Roughly 28 states plus the District of Columbia handle residential real estate closings primarily through escrow or title companies, while about 16 states run them through attorneys, and the remaining handful allow both. That split is the heart of the escrow states vs. attorney states question, and it determines who coordinates your closing, who can give you legal advice during it, and how your money moves.
What Each Model Actually Does
In an escrow closing, a neutral third party—typically a title company or an independent escrow company—sits between the buyer, seller, and lender. The escrow officer collects the earnest money, holds it in trust, gathers signed documents, and releases funds once every condition in the purchase agreement is met. The escrow agent represents no one and cannot give legal advice. The role is mechanical: follow the escrow instructions, confirm the conditions, close the file.
In an attorney closing, a licensed attorney either must be present or is so embedded in local practice that nearly every deal runs through one. The attorney reviews the title, drafts or approves the deed and other closing documents, and confirms the transaction complies with state law. The strictness varies: some states require an attorney at the closing table, others only require that an attorney prepare certain documents.
The attorney requirement in these states is tied to unauthorized practice of law rules. Drafting contracts, interpreting contract terms, and advising on legal rights are reserved for licensed attorneys. Real estate agents can usually fill in factual blanks on pre-approved forms—names, addresses, prices—but anything past that crosses the line.
Escrow and Title Company States
In these states, an escrow officer or title company representative typically runs the closing from contract to recording. An attorney is available if either party wants one, but the deal can close without one:
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- District of Columbia
- Hawaii
- Idaho
- Illinois
- Indiana
- Kansas
- Maryland
- Michigan
- Minnesota
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Mexico
- North Dakota
- Ohio
- Oklahoma
- Oregon
- South Dakota
- Texas
- Utah
- Wisconsin
- Wyoming
Local practice can still vary. In parts of Ohio, a real estate broker may be required to hold the earnest money rather than a title company. In Texas, the lender sometimes handles parts of the closing directly. The list reflects the predominant practice, not a universal rule.
Attorney States
In these states, closings generally go through a licensed attorney:
- Alabama
- Connecticut
- Delaware
- Georgia
- Iowa
- Kentucky
- Louisiana
- Maine
- Massachusetts
- Mississippi
- New York
- North Carolina
- South Carolina
- Tennessee
- Vermont
- West Virginia
States That Use Both
A handful of states let you close through either a title company or an attorney, with the choice often turning on local custom or the complexity of the deal.
- Florida: either a title company or a closing attorney can handle the transaction. No attorney is required, but many buyers hire one anyway.
- New Jersey: northern New Jersey closings are almost always attorney-led, while southern New Jersey commonly uses title companies. The state does not mandate one model.
- Pennsylvania: title companies, escrow companies, and attorneys all handle closings depending on the region and the parties’ preferences.
- Rhode Island: both title companies and attorneys conduct closings.
- Virginia: title companies, escrow companies, and attorneys all operate in the closing space.
- Washington: title companies and independent escrow companies handle most closings, though escrow companies must have a limited practice officer to conduct the closing. Attorneys also handle closings directly.
In a hybrid state, the purchase agreement usually names who will handle the closing. Your agent can tell you what is customary locally, but you are generally free to choose.
How the Costs Compare
The closing model affects your costs, though not always in the direction you would expect. In escrow states, the escrow company’s fee for a standard residential transaction typically runs $300 to $2,500 or more, depending on sale price and complexity. In attorney states, legal fees for handling the closing generally range from $750 to $5,000 or higher, reflecting the added legal review and liability the attorney takes on.
Recording fees charged by county offices to record the deed and mortgage usually fall between $125 and $500 depending on the county and the number of pages. Transfer taxes add another layer. About 34 states charge a real estate transfer tax, at rates between 0.1% and 3% of the sale price, with the buyer or seller paying depending on local custom and the contract. The other 16 states—including Alaska, Arizona, Colorado, Idaho, Indiana, Kansas, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, and Wyoming—charge no state-level transfer tax.
When the Money Actually Moves: Wet vs. Dry Funding
States also differ in when funds change hands at closing, which matters more than most buyers and sellers realize because it decides whether you walk out with a check or wait days for your proceeds.
In a wet funding state, all mortgage funds are disbursed the same day documents are signed. The seller is paid, the agents get their commissions, and the deal is effectively done at the table. Most states follow this model.
In a dry funding state, documents are signed first and funds are not released until all paperwork has been reviewed and recorded, sometimes one to four business days later. The states that permit dry funding include Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington. Some of these, like Alaska and California, allow both wet and dry closings, with the parties choosing.
If you are a seller in a dry funding state, do not plan on depositing your proceeds the day you sign. If you are buying another property at the same time, build the delay into your timeline so you are not caught between two closings with no accessible funds.
Title Insurance vs. Attorney Title Opinions
In escrow states, a title insurance policy is the standard way to protect against ownership disputes. The title company searches public records, flags liens or defects, and issues a policy that indemnifies you against losses from covered title problems. Lender’s title insurance is generally required to get a mortgage; owner’s title insurance is optional but strongly recommended.1Consumer Financial Protection Bureau. What Is Lender’s Title Insurance?
In some attorney states, buyers may receive an attorney’s title opinion letter instead of, or in addition to, a title insurance policy. The attorney examines public records and issues a written opinion on the status of the title. The protection gap between the two is significant. Title insurance covers risks that cannot be found through a public records search, including forgery in the chain of title, unrecorded liens, and heir or probate issues. An attorney’s opinion covers only what the attorney found in the public records, and if something was missed, your only remedy is a malpractice suit against the attorney.2American Land Title Association (ALTA). Frequently Asked Questions for Lenders Considering Title Insurance vs Attorney Opinion Letters
Title insurance also comes with a duty to defend. If someone challenges your ownership, the insurer pays for legal defense on top of the coverage amount. An attorney opinion letter typically carries no duty to defend, so litigation costs fall on you. For most buyers, title insurance is the safer choice regardless of which state you are in.
What Happens When the Deal Falls Apart
One of the biggest practical differences between the two models shows up when a transaction collapses and both sides claim the earnest money. In escrow states, the escrow agent holding the deposit is stuck in the middle. They cannot release funds to either party without written agreement from both sides or a court order. If the buyer and seller cannot agree, the escrow agent’s typical remedy is to file an interpleader action, essentially asking a court to decide who gets the money. That process can take months and adds legal costs for everyone.
In attorney states, the closing attorney faces a similar dilemma but may have more room to advise their own client on the contractual rights to the deposit. Because the attorney represents one party and not both, the other side still needs its own counsel to work out the dispute. Either way, the contingency language in the purchase contract is what finally decides who keeps the earnest money. Spend the time upfront to understand what your contract says about inspection, financing, and appraisal contingencies. That language is worth more than any escrow protection once a deal goes sideways.