What is Title and Escrow?

What is Title?

“Title” represents the process in which the legalities around a property are examined to make sure the seller has complete ownership of a property and the right to sell it, the legal description is compared against the property for sale, and any other entities who may have legal and continuing access to the property are identified. Here are just a few things that are examined during the “title review” process:

  • Verify seller has the right to sell the property. Sometimes there are other entities who may be listed as legal owners. These could include divorced spouses, heirs, or trusts. These need to be cleared before the property changes hands.
  • Identify any lienholders. Sometimes creditors put “liens” on properties to make sure debts are paid before the property sells. These can include creditors for property tax, some utilities, contractors, and even the IRS. In some cases, these debts can be paid out of closing dollars, but often they need to be taken care of by the seller before closing. 
  • Identify easements which provide ongoing access. The buyer needs to be informed of any existing easements and ongoing access that goes along with the property. For example, some utilities such as power companies, gas companies, pipelines, shared driveways and other shared spaces must be identified. This way the buyer knows exactly what they are purchasing and which areas must remain clear of fences and outbuildings so those who need ongoing access can obtain it. 
  • Identify other responsibilities. Shared private roads, wells, and community systems are identified along with instructions on how those may be maintained. 
  • Other restrictions. If the property is in a planned community or HOA, there may be additional rules and regulations around what can and cannot legally be done with the property. These are also identified in a title search. 
  • Legal description. As a buyer you want to make sure that you are purchasing the right property!

What is Escrow?

Escrow is a central station for making sure all the terms of the transaction are met. The escrow officer makes sure all paperwork is collected and distributed to all parties who have an interest in the transaction as well as making sure all funds and activities are taken care of in a timely fashion.

Once an offer is accepted by both parties, the purchase and sale paperwork is submitted to escrow along with earnest money. Escrow will begin their lengthy list of “to dos” which usually include:

  • Making sure contingencies are satisfied such as inspection, financing, or sale of another home. 
  • Making sure buyer and seller signs off on such forms such as seller disclosure.
  • Working with “Title Officers” to make sure that the seller has a legal right to sell the property and there are no others who may have an interest in the property. 
  • Making sure the buyers receive a copy of the “Title Report” which will indicate any easements and identify any parties who may be granted ongoing access to the property. 
  • Making sure that other benchmarks are reached such as the septic and well inspection. 
  • Making sure all the necessary paperwork is signed by the buyer including loan documents as applicable.