In brief
A title company does two distinct jobs: it searches the public records to prove the seller can convey clean ownership (surfacing liens, judgments, easements, and breaks in the chain of title), and it insures that conclusion with a one-time policy. Escrow is the separate job of holding everyone’s money and documents in neutral hands and releasing them only when every condition is met; depending on the state, that job is performed by an escrow company, the title company itself, or a closing attorney. The title commitment is the document that ties it together: Schedule A states the facts, Schedule B-I lists what must be fixed before closing, and Schedule B-II lists what the policy will never cover, the schedule almost nobody reads and the one that matters most. At closing, the deposits, loan funds, and cash-to-close converge in the escrow account, the seller’s mortgage and liens get paid off, the deed gets recorded, and only then does anyone get paid.
Ask ten buyers what the title company on their closing statement did and you will get ten variations of “paperwork.” That vagueness is earned. Title and escrow are the parts of a transaction designed to be invisible when they work, but they are also where the deed and the money change hands, which makes them the part of the deal where an unread page costs the most. This guide takes it apart: the two jobs, the documents they produce, and the choreography of closing day.
Start with a distinction that clears up most of the confusion. Title is a question about the past: who owns this property, and what claims have attached to it over decades of recorded history? Escrow is a discipline about the present: how strangers exchange hundreds of thousands of dollars and a deed without either side trusting the other. One is research; the other is custody. They are usually billed on the same statement and often performed by the same company, and they are different kinds of work.
Job one: proving the seller can convey clean title
A deed is only as good as the chain of deeds behind it. Before anyone insures the buyer’s ownership, a title examiner works backward through the public records (deeds, mortgages, court filings, tax rolls, probate records) to assemble the property’s recorded history. The search looks for anything that could challenge the buyer’s ownership or ride along with it uninvited. The usual suspects:
Liens. A lien is a debt secured by the property: the seller’s current mortgage, unpaid property taxes, a contractor’s mechanic’s lien from that kitchen remodel, an IRS lien, unpaid HOA assessments. Liens generally follow the property itself rather than whoever owns it, which is why every one has to be paid or released before the deed changes hands, and why the seller’s “proceeds” are whatever is left after the lienholders are paid.
Judgments. A court judgment against the seller can attach to everything the seller owns in the county, including the house. A seller who lost a lawsuit three years ago and forgot about it will be reminded by the title commitment, usually at the least convenient moment.
Easements. An easement is someone else’s legal right to use part of the property: the utility company’s line along the back fence, a shared driveway, a neighbor’s recorded right to cross the lot to reach the lake. Most are benign and permanent. The buyer inherits all of them, which is why they belong in the “read before you waive” pile rather than the “fix before closing” pile.
Encroachments. The neighbor’s fence two feet over the line, the garage corner sitting on the adjoining parcel. These usually surface from a survey rather than the records themselves, which is why title policies commonly carve out “matters an accurate survey would disclose” unless a survey is done.
Breaks in the chain. The rare, serious ones: a deed signed by one spouse when two owned the property, an estate that skipped probate, a decades-old mortgage that was paid off but never formally released, a notarization that doesn’t hold up, an heir nobody knew existed. These are the reason title insurance exists, and every one is far cheaper to cure in week one of a contract than in the week of closing, when they turn into closing delays.
The title search is the only part of a transaction that interrogates the past. Everything else in the file assumes the past is fine.
The title commitment: three schedules, one of which nobody reads
The search produces a document called the title commitment (in some markets, a preliminary report), the insurer’s formal offer: we will insure this title, on these facts, if these things happen, except for these things. Nearly everything an agent needs to know about the property’s legal condition is inside it, organized into schedules. The structure is worth learning, because the schedules are not equally dangerous.
| Section | What it lists | What to do about it |
|---|---|---|
| Schedule A | The facts of the deal as the insurer understands them: the effective date of the search, the proposed insured parties, the current record owner, the estate being insured (usually fee simple), the legal description, and the policy amounts. | Proofread it like a contract. A misspelled name, the wrong marital status, a legal description that doesn’t match the survey, or a policy amount that doesn’t match the price: every one of these is easiest to fix the day the commitment arrives and hardest the day of closing. |
| Schedule B-I (Requirements) | Everything that must happen before the insurer will issue the policy: pay off the existing mortgage, release the tax lien, obtain the executed deed, resolve the judgment against a party, record the power of attorney. | Assign every item an owner and a date. Most requirements are the seller’s or the closer’s to clear, but nobody clears an item they don’t know exists. Requirements are curable almost by definition (that’s why they’re requirements), but only if someone is working them before closing week. |
| Schedule B-II (Exceptions) | Everything the policy will NOT cover: recorded easements, restrictive covenants, mineral or water rights reservations, survey matters, and the standard pre-printed exceptions (parties in possession, unrecorded mechanics’ liens, matters an accurate survey would show). | Read it closely; this is the schedule that survives closing. Pull the recorded documents behind any exception that sounds consequential. If an exception is objectionable, raise it inside the contract’s objection window; if it’s benign, know that before you waive. Ask which standard exceptions can be removed with a survey or an affidavit. |
Swipe sideways for the full table.
