Escrow instructions to pay off secured promissory note?

[Lois S.]

We hold a promissory note that has come due, and have received a payoff demand letter from an escrow co. that is not local.

Escrow is asking for:

• the Note, 
• the Trust Deed, 
• Order to Reconvey signed by us
• Policy of Title Insurance number
• Fire Insurance Policies Number. (The borrower buys fire insur)

The demand letter says:

You are authorized to use the above described documents on of before _____, (date) provided you hold for the account of the undersigned the sum of $_____________, and interest at _______% per annum on $__________ from ______(date) to date of payment and pay a reconveyance fee of $45.

Disbursement to be made by your check etc......   If conditions of this escrow have not been complied with at expiration of time provided, you are to complete same at earliest possible date, unless I have otherwise instructed you in writing.

Questions:  Is it standard to send escrow our original documents before we get paid, including order to reconvey?

Thanks for any information given to this newbie.

[Jeff S.]

The first rule of arranging a loan payoff:

NEVER SEND ORIGINAL LOAN DOCUMENTS TO ESCROW UNTIL YOU HAVE BEEN PAID OFF IN FULL.

This includes the signed and notarized Substitution of Trustee and Reconveyance which, once recorded, nullifies your Deed of Trust, @Lois S.

These documents are the only leverage you have if there is a payoff dispute. The first time you are shorted $132K by Title, as we once were, you’ll be glad you held all the cards.  Bad advice from your tax preparer.

Unless it precisely fits your situation, throw out the demand letter you received from escrow. You are under no obligation to use it and I’ve never had a title company complain. Instead, we email a much more specific demand letter containing the items I listed in my response to you in this thread: Promissory note payoff issue with title company

Include your wire instructions. Add to the end that you will send the original note, original deed of trust, and the signed and notarized sub & recon once you receive payoff. Also add that you request Title call you to confirm the payoff amount and verify your wire instructions. There’s no obligation, but most of the time they will.

For a description of the documents you are legally obligated to send, and the required timeline (for CA, you really need to state the jurisdiction), see this thread: Request for a payoff and reconveyance

No idea why escrow would ask you for any title or fire insurance info. They can get that from the borrower.