Title and Escrow. What do they do? April 23, 2005
The title and escrow companies are two important players in a real estate transaction. Are you wondering what they do?
A title company provides you with an insurance that guarantee that you are receiving real property in exchange for your money when you buy real estate . Title insurance guarantees that the the ownership of the property you are buying is just as stated in recorded documents.
Whenever you buy any real estate , you expect to acquire use of the property as well as the property “title” or legal ownership. You want to be absolutely certain that the previous owner had clear title to the property to begin with and is legally entitled to sell the property.
In most cases, escrow companies work closely with title insurance companies (usually they also provide you with a discount if you do all work with one company).
What is escrow? Simply stated the escrow company is the involvement of an impartial third party in a real estate transaction. This party acts as an intermediary between the buyer and the seller and also collects and distributes funds as instructed. Generally, this means that when you buy a home , you do not pay the seller directly: instead you deposit funds with the escrow company that then pays the seller on your behalf. The basic concept of escrow is to ensure that both the buyer and the seller are protected during any real estate transaction. In order to facilitate the transfer of the property from one owner to another, the best escrow companies will:
- prepare and amend escrow instructions
- determine the legal ownership and status of the property
- request a demand statement if a debt is to be fully by seller
- verify that the buyer is qualify and meets lenders requirements
- confirm property meets requirements imposed by lender/buyer
- prorate taxes and insurance
- have legal documentations recorded
- comply with time limits imposed in instructions
- “close” escrow when instructions have been fulfilled
- distribute funds as instructed
- prepare final closing statement for buyer and seller
Escrow companies are generally held liable if any instructions are violated during the course of escrow, although changes may be made to any escrow instructions if both parties agree. Escrows have clearly defined time limits. If for some reason, all instructions cannot be carried out by the end of the time limit, all parties involved are entitled to the return of documents, fees, funds and other related materials. They also may mutually agree to extend the time period.
Sphere: Related Content- Posted in : Buyer Information, Mortgage and Lending, Seller Information
- Author : Anna
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