What are Title & Escrow?

What is title insurance?

Title insurance is an insurance policy that protects property owners and their lenders against losses related to the property’s title or ownership. Title insurance minimizes the risk to the purchaser of acquiring property with an unknown legal history.
Title insurance is issued for a one-time fee, called a premium, usually due at the time of closing or settling a real estate trans-action, and is based on the price of the property. Title insurance coverage lasts as long as the insured or their heirs hold title to the property.

What is an escrow?

An escrow is a neutral third party who holds the funds until conditions are met, then disperses them as instructed by the parties.

Opening the escrow

After the buyer and seller agree to the terms of a sale, the transaction goes into escrow, which can take several weeks (30-45 days) to reach closing. Escrow can be opened by the buyer or the seller’s real estate agent.

What the escrow company does

When the escrow is opened, an order to a preliminary title report/commitment is placed with the title company, which shows ownership of a parcel of land and recorded matters that are relative to the property. Then a plan is set for the necessary action and documents required, such as demands for satisfaction of liens, instructions for recording documents and other requirements of the new lender.

Escrow instructions and your closing

The lender, escrow officer, closing attorney, or real estate agent will contact both the buyer and seller for an appointment to sign escrow instructions and supporting documents. Bring a legal form of identification with you, such as a current driver’s license, passport or ID card (military or state). At this time you will normally be advised of the amount of money you will need to deposit and/or receive depending on if you are the buyer or seller.

When the instructions from all parties have been executed, escrow is ready to close. At the time all required funds have been receipted into escrow, the documents are recorded, funds disbursed and the policy of title insurance is issued.

If you are the buyer, you will be informed about the disbursement of keys by the real estate agent or seller. If you are the seller, upon receipt of the proper documentation and releases, the escrow officer will disburse the reserved funds, including the seller’s payment.