What Is the Difference Between Title and Escrow?

If you’re going through the steps to buy a home, you’ve likely heard the terms “title” and “escrow” at some point during the process. Title and escrow are two very important components central to most real estate transactions. Whether you’re a first-time homebuyer or have several purchases under your belt, it’s a good idea to know what these terms actually mean. Read on to learn more about title and escrow and how they might apply to the settlement proceedings surrounding the property you intend to purchase. 

What is title?

Title is the legal term describing the past and present ownership of a piece of real estate and the right of said owner to use the land/property. When one party sells a property to another, the title and the deed (or document describing these ownership rights) are passed on to the buyer. Title transfer and deed preparation activities are generally conducted by a title agent or real estate attorney.

Title search: Identifying title defects

In order for title to pass seamlessly and legally from one party to the next, it must be free and clear of title defects, or issues that would prevent this transfer of ownership. Prior to transferring title, the physical act of which takes place at the real estate closing, the title agent will carry out a title search. To perform a title search, the agent will conduct a thorough evaluation of the history of ownership on the property via public records in an effort to identify any issues, or “defects,” that would prevent the proper transfer of property rights. In most cases, any title defects that are detected must be resolved in order to conclude the real estate sale. While there are a wide range of title defects, some of the most common include:

-Mechanic’s liens


-Unpaid taxes 

-Improperly probated wills

-Undisclosed heirs

-Recording errors

-Fraud or forgery

What is escrow?

Escrow describes the holding, management, and disbursement of the legal documents and funds central to a given real estate transaction. The escrow agent functions as a neutral third-party to facilitate the closing process, receiving and disbursing the funds and documents according to the conditions set forth in the real estate contract. Since most real estate purchases involve large sums of money, utilizing an escrow agent can ensure all parties are fairly represented (with respect to the collection and distribution of financial assets) and streamline the closing process.

How can I learn more?

At Linear Title and Escrow in Virginia Beach, VA, our experienced team serves as a trusted source for real estate closings and escrow services throughout the Hampton Roads area. To learn more about title, escrow, title search, or other aspects related to real estate settlements, please contact our office today!


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