What Is Payoff / Sub-Escrow?

Sub-escrow (loan payoff) is an important service provided by title companies to facilitate the handling of money at the close of a real estate transaction. In Southern California, where most customers use independent escrow companies, the sub-escrow department handles the actual payoff of existing loans — a function unique to the region. The sub-escrow department does not draw escrow instructions or documents; they coordinate payoffs at closing.

Services covered by the sub-escrow fee include: coordinating with the escrow company or lender for recording, verifying and updating payoff demand figures with the lender on the day of closing, verifying payment of property taxes, calculating payoffs, disbursing all payoffs and net proceeds per instructions, notifying the escrow company upon confirmation of recording, and processing any refunds.

Good funds requirements are strict. Fidelity National Title must receive 'good funds' before disbursing. Wire transfers provide same-day availability. Cashier's, teller's, or certified checks provide next-day availability after deposit (per AB512). Local checks require two business days; out-of-area checks require five business days. Understanding these timelines is essential to avoid closing delays.

Demands for payoff must include specific information about the property and must be signed — it is the escrow company's responsibility to order and provide all necessary demands, including updates, on a timely basis. Overpayments on demands are refunded to escrow upon receipt from the lender, typically within two to six weeks. Shortages must be received before payoff can proceed. Disbursement checks are delivered locally by messenger; out-of-area payments are sent via overnight delivery.

Team Goeglein at Fidelity National Title coordinates sub-escrow and payoff services on every transaction across the South Bay. Matt Goeglein and Xavier de la Piedra IV ensure that payoff figures are verified, good funds are confirmed, and disbursements are completed accurately and on time.