How Title & Escrow Work

When a Sale Agreement (also called an Earnest Money Agreement) is completed, we (your agent) will deliver the earnest money check and a full copy of the agreement to escrow.

The escrow closer is a neutral party who holds and disburses the party’s funds, prepares an accounting of the transaction, prepares certain documents to transfer ownership; all in accordance with the terms of the Sale Agreement and written instructions.

The earnest money is also deposited into a 3rd party account that is managed by the escrow company.

The escrow closer reviews the documents, orders title insurance and any necessary payoffs (to clear title to the property). Pertinent information is requested from the buyer and seller at this time.

The buyer arranges financing. The loan documents are delivered to the escrow closer to prepare final statements, escrow instructions and documents for the transfer of ownership.

The buyer and seller will be contacted for a signing appointment to sign and review the appropriate documents. The buyer’s closing funds are deposited with escrow when the closing papers are signed.

Upon approval by the lender, the Warranty Deed and Deed of Trust are delivered to the title company for recording with the County Auditor. Verification of recording is given to the escrow closer who then disburses funds.

Frequently Asked Questions

What Is Title Insurance?

A title insurance policy protects the insured against any loss suffered as a result of the title to land not being as represented in the policy. It is a one-time premium insuring protection as long as the Buyer owns the property. The seller provides an Owner’s Title Insurance Policy to the buyer; the buyer provides a Lender’s Title Insurance Policy to the lender. Unlike other kinds of insurance, title insurance insures against past events, affecting the rights to real property, rather than unforeseen future events.

Why Is Title Insurance Important?

You need title insurance because any home, no matter how new or apparently secure, is built on land as old as the earth itself. Undoubtedly, this land has had many previous owners. Claims against any one of these persons can be filed against the property and against you as the present owner. Such hazards as fraud, missing heirs, old liens and many others can, and often do, arise like ghosts out of the past. Title insurance protects you against claims and title faults. It makes your home safely yours. Your title insurance policy is your shield of protection and will defend your ownership against loss. Your protection and peace of mind last as long as you and your heirs remain in ownership.

How Much Does Title Insurance Cost?

Unlike the annual premiums of most other forms of insurance, you pay a small, one-time premium for title insurance. The premium will depend on the type of coverage you and/or your lender request.  

Who Is Covered?

There are two basic types of title insurance policies: an Owner’s Policy and a Lender’s Policy.

Owner’s Policy:

Owner’s title insurance, which the seller typically pays for at closing, is issued generally for the amount of the purchase price. It protects the purchaser and the purchaser’s heirs as long as they own the property.

Lender’s Policy:

Most lenders require title insurance as security for their investment in the property. The borrower typically pays for the Lender’s Policy, which is issued for the loan amount.

How Does A Title Company Eliminate Risks?

The title company conducts an examination of the public records looking for matters affecting the title to the real property. These records include:

• Deeds
•  Civil and Probate court records
•  Easements
• Maintenance Agreements
• Assessments
•  Debts and other burdens
•  Restrictions on the property

An important part of the title insurance process is eliminating risk prior to insuring, thereby reducing the possibly of claim or loss. However, even the most careful examination cannot disclose “hidden hazards” to title.

Information provided by Pacific Northwest Title @ www.pnwt.com