For some
first-time home buyers, understanding the difference between ‘title’ and
‘deed,’ and what happens when their home is ‘in escrow,’ can be puzzling -
especially since title is not a physical document, but a deed most certainly
is.
Here’s a simple explanation.
First, there are two parts to every real estate transaction. The first part, title, is research done by the title company to verify that the seller owns the property and has the full right to sell it.
During the title search, a reputable title agent examines all of the property’s legal records and documents, including prior deeds, liens, mortgages and releases, over an extended period of time. That’s to ensure the property is clear of liens incurred by previous owners, that the property lines are correct, and that the seller has clear ownership of the property and has the right to transfer ownership to the buyer.
A search performed by title experts is crucial to a transaction because it’s the only way to discover the legal status of a property and prove that it is free of liens.
The second part of the transaction is the escrow stage. At this point, title and/or escrow agents work with the buyer and seller to ensure that all the terms and conditions of the transaction are followed, and to receive and disburse funds as instructed for the transacting parties. Escrow is an impartial third party - the gatekeeper, you might say - of the financial process, the loan documents, and the legal documents to be recorded with the county when the transaction is concluded.
The deed, unlike title or escrow, is a written statement of property which contains the names of the seller and the new owner as well as a description of the property. It must be notarized and filed with the county and may require witnesses. Once your buyer holds the deed in their hands, they can prove legal ownership of the property.
Here’s a simple explanation.
First, there are two parts to every real estate transaction. The first part, title, is research done by the title company to verify that the seller owns the property and has the full right to sell it.
During the title search, a reputable title agent examines all of the property’s legal records and documents, including prior deeds, liens, mortgages and releases, over an extended period of time. That’s to ensure the property is clear of liens incurred by previous owners, that the property lines are correct, and that the seller has clear ownership of the property and has the right to transfer ownership to the buyer.
A search performed by title experts is crucial to a transaction because it’s the only way to discover the legal status of a property and prove that it is free of liens.
The second part of the transaction is the escrow stage. At this point, title and/or escrow agents work with the buyer and seller to ensure that all the terms and conditions of the transaction are followed, and to receive and disburse funds as instructed for the transacting parties. Escrow is an impartial third party - the gatekeeper, you might say - of the financial process, the loan documents, and the legal documents to be recorded with the county when the transaction is concluded.
The deed, unlike title or escrow, is a written statement of property which contains the names of the seller and the new owner as well as a description of the property. It must be notarized and filed with the county and may require witnesses. Once your buyer holds the deed in their hands, they can prove legal ownership of the property.
Thinking of buying or selling? I like to explain how things work to my clients.
Francis Rolland
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