If you are buying Denver Metro real estate, you will be using the services of an escrow and title company. Title and escrow companies are necessary third parties that are being used in real estate transactions. You should understand the function and role each play in the transaction.
Title Company
The title company insures that the title is marketable and clear. The title company performs a title search and examines the chain of title ownership to insure that are no claims to ownership interest in the property by a third party. The title company also checks to make sure that there are no encumbrances or liens on the property other than what the seller has disclosed. All liens have to be paid off before title can be transferred. Liens include taxes and any mortgages on the property or judgments. The title company makes sure there is no fraud or forgeries on documents as well. All lenders require title insurance.
Escrow Company
The escrow company is a neutral third party that passes paper and holds money on behalf of the parties until the closing. They exchange, transfer and disburse title deeds.
Who Pays for Their Services?
Local customs dictate who pays for title and escrow services. Typically, the seller pays for the owner’s title insurance policy, and the buyer pays for the lender’s title policy. The seller and buyer split their escrow closing fees. The fees can add up to thousands of dollars.
While the President is proposing changes to the financial industry that would oversee the regulation of financial interests of the public, which may including the regulation of title insurance and closing fees, you can shop around and protect yourself right now by negotiating your title and escrow fees. Your Realtor can recommend a reasonable escrow and title insurance company to you.
Title and escrow companies are part of the closing process so it is important that you clearly understand their roles, the fees that they charge and why it is necessary to use them in your transaction.
