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WHAT DOES THE TITLE INSURANCE COMPANY DO?
The Title Insurance Company carefully researches every known-recorded document regarding current and prior ownership of the property to determine the current status of the title. This includes close scrutiny of all public and court records, property tax records, survey and legal descriptions, liens and claims. The search may cover such relevant documents as deeds, mortgage, wills, judgements, divorce decrees, liens and assessments relative to the property in question. This process of "risk elimination" is followed to determine if there are any visible defects, which may affect ownership. However, no matter how extensive and exact the title search may be, the possibility of "hidden risks" remains. Therefore, the purchase of title insurance is the most prudent investment.
WHAT DOES TITLE INSURANCE PROTECT AGAINST?
Because lenders understand the potential of the "hidden risk" factors of any real estate transaction, they require a title insurance policy to protect the amount of money they loan on the property. The title insurance policy assures repayment of the loan in the event of a
successful claim against title to the property.
In a similar sense, a buyer of a property should demand the additional protection given to
his investment by securing an Owner's Title Policy. This policy differs from that of the
lender by covering exclusively the owner's interest.
WHAT IS ESCROW?
Escrow is a service, which provides the public with a means of protection in the
handling of funds and documents. Escrow enables the parties to a transaction to
conduct business with each other through a neutral third party, thereby
minimizing their risk.
In the escrow, all parties involved give their instructions to this neutral
intermediary, the "escrow holder," whose duty it is to assure that no funds or
property will change hands until all instructions have been carried to
completion.
WHAT TYPES OF TRANSACTIONS GO THROUGH ESCROW?
Most contracts that involve the transfer, lease, or financing of real estate
should be placed in escrow. The parties to a transaction should demand the
protections of an escrow for any transaction, which involves a substantial
investment.
WHY DO I NEED ESCROW?
If you are a party to a transaction, you want the assurance that no funds or
property will change hands until all of your instructions have been followed.
With the increasing complexity of business, law and tax structure, it takes a
trained professional to supervise the transaction.
WHAT HAPPENS AT THE CLOSING?
When instructions of all parties to the escrow have been carried out, the
closing can take place. All outstanding funds are collected at this time and all
costs must be paid. Title to the property will then be transferred. All specific
documents are recorded or filed at this time.
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