covered)
- First half due October 1
- Second half due March 1
- Prorate based on calendar or fiscal year per contract
Loading diagram...
Test Your Knowledge
Who typically conducts real estate closings in Arizona?
A
B
C
D
Test Your Knowledge
In Arizona's deed of trust, who is the trustee?
A
B
C
D