The word “title” refers to your legal rights to own, use, and dispose of a specific property. The title company insures the property’s title with policies to the buyer and the lender to protect against problems with the property or the title.
Escrow is the arrangement of one company holding and managing the payment of funds required for two parties in a given transaction. The escrow company or agent acts as the objective third-party between the buyer, seller, and lender to make sure that the contract is closely followed and that the money goes to all of the correct places when terms of the contract are met. At Pioneer Title Company, we provide both services.
An escrow is an arrangement in which a disinterested third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions.
People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
An escrow is convenient for the buyer and seller because both can move forward separately, but simultaneously in providing inspections, reports, loan commitments and funds, deeds, and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves much time and facilitates the closing of the transaction.
The Seller
The Buyer
The Lender (If Applicable)
The Escrow Holder
Who usually pays for what?
While every transaction can have individual conditions, there are certain things which the buyer and seller have traditionally paid for.
The seller can generally expect to pay for:
The buyer can generally expect to pay for: