Comparing Escrow Services and Title Companies in the Home Buying Process
May 08, 2023
Home buyers are often unaware of the distinction between escrow services and title companies that are involved in the closing process of a home purchase. Knowing the differences between these two services can be essential to the home buying process.
Simply put, a title company is responsible for researching and verifying the legal title of a property, while an escrow service is responsible for holding funds in trust until all of the terms of the purchase and sale agreement have been fulfilled. Both are necessary for the closing process.
A title company’s primary role is to research and verify the legal title of the property, as well as to issue title insurance. The title company is responsible for searching the public records to ensure that the seller is the owner, and to ensure that there are no liens or encumbrances on the property. Title insurance protects the home buyer from any risks associated with the purchase of the property.
The escrow service’s role is to collect the funds necessary for closing, and to ensure that the terms of the purchase and sale agreement have been met. The escrow service holds the buyer’s and seller’s funds in trust until all of the necessary documents have been signed, and all other conditions of the agreement have been fulfilled. Once all conditions are met and the documents are signed, the escrow service transfers the funds to the appropriate parties and records the deed, mortgage, and other documents in the public records.
The important thing to remember is that both of these services are necessary components of the closing process, and are equally important. By understanding the role of each of these services, home buyers can be better equipped to handle the process and feel more secure in their purchase.