Whether this is your first transaction or you a pro at real estate transaction, you’ve heard the terms “title” and “escrow”. You may have thought they were interchangeable and there was no difference between the two.
There are actually two different jobs.
The title of a property refers to the owner’s legal rights to own and use a specific piece of property. The title company insure your title and that there are no other claims to the title. They will issue a policy to protect you. This policy protects you against any problems with the title such as unknown liens or even fraud.
Escrow arranges the management of the transaction and the transfer of funds between the two parties. The escrow company works will all parties involved including the title company to make sure the transaction is accurate and each dollar goes to the right people so the contract can be executed legally.
Escrow companies will partner and possibly own a title company so they can manage every aspect of the transaction without the buyer or seller having to negotiate with multiple parties and resources to close a contract.