How often should you reconcile an escrow account?

Short answer: Under ALTA Best Practices v5.0 Pillar 2, reconcile bank activity to the escrow books at least daily and perform a three-way reconciliation at least monthly, with results reviewed by management and made available to the title insurer.

The short answer from the industry standard: daily and monthly, and they are two different jobs.

Daily: bank to books

ALTA Best Practices v5.0, Pillar 2: "On at least a daily basis, reconcile the Escrow Trust Account activities in the bank’s records to the activities in the Escrow Trust Account books, identifying and investigating any discrepancies."

Daily work catches a wrong posting, a missing deposit or an unexpected debit while it is one day old and easy to trace.

Monthly: the three-way

Pillar 2: "On at least a monthly basis, a Three-Way Reconciliation is performed." The three-way ties bank, book and the sum of every file balance. It is the proof that the money in the account is exactly the money owed to the files. See Three-way reconciliation.

Then: review and share

Pillar 2: "Shortly after the monthly Three-Way Reconciliation of each fiduciary account is completed, results are reviewed and approved by Company’s management and are made available to Company’s contracted Title Insurer(s)."

A state that writes it down: New Mexico

New Mexico’s escrow rule says a title insurer or agency shall "on a daily basis, reconcile the book balance and escrow account balance" (13.14.4.9.C NMAC). It also says "At least once each calendar month, prepare a three-way reconciliation for each escrow account," with each one "prepared within 10 business days of the closing date of the bank statement and to be approved by a title insurance agent who did not perform the reconciliation" (13.14.4.9.D NMAC). That is the same daily and monthly pairing as Pillar 2, with a deadline and a second reviewer written in.

Read 13.14.4 NMAC (New Mexico Administrative Code)

How AER does both

For every account under daily reconciliation, AER reviews each day’s bank activity, works every unmatched item against your ledger, and notes by the next business day exactly where each one posts. Every month the AER Compliance Portal gives the three-way summary, and at audit time a separate portal holds each period’s reconciliation report and bank statement for your underwriter’s auditor.

Escrow reconciliation services

This page is general information, not legal advice. Your underwriter agreement or state rules may set their own schedule.