What Do Title and Escrow Companies Do?
The purchase of a home involves a series of steps through which the actual transfer of money and ownership takes place. Title and escrow companies play pivotal roles throughout this process and provide the required authorizations needed for buyers, sellers, realtors and lenders to conduct the sale of a home.
Other People Are Reading
-
Document Handling
-
Once a buyer decides to purchase a home, paperwork becomes the driving force that moves the process along. In cases where a buyer uses a bank or lending institution to finance the purchase, title and escrow companies coordinate the paperwork transactions that take place. According to Real Estate ABC, escrow companies have the responsibility of administering the terms of a purchase agreement and securing whatever funds and documents are involved in the transaction until the sale is complete. In effect, the terms of the purchase agreement determine the roles that an escrow company assumes throughout the process.
Escrow Account
-
According to Real Estate ABC, an escrow account acts as the holding vault for any monies or documents that change hands once a home has been sold. In addition to the actual cost of the home, buyers and sellers pay for the title and escrow companies' services, as well as fees charged by the lending institution. The escrow account acts as a deposit fund that holds these payments until the terms of the purchase agreement have been fulfilled. In effect, the escrow company protects the interests of buyers, sellers and lenders by preventing any money or document exchanges from taking place prior to the closing of a sale.
-
Property Title Research
-
Home sales that involve lending institutions typically require certain steps be taken to ensure that a potential buyer will have full ownership in the property. Once a buyer applies for a home mortgage, the bank submits information regarding the home and its seller to the title company. The title company then researches the property title to determine whether any liens, lawsuits or mortgages exist or have been placed against the property. In some cases, lawsuits placed against a seller can affect the seller's actual ownership of the property. It's the title company's job to settle existing discrepancies, if possible, and ensure the title is cleared for the official sale of the home.
Closing Proceedings
-
Closing proceedings represent the final stage of the sale of a home. Title companies coordinate all aspects of the closing from getting needed loan paperwork from the bank and escrow company to preparing the final closing statement, also known as the HUD-1 settlement statement. The HUD-1 settlement statement lists all of the costs, such as title transfer fees, title recording fees, realtor fees and closing costs that pertain to the sale of the home. Once the settlement statement is signed by the buyer, seller and closing agent, the title company issues the payment or check to the seller and finalizes the settlement statement, which closes the sale of the home.
-
