Title And Escrow Explained
Title insurance is an insurance product that protects an insured owner (or lender) against various adverse claims, encumbrances, and defects against title to real property.
When a request for title insurance is received, the title company will examine the title history to the property in question and issue a title commitment that reflects the title’s current status. This commitment displays who owns the property, any taxes and assessments due, unpaid mortgages, liens, easements, covenants, and any other matters that may indicate someone other than the owner has rights to all or part of the real estate under search.
When the commitment is issued, the seller and purchaser (or lender) agree upon which items can remain on the title and which should be eliminated. Once title is acceptable to the purchaser and/or lender, the transaction is closed and the title insurance company issues a policy showing the condition of the title at the time of closing.
Unlike automobile or life insurance, title insurance is a one-time fee paid at closing of the transaction. In the Puget Sound Region, unless agreed upon otherwise in your purchase and sale agreement, typically the seller purchases the buyer’s title insurance policy. The buyer pays for a policy of title insurance for the lender (if any).
Escrow is an impartial third party in which documents and funds are deposited by buyers, sellers and lenders to facilitate the closing for a real estate transaction. As a fiduciary player in the transaction, escrow is required to follow mutual written instructions from all parties.
Escrow will coordinate with the buyer, seller and lenders to obtain required signatures on all documents, work closely with the title officer to clear liens and encumbrances against the property, and record the documents with the county.