Title Escrow Process

When you are buying or selling property, there are many details that have to be researched, understood, decided upon, paid for, and managed.  For most people, those details can be too much to handle.  That is why they count on professionals to help them through the transaction process.  One of the professional organizations that are often used is an escrow company.

There are many functions that an escrow company can provide, depending on the type of transaction and the instructions of the parties involved.  Those functions can include holding important monies or documents, completing a title search, providing a report at closing of all the information and monies they have held and how they are to be transferred, and facilitating that transfer.  Escrow companies are used for more elements of a real estate transaction on the West Coast, while lawyers are more often used for many of those functions in the East.

Title Search

Often an escrow agent is part of a title company and when the parties of a real estate transaction employ that company they give a number of instructions, including asking that title company to research the title of the property in question to make sure that it is free of other liens and encumbrances.  Once that search is done, the title company will often provide title insurance, guaranteeing that they will defend that title against anyone who challenges it.  Once those services are complete, the escrow company will hold the title, the title search documents, and the title insurance in escrow for the parties in the real estate sale until all details of the transaction are complete, and then facilitate the transfer of those documents from the seller to the buyer at closing.

Holding Documents and Funds

In addition to providing a title search and title search insurance, an escrow company will often hold documents and monies for a real estate transaction, notifying parties when all the required information is complete and the transaction is ready for closing.  An escrow company or agent may:

• Hold the down payment for the buyer
• Gather documents for both parties
• Perform a title search and provide insurance guaranteeing that the title is clear
• Gather and disburse loan funds
• Provide closing documents to detail the way in which property taxes, maintenance fees, leases or rents, and any other funds appropriate to each transaction are divided between buyer and seller.
• Record closing documents with the appropriate government agencies
• Facilitate the transfer of monies and documents between the buyer and seller, or their representatives, at closing
• Maintain a record of closing costs and the transfer of documents for seven years after the transaction.

Having a neutral third party to protect, research, and maintain the monies and documents in a real estate transaction is vital in today’s complex society.  Title and escrow companies are experienced in providing these services, often having lawyers on staff who can advise and facilitate these functions throughout the transaction and through to the closing.  While title and escrow companies often handle these functions on the West Coast of this country, law firms do so in the East.  Most buyers and sellers find that their real estate transactions are smoother and less stressful, and often more problem-free, when they enlist qualified legal professionals to administer these important functions.