Although it’s not the most talked-about aspect of buying a home, escrow and title information is nonetheless a vital component of a successful transaction.
What is Escrow?
Escrow is an arrangement in which a neutral third party holds onto funds and key documents involved in a home sale, and then distribute them according to the agreement between the buyers and sellers. The Escrow period begins when a seller accepts a buyer’s offer, and ends when the property has officially recorded with the Maricopa County Recorder.
Purchasing a house isn’t like buying shoes; there’s a lot of money involved, a lot of steps to manage, and a lot at stake. So the buyers and sellers don’t exchange money and documents directly with one another. They do it through the escrow account.
Exchange of Money:
Escrow ensures accountability. Buyers want to be sure all contingencies are met (inspection, title report, secured mortgage, etc.). Sellers want to make sure they receive funds before they hand over the deed. The exchange of money is documented and handled through the escrow process.
Title insurance is a policy that protects against financial loss stemming from problems found in a property’s title, or legal ownership.
As the buyer, how do you know the seller really owns the property? How can you be sure there are no liens, such as from unpaid taxes and lawsuits, or undisclosed heirs who might claim ownership? The answer lies in the title search.
A good title search generally turns up these types of issues. And a good title insurance policy will protect you should they arise during your ownership.