Title, Escrow, and Title Insurance Fundamentals

Title insurance protects against problems in the chain of ownership that are discovered after closing. These include: liens that were not paid off by a prior owner (contractor, tax, or judgment liens), ownership claims by undisclosed heirs or parties, forged signatures in prior deeds, clerical errors in public records, and boundary or survey disputes.

These issues may have existed for years before you bought the property. A title search scours the public record, but not every defect in a chain of title is discoverable through a records search. Title insurance covers the gap.

Your mortgage lender requires a lender's title insurance policy that protects the bank's interest in the property. This policy does not protect you -- it protects the lender. It covers only the outstanding loan balance and diminishes as the loan is paid down.

An owner's title insurance policy protects your equity and your ownership rights for the full purchase price. It covers you for as long as you own the property. In Arizona, it is customary for the seller to pay for the owner's policy. Confirm it is included in your transaction before you close.

In Arizona, the title company serves dual roles: it performs the title search and issues insurance, and it also serves as the escrow holder. Escrow is the neutral holding arrangement where the title company manages all documents and funds -- earnest money, down payment, lender funds, and seller proceeds -- until all conditions of the contract are satisfied and the transaction can close.

Escrow opens when the signed purchase contract is delivered to the title company. The title company orders the title search, coordinates with the lender, prepares closing documents, and schedules signing. They are a neutral third party -- they work for the transaction, not for either side.

Escrow opens at the start of the transaction and closes when the deed records with the county. Between those two events, the title company is tracking contingency deadlines, receiving and holding funds, coordinating lender document packages, and preparing the HUD or Closing Disclosure.

I work with Navi Title Lake Pleasant on my transactions specifically because their team is communicative and experienced. A title company that is hard to reach or slow to respond creates problems at exactly the wrong moment. Who handles escrow matters, not just who issues the insurance.