The human failure mode is consistent: everyone reads Schedule A because it is short, someone reads B-I because the closer chases the requirements anyway, and almost nobody reads B-II, the one schedule whose contents survive closing. A requirement left unmet blocks the deal, so the system defends itself. An exception left unread blocks nothing; it rides through closing and becomes the buyer’s problem forever, uninsured by design. The agent who pulls the recorded documents behind the B-II exceptions, the easement and the covenant themselves, is doing the highest-leverage reading in the transaction.
The commitment also starts a clock. Most form contracts give the buyer a defined window after receiving the title work to object to what’s in it. An objection raised inside the window obligates the seller to respond, while the same objection a week late is commonly waived. That window is one of the deadlines with real teeth, and it is the only point in the deal where the buyer holds real leverage over what appears in B-II. Once it closes, the exceptions are permanent.
Title insurance: one premium, two very different policies
Title insurance runs backward. Ordinary insurance charges an annual premium against future misfortune; title insurance charges a one-time premium at closing against defects that already exist but haven’t surfaced: the forged signature four deeds back, the missed lien, the recording error, the unknown heir. There are two policies, and conflating them is one of the most common consumer misunderstandings in the subject.
The lender’s policy is required by virtually every mortgage lender. It protects the lender, up to the loan balance, and its coverage shrinks as the loan is paid down. If a title defect wipes out the buyer’s ownership, the lender’s policy makes the lender whole. It pays the homeowner nothing.
The owner’s policy protects the buyer’s own stake, up to the purchase price, typically for as long as they (and often their heirs) hold the property. Whether the buyer or the seller customarily pays for it varies by state and even by county; in a number of markets the seller buys the owner’s policy as part of delivering clean title. It is optional in many places. Declining it saves a one-time fee but leaves the buyer’s own equity uninsured against the defects the policy would otherwise cover.
What neither policy covers is just as important: everything listed in Schedule B-II, defects created after the policy date, zoning and land-use rules, and the physical condition of the house. That last one belongs to the inspection contingency, not the title file. Title insurance covers the ownership record, not the building itself.
Job two: escrow is a function, not a company
Strip away the branding and escrow is one idea: a neutral third party holds everything of value until every condition is met, then releases it all at once. The buyer’s deposit, the lender’s loan funds, the signed deed, the payoff checks: none of it belongs to the escrow holder, and none of it moves until the instructions say it can. The function is the same everywhere. Who performs it varies by region:
Escrow companies in much of the West. In the California archetype, an escrow officer (at an independent escrow company or the escrow division of a title company) administers the closing, and there is often no “closing table” at all: buyer and seller sign separately, sometimes days apart, and the deal closes when escrow confirms every condition and records.
Title companies across much of the rest of the country. In large parts of the Midwest, South, and Mountain states, the title company that searched the title also conducts the settlement, and the parties commonly sign at a scheduled closing.
Attorneys in attorney-closing states. In a number of states (several in the Northeast and Southeast are the commonly cited examples), a licensed attorney must conduct or supervise the closing, whether by statute, by bar regulation, or by long-standing custom. The attorney performs the same escrow function, sometimes alongside a title agency they operate.
For an agent working across state lines, or an out-of-state buyer confused about why there’s no closing table, the practical rule is simple: ask who performs the settlement function in this county, and assume nothing from the last deal.
Closing day: the money choreography
By the final week, the escrow account becomes a staging area, and the sequence is more rigid than it looks from outside:
Deposits are already in. The earnest money has usually been sitting in escrow or a broker’s trust account since the first days of the contract, and at closing it becomes a credit toward the buyer’s cash to close.
The loan funds arrive. After the borrower’s Closing Disclosure has satisfied the federal TRID rule (delivered at least three business days before consummation, the one closing deadline that is uniform nationwide), the lender wires the loan amount to the settlement agent. The mechanics of that rule get their own treatment in our three-day-rule guide.
The buyer wires cash to close. The down payment plus closing costs, minus the deposit already held. This transfer almost always moves by wire, following the settlement agent’s instructions, which is where the fraud risk concentrates (more on that below).
Signing, funding, recording, disbursement. Documents are signed; the lender authorizes funding; the deed and the mortgage (or deed of trust) are recorded in the county land records; and the settlement agent disburses, payoffs first, then fees, then the seller’s proceeds. In wet-funding practice, common in much of the country, funds disburse the same day the parties sign. In the handful of dry-funding states, mostly in the West, signing and funding are separated: everyone signs, the lender reviews the executed package, and the deal closes (money moves, deed records) a day or more later. Which regime applies is a matter of state practice and lender policy, and it decides something buyers care about: whether you get the keys the day you sign.
