What Is Escrow and Title? A Definitive Guide

what is escrow and title

What Is Escrow and Title? A Definitive Guide

In this article, I will tell you What is Escrow and Title Definition and How it works.

Purchasing a home is a major event. It’s simple to get caught up in the excitement of everything. To have a successful sale, it is important to comprehend the important elements of a real estate transaction, such as title and escrow.


The term “Title” denotes your legal ownership of a certain piece of property. When the home transaction is completed, the seller transfers the title to the buyer. There are three fundamental parts:

  1. Informational rights and interests (deeds, leases, mortgages, etc.)
  2. Existing but unregistered rights and interests (laws and statutes)
  3. Rights and interests that are obscured or omitted on purpose (unknown heirs or marriages, forgeries, etc.)

Escrow is a term used to describe the money and paperwork involved in a real estate transaction. Comprehensive escrow-related tasks are managed by a third party, usually a title company, during the home acquisition.

An escrow company is a neutral 3rd party that will follow the terms and the conditions of a purchase contract between buyers and sellers, an arrangement of one company holding and managing the payment of funds required for two parties in a given transaction. When funds are transferred between buyers and sellers, the escrow company will receive the funds and they’ll handle the funds. They are a neutral 3rd party to make sure all terms and conditions are all satisfied before funds are released and distributed. 

They also determine what other parties need to be paid during the escrow process. The lender for the mortgage, property tax, any liens, court judgment, or HOA.

By the time the property changes hands and the new owner takes possession of the title, they make sure that all parties have been paid and satisfied.

Now the title company makes sure that when the property is transferred, the title is free and clear for the new owner. They do the title search to identify any problem and clear any and all problems before the new owner takes the title. Any rights or claims that may have an impact on the title are unpaid taxes, unsatisfied mortgages, judgments, tax liens against current or past owners, easements, court actions or maybe a pending divorce. Once it’s reported, they can accept it, resolve it or extinguish it. 

The buyer is protected against any recorded defects, liens, or encumbrances on the title. 

The title company basically provides insurance to protect them against any type of claim. They will defend the title in court, if necessary, at no cost to the owner.

The title company will also bear any cost in settling the case in order to protect the title and maintain possession of the property. So, at the end of the day by the time the buyer closes, escrow, transfers the title, and takes possession, they’ll have peace of mind knowing that nobody else will have a claim to their property.


If you are considering making a move, sooner is better than later.  We can help you with the process of planning and the details of moving.  

The Bay Area real estate market is fast-moving.  You need a trusted advisor on your side and someone that has a history here.



Both title and escrow are great options for handling a real estate transaction. The title business is undoubtedly a good all-in-one option, but not all states accept this procedure. Many states continue to use a professional attorney to draft contracts and handle closings. If this is the case in your state, you will probably wind up employing an escrow service for the parts of the transaction that your lawyer doesn’t manage. To obtain title insurance for both you and the mortgage lender, if applicable, you will still need to speak with a title agent.



For any questions, contact Gwen Chua at Intero Real Estate – Burlingame

Also, if you would like to see what homes are available for sale in the area or want to schedule an appointment, please feel free to contact me anytime!

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