The Jobs of Title and Escrow when Buying a Home
Step 6 Title & Escrow
Title and Escrow are actually two separate jobs typically performed together by a neutral third party company refer to as Title.
The Title and Escrow Office will:
- Collect funds (earnest money, downpayment, lender funds, etc.) and safeguard them until disbursement
- Search public records for “clouds” in the chain of title
- Address clouds to guarantee the property has a clear title and the Seller has the right to sell it
- Collect, process and coordinate the flow of documents
- Respond to lender requirements
- Setup the title insurance policies
- Assure instructions in the contract are carried out correctly
- Prepare the final Settlement Statement for each party (sometimes referred to as the HUD-1) that shows the costs and charges associated with the transaction and loan
- Facilitate the signing of the loan and closing documents
- Disburse funds
- Record the deed to convey title
- Record the Seller's loan release
Your jobs are to:
- Deliver your earnest money to title
- Complete and promptly return all requested information
- Obtain a homeowners insurance policy (also flood if needed) and supply info to title
- Do your Due Diligence
- Decide how you wish to hold title
- Make sure Title has the correct “Buyer” named on all documents (is your name spelt correctly? Is your LLC or trust the buyer?) Verify our contact info is correct
- Review all documents: Loan Estimates, The Contract and Forms, Title Reports, CC&Rs, HOA and Association information, Seller Disclosures, Closing Disclosure from Lender, etc. Call if you need clarification
- Deliver your down payment to title
- Review the Settlement Statement or HUD 1 for accuracy
- Do your Final Walk-Through
- Sign closing documents
It is important you respond promptly to items your Realtor, Title and Lender request so we can keep the dead-lines of the contract. This help safeguard your earnest money and allows us to close on-time.
Inform Title and your Lender exactly how you wish to hold title so they can prepare the documents correctly. Changes later can delay closing or, if done after closing, cost you money. You may wish to consult an attorney, accountant or other professional before deciding how to hold title.
Title insurance insures the title of the property is clear from others making a claim.
There are two title insurance policies:
A Lender’s Policy is purchased by the Buyer and provides protection to the lender against any title defects that may affect the security of the mortgage.
An Owner’s Policy is purchased byt the Seller and provides protection if someone sues or says they have a lien against the home.
Title fees vary by company and are based on the purchase price of the home. They typically range between 0.1 to 0.2 percent.