In one sentence
Written instructions from the lender to the closing or title agent specifying exactly how the closing must be conducted and funds disbursed.
The longer version
The instruction letter tells the closing agent what conditions must be met before recording and disbursement, how to disburse, and what to return. It converts the lender's requirements into operational steps for the agent.
Because it governs the moment funds move, the instruction letter is precise and closely followed, and its conditions map directly to closing checklist lines.
Common questions
- What is a closing instruction letter?
- The lender's written instructions to the title or closing agent stating exactly what must happen before funds are released and documents recorded.
- What do closing instructions include?
- The documents to be signed and recorded, the title policy to be issued, payoffs, required endorsements, the approved settlement statement, and the conditions to release funds.
- What happens if the agent does not follow the instructions?
- The agent can be liable for losses caused by the departure, which is why instructions are specific and agents confirm compliance before funding.
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