Homebuyers Guide to Title & Escrow

Buying a home is a dream come true. Knowing the components and processes of a home purchase is an important part of the process. Title and escrow are two of the primary terms that you will often hear. But what are title and escrow? BNTC has created a go-to guide to title and escrow for anyone involved in home buying and home selling processes.
 

What is the difference between title and escrow?

Title

What is title? Title is a general term that covers all of the legal rights of a home and/or property. It encompasses your right to own and use it during the duration of time you own it.

Escrow

What is escrow? The term escrow represents the facilitation of the actual transaction for the sale of the home or property. Escrow covers the management of the transaction of the funds and related documents and actions. It is typically performed by a neutral third party separate from the buyer’s or seller’s interests.
 

Title and Escrow Services

A title company can handle both title and escrow services. Title and escrow services are quite comprehensive and serve as a real convenience to homebuyers and real estate industry professionals. Let’s break down the different types of title and escrow services that support a successful real estate transaction.

Title Search

The title company will perform a thorough search of all public records of a property to determine if there are any issues and the make sure the seller has a right to legally sell the property. A detailed title search reveals issues that could cause a problem with the transfer of ownership.

Title Insurance

Title insurance comes in two types: lender’s and owner’s policies. Both of these are needed to protect each party’s interests. The first one protects the Lender for the amount of the mortgage. An owner’s title insurance policy will protect the new homeowner for the full value of the property for as long as the property is owned.

What Does Title Insurance Cover?

An owner’s title insurance policy typically covers a range of areas:

• Unpaid taxes
• Outstanding mortgages or other liens on the property
• Land use restrictions
• Issues with inheritance rights such as undisclosed spouses or other heirs
• Clerical errors on official documentation that could affect the sale, among others
• Forgeries in official documentation such as wills and deeds
• Deeds by minors or those of unsound mind

The homebuyer(s) only has to pay a one-time fee for the title insurance. This is paid during the closing process, providing important protection and security for the owner.

Escrow Services and Related Documentation

Title and escrow companies handle the management of the funds and the related documentation for the home sale. The standard escrow services include:

• Receiving funds necessary for the transaction
• Receiving documents necessary for the transaction
• Obtaining and completing forms/documents
• Managing processes and communications
• Delivering final documentation after the completion of the sale

The standard types of documentation needed to fulfill the requirements of the escrow services may include:

• Tax statements
• Loan documents
• Documentation covering the terms of the sale
• Documentation covering the terms of the financing
• Fire, flood, and other insurance policies
• Any request for services to be paid out of the escrow funds

It there is new financing that needs to be done for the purchase of the home, it is the buyer’s responsibility to take care of arrangements with the financial institution.

Title and Escrow Fees

Title and escrow fees are typically part of your closing costs. This includes the funds for your title insurance and other services delivered by the title company, as well as charges to handle the escrow services.

As a general rule across the nation, title and escrow fees are somewhere between two and five percent of the purchase price of the home. For example, if the home price is $200,000, the fees would be between $4,000 and $10,000. Typically, the buyer is responsible for the closing fees, which include both title and escrow services.
 

BNTC — A Better Closing Experience

At Bay National Title Company, we offer a better closing experience. By placing the customer’s needs first, we provide title and escrow services with the utmost efficiency and accuracy through state-of-the-art technology in a paperless environment.

Our dedicated professionals are with you every step of the way, serving home buyers and real estate industry professionals in Florida and across the United States.

For more information, please contact us about the full extent of our services. We’ve been making better closing experiences for nearly two decades with a passion for service and helping the dream of home ownership come true.