Escrow and title – these two terms have been the sources of endless head-scratching among home buyers and sellers. Just when you thought the real estate industry couldn’t get any more complicated, these puzzling words are thrown your way. What do they mean and how do they relate? Do they mean the same thing? The last thing you need when dealing with a life-changing transaction is more uncertainty. At Vanport Escrow & Title, this is our area of expertise, so let’s clear the air.

Are title and escrow the same thing?

No, escrow and title aren’t the same things. Unfortunately, these terms have been tossed around loosely for years, leading to a lot of misunderstandings and incorrect assumptions. In reality, both escrow and title services are integral parts of real estate transactions designed to improve the security, trust, and compliance among both buyers and sellers. These services are often performed together which explains why they’re so commonly mixed up. However, escrow and title solutions each serve very specific functions in property agreements.

Definitions: Escrow vs Title

Before we explore what these services look like in action, let’s set the record straight by defining each term clearly.

Escrow – Escrow is an agreement wherein an independent company holds and manages funds in transition between two parties. The escrow company is responsible for ensuring both the buyer and seller uphold their end of the agreement before the funds are transferred. With a trustworthy, neutral third party handling the funds and enforcing the arrangement, neither party has to worry about fraud or other potential issues.

If escrow sounds like a foreign word, that’s because it is! It actually originates from the Old French word escroue which is a piece of paper held by a third party until an agreement was complete. That’s not essential information, but it might help the meaning stick.

Title – A title determines an individual’s rights to use a property in any manner they wish. Title records include information about previous and current owners, physical details about the property, and references of property liens such as mortgages. It’s commonly mistaken for a deed which is simply a piece of paper saying that you own a property. An escrow provider can insure a title to protect home buyers from financial risk due to issues that might come with a property title including problematic wills, liens, or back taxes. Title insurance is an additional level of protection usually combined with escrow services to further secure the transaction.

What does a title and escrow company do?

A title and escrow company acts as a freestanding party to oversee real estate transactions between buyers and sellers. Without a trustworthy intermediary, both parties would have to rely on the goodwill of the other which isn’t an easy thing to do when dealing with large sums of money and valuable property. The responsibilities of escrow and service providers are two-fold.

  1. Title Services – Title services involve a comprehensive search of a property’s title to identify any potential problems that might restrict a buyer’s legal claim. Through title insurance, a homeowner’s financial interests are insured in the event of any number of potential issues such as forged documents, undisclosed heirs, and unpaid liens. On the other hand, escrow services involve the financial side of the transaction.
  2. Escrow Services – Escrow companies act as neutral middlemen responsible for holding the money in transition from the buyer to the seller. They’re responsible for ensuring both parties uphold their ends of the deal before releasing the money to the seller. Since both escrow and title services are essential for making a real estate transaction go smoothly and safely, they’re commonly offered by the same provider.

Looking for a dependable escrow and title company in Oregon? You’re in the right place! Vanport Escrow & Title specializes in helping buyers, sellers, and agents achieve streamlined and secure real estate transaction processes. With state-of-the-art technology and highly experienced team members, we’ll guide you through the whole process for a quick and hassle-free experience. Contact us today to learn more about our services.