Title Company, Escrow

Title Company, Escrow

The function of a Title Company is to verify that the title on a particular piece of real estate is legally transferable to a buyer. Title Companies also conduct the closing of a transaction through a process known as escrow. Escrow is a legal agreement in which a third party controls money, paperwork or assets until the two parties have fulfilled the various terms of their transaction.

What is an Escrow Officer?

Title companies employ Escrow Officers, individuals who are highly trained in the real estate closing process, to act as neutral third parties. They ensure that the mortgage transaction is carried out accurately and according to the terms outlined by buyer and seller.

Title Companies are also responsible for issuing title insurance policies on behalf of insurance companies.  In most cases, the title company acts as an independent agent of the insurance company and simply receives a commission for issuing the title policy.  The actual premium goes to the insurance company and the insurance company bears the risk of any loss under the policy.  The title company merely facilitates the paperwork required for issuing the policy.

Earnest money is a deposit you put down with your offer on a house, signaling your “earnest” intention to purchase. The title company holds this deposit until it becomes part of the down payment on the property.

A preliminary title report is a formal report that details the conditions under which a title insurance policy can be issued on a property. The report reflects ownership, vesting and any other information that is recorded against the property.  The title company servicing the real estate transaction will compile this report from a search of county records. Once completed, the title company can issue title insurance, and any liens against the property are listed as “exceptions” to title insurance.

Shortly after an offer is mutually accepted, a title report will be ordered and delivered to the buyers agent.  The buyer should look closely at this report to ensure the title is as clean as possible.  If there are any issues on the title that could affect homeownership, it’s best to know and understand them thoroughly before closing.  Your agent will help you review this document. It is important to ensure that the legal description of the property is accurate and that there are no outstanding property taxes due to the city or county. A buyer typically has 5 business days to review and clarify any outstanding issues found on the preliminary title report.

How does the Escrow Process work?

Once escrow is opened, the buyer gives the Title Company their funds for the purchase price, typically the earnest money followed by the down payment, and the seller gives the Title Company the signed deed to their property. The Escrow Officer follows the terms of the purchase agreement and the requirements of the lender. Escrow cannot be completed until the terms and conditions of the agreements have been satisfied, and all parties have signed the escrow documents.  After all parties have signed, the Title Company will record the necessary documents, such as deeds and mortgages, in the local county land records office. The Escrow Officer will then release the deed and money according to the instructions of both buyer and seller.

Important sections to review

If the owner has access to the property via an easement, this would be recorded against the title report. The easement stays with the report until both parties agree to remove it.
Some properties (typically those belonging to a Homeowners Association or HOA) are subject to Covenants, Conditions and Restriction (CC&Rs), which are recorded against the property. Any new buyer who is purchasing the property is subject to the rules and regulations documented in the CC&Rs and must abide by them.
The seller conveys the title to a property by means of a Statutory Warranty Deed. This deed must be free and clear of all liens, except property taxes that are not yet payable, zoning ordinances, building and use restrictions, reservations in federal patents, easements that affect the property and covenants, conditions and restrictions.

Legacy Real Estate’s trusted title companies  

500 Liberty St. SE, Ste. 200
Salem, OR 97301

777 Commercial St. SE, Ste. 100
Salem, OR 97301

320 Church St. NE
Salem, OR 97301

315 Commerical St. Ste. 150
Salem, OR 97301