Roots Realty

Portland, Oregon

(503) 819-5336

Licensed in Oregon

Escrow and Title Insurance

Escrow and Title Insurance: What it is, what it means and how it is important to you the consumer.

Title Insurance is different from other types of insurance because it insures from the date of the policy backwards, while other types of insurance insure against things happening in the future, after the policy has been instated.

There are two main types of title insurance policies, the Owner’s Policy and the Mortgagee’s Policy. There are other types, but these are the two most commonly used in residential real estate today.

The seller of a property customarily purchases the Owner’s Policy and it ensures the buyer that they are buying the property free and clear of all unknown encumbrances. In Oregon, it is ordinarily paid for by the seller, but can be negotiated as part of the contract to be paid for by either party. The Mortgagee’s Policy is customarily purchased by the buyer, and is purchased only if there is a mortgage on the property. This type of policy ensures the lender that they are getting whatever lien position on the title that they intended to get when they loaned the money to the buyer. On first mortgages it would be first position lien. This type of positioning becomes important in the event that the property goes into foreclosure. The lien holder in first position gets their money first, the second gets their’s second and so on until the money is gone.

The word ESCROW means a neutral depository for funds and documents. An escrow company is a disinterested third party who is responsible for maintaining a file full of all the things that make a transaction whole. This includes the sale contract, earnest money, any addenda, loan documents, etc. In Oregon, the Escrow / Title Company prepares the deed that transfers the title, or ownership of the property. They also perform a title search to ensure that title can be properly transferred from seller to buyer without interference from any third parties. Escrow is responsible for putting together the final figures on a settlement statement. These numbers are the final ones; if buyer or seller has received any figures from their Realtor or lender, those were estimated and preliminary figures. The escrow settlement statement is the final accounting of buyer, seller and lender numbers. Each state in our country has their own set of rules, so if you buy or sell property outside of Oregon, the process may differ.