Where this fits in the agent’s file
The title and escrow layer adds three things to a transaction: more documents that arrive by email, more dates that start clocks, and more parties who each see only their slice. The commitment lands as a PDF and starts the objection window. The payoff carries a good-through date, the estoppel takes two weeks nobody budgeted for, and the Closing Disclosure resets a federal clock. None of these live in the purchase contract an agent read at ratification. They accrete onto the file afterward, one attachment at a time.
This layer of the file is a large part of why Ratifyly works the way it does. You forward the paperwork (the commitment, the amendment, the closing package) the same way you’d send it to a coordinator, and the AI reads every page, extracts the parties, the price, and every date with the convention it’s counted by, and folds each new document into one live timeline that the agent, the client, the broker, the lender, and the closing office all see. When a document moves a date, the schedule re-flows; when a deadline approaches, it escalates while there is still time to act; and a human approves what counts before anything sticks. The how-it-works page shows the path a forwarded email takes. Either way, the title and escrow machinery keeps producing paper, and someone has to read it as it arrives.
This article is educational and general in nature; it is not legal advice, and title, escrow, and closing practice vary meaningfully by state, by county custom, by form contract, and by the language of your agreement and commitment. The Closing Disclosure timing rule described here is federal (the CFPB’s TRID rule). Nearly everything else differs by jurisdiction, including who conducts closings, who pays which premium, wet versus dry funding, and objection-window mechanics, and the governing documents control. Verify specifics against your state’s association form library, ALTA’s published commitment and policy forms, your state’s real estate commission or bar guidance, and a licensed attorney or title professional in your market.
Questions agents actually ask
What does a title company do, in plain terms?
Two things. First, it researches the public records to confirm the seller owns the property and to find anything attached to it (mortgages, tax liens, judgments, easements, old unreleased loans), then issues a commitment describing what must be fixed before closing and what the title policy will not cover. Second, in much of the country the same company also runs the closing itself: it holds the deposits, collects the loan funds and the buyer’s cash to close, pays off the seller’s mortgage and every other lien, records the deed, and disburses what’s left to the seller. Proving the title and moving the money are separate jobs; a title company often does both.
What is the difference between title and escrow?
Title is about the property’s legal history: who owns it, what claims are attached to it, and whether the seller can convey it cleanly. Escrow is about the present-tense money and paperwork: a neutral third party holds the deposit, the loan funds, and the signed documents, and releases them only when every condition of the contract has been met. Title answers whether the property can be sold clean; escrow answers whether everyone performed before anyone got paid. In many states one company performs both functions; in others they are split between a title company and a separate escrow company or a closing attorney.
What is Schedule B-II on a title commitment and why does it matter?
Schedule B-II (often labeled Schedule B, Part II) is the list of exceptions: everything the title insurance policy will NOT cover. Easements, restrictive covenants, mineral reservations, survey matters, and any recorded item the insurer has decided to carve out all appear here. It matters because an exception survives closing: the buyer takes the property subject to whatever is listed, and the policy will never pay a claim arising from it. Reading B-II before the objection window closes is the point of the commitment. An exception nobody reads still binds the buyer, and no policy will cover it.
Is owner’s title insurance worth it if the lender already requires a policy?
The lender’s policy protects only the lender, only up to the loan balance, and it shrinks as the loan is paid down. It pays the buyer nothing. An owner’s policy protects the buyer’s own equity up to the purchase price, typically for as long as they own the home, for a one-time premium paid at closing. Whether it is required, who customarily pays for it, and what it costs all vary by state. In some markets the seller traditionally buys the owner’s policy, in others the buyer does. Many closing professionals regard declining an owner’s policy as a false economy: the defects it covers, like a forged deed or an unknown heir, are rare but catastrophic.
Who handles closing: a title company, an escrow company, or an attorney?
It depends on where the property is. In much of the West, an escrow company or the escrow division of a title company runs the closing, and buyer and seller may sign separately over a period of days. Across much of the rest of the country, the title company conducts the settlement. And in a number of states (several in the Northeast and Southeast are commonly cited), an attorney must conduct or supervise the closing, whether as a matter of law, regulation, or entrenched custom. The function is the same everywhere: a neutral party holds everything until the conditions are met. Only the profession performing it changes.
What happens if the title search finds a lien or a break in the chain?
It goes on the commitment. If it must be cleared (an unpaid tax lien, an old mortgage that was paid off but never formally released, a judgment against the seller), it appears in Schedule B-I as a requirement, and the closing cannot complete until it is satisfied, usually by paying it from the seller’s proceeds or tracking down a release. If the insurer instead lists it in B-II as an exception, it will not block closing but it will not be insured either, which is when the buyer’s objection window in the contract matters. Most title problems are curable when they surface early in the contract; discovered the week of closing, the same problems turn into delays.