Buyers and sellers often ask me, 'What is the difference between Title and Escrow?

The best answer to that question is -

Title

The word "title" refers to your legal rights to own, use, and dispose of a specific property. The title company insures the property's title with policies to the buyer and the lender to protect against problems with the property or the title.

Escrow

Escrow is the arrangement of one company holding and managing the payment of funds required for two parties in a given transaction. The escrow company or agent acts as the objective third-party between the buyer, seller, and lender to make sure that the contract (offer) is closely followed and that the money goes to all of the correct places when terms of the contract are met.

THE ROLE OF TITLE AND ESCROW

The title agent researches the history of the property being purchased and transfers the actual property ownership between the seller and the buyer.

The escrow agent manages all crucial documents that are required to close. They work with both parties to prepare transaction documents, and they coordinate with the lender. They also oversee the finances involved in the real estate transaction including the loan, closing, and recordation.

In short, the title agent gathers and researches the transaction while the escrow agent executes according to the terms of the contract.

When a seller hires me to list their home for sale, I begin the process by contacting the title company to “open title.” The title company runs a search of the property history for any liens or problems that might be a potential issue at closing.

When working with a buyer or seller it is important for each real estate broker to have access to the Title Report and make it available to their clients.

Once a home is under contract, the listing agent sends the signed contract to the escrow company and they begin the process of working with the lender, real estate brokers and the buyers/sellers to oversee the entire transaction to closing. That process typically takes 30 days, but cash offers can close more quickly. It used to be that all of the parties involved would meet at the title/escrow company on the day of closing to sign the documents. Now days the buyers and sellers might not even meet each other because the escrow company sends a mobile notary person to their home and documents are signed and sent back to the escrow company a day or two before closing.

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