Buyer & Seller Guide

What is a Payoff?

  • Published 2023-03-10
  • Est. reading time
  • Author admin

A loan payoff is an extremely important service provided by title companies to facilitate the handling of money in the closing of a real estate transaction. It is the receipt of funds from the buyer and the payment of the obligations of the seller (if any) in conjunction with a real estate transaction. The payoff function is performed by Lawyers Title as part of the escrow process.


Commonly Used Payoff Terms

Prefigures: Estimated payoff figures calculated and given prior to closing upon request. These figures are only valid through the date given and are based on the information provided at the time.

Good Funds: Lawyers Title must be in receipt of “good funds” prior to disbursing on a payoff. Types of good funds include: a) funds wired into Lawyers Title; b) a cashier’s, teller’s or certified check (provide next day availability after deposit to comply with AB51 2); c) other local checks (provide availability of funds two days after deposit), and d) out of area checks (provide availability of funds five days after deposit).

Demands: Demands must include specific payoff information concerning the particular property and must be signed. It is the responsibility of the escrow officer to order and provide all necessary demands, including any updates or changes on a timely basis.

Taxes: Outstanding property taxes can be paid out of the payoff proceeds.

Refunds: Any overpayment of demands will be refunded to the escrow upon receipt from the lender. Refunds typically take two to six weeks to process.

Shortages: Your escrow officer will contact you if there is a shortage of the necessary funds to cover the outstanding obligations. The shortages must be received prior to payoff.

Disbursement Checks: Checks are delivered locally to lending institutions by a contracted messenger service. Checks to individuals
and to out of area lenders are typically sent via an overnight delivery company.

Wire Transfers: Funds can be wired into and out of Lawyers Title offices with our bank.

Out-of-County Transactions: Lawyers Title offices can receive and disburse payoff funds through any of our offices.

Buyer & Seller Guide

Glossary of Terms

The following is a short glossary of commonly used terms during your escrow transaction. For a more complete glossary

Close Costs and Who Pays What

Closing costs are what the buyer and seller will pay as part of the escrow transaction. Some fees are negotiable between the seller and buyer

Real Property Tax Dates

The following schedule lists some of the more significant dates for California property taxes affecting property owners.


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