Title and escrow company

A title company searches the property’s records for liens and ownership problems. It also issues title insurance. Escrow holds the money and documents until the purchase closes.

When you need one

• Most purchases by contract close through title and escrow. At an auction, you follow the official payment and deed process, so arrange your own title search separately.
• Before you bid at an auction: order a title search (see “Should you hire one?” below for what it can and can’t tell you).
• After a tax or foreclosure sale, many won’t insure until a quiet title action is done.
• Land, a rural property, a fence or building near the line, or commercial property: ask what a survey would add. Title insurance usually excludes what only a survey would show; a licensed land surveyor marks the boundaries, easements and encroachments.

How to find one

• Call a few title companies in the county and ask for a title search or preliminary title report on the parcel.
• For an auction property, ask whether and when they would insure it.

Questions to ask

• Will you insure this property after this kind of sale, and what do you need first?
• What does a title search cost, and how long does it take?
• Which liens could stay with the property?

A title company searches public records to confirm the seller really owns the property. It also looks for liens, then insures the result. An escrow (settlement) officer holds the money and documents and pays everyone at closing. In California, Nevada, Arizona and Utah, title or escrow companies usually handle closings rather than attorneys. In Texas, the Texas Department of Insurance sets title insurance rates, so every title company charges the same premium. You can choose any title company (TDI).

There are two policies. The lender’s policy protects the lender and is usually required. The owner’s policy protects you if someone later claims the property. That could happen because of a forged deed or an old unpaid bill. The CFPB says the owner’s policy is optional but can protect your investment. Fraud is rising. In ALTA’s 2024 study, 28% of title companies saw a seller-impersonation attempt in 2023. Vacant land, all-cash deals and unknown notaries were top red flags.

The biggest single risk at closing is wire fraud. Criminals send fake wiring instructions that look like they came from your escrow officer, agent or lawyer. FBI teams can sometimes freeze the money if you report it within hours. But many victims never get it back.

How they’re paid

• Title insurance is a one-time premium paid at closing. Who pays for which policy depends on local custom and the contract.
• Escrow and settlement fees are listed on the Loan Estimate and Closing Disclosure and can be compared across providers (CFPB).

Check before you hire

• Check that the title or escrow company is licensed with your state’s regulator and has been in business a while.
• Ask for the preliminary title report early and read every lien and exception. It’s an offer to insure, not a guarantee that title is clean.
• Ask about an owner’s policy. If you will own vacant land or a rental, also ask about post-closing forgery coverage (ALTA 49 endorsements).
• At the start, get the escrow officer’s phone number in person or from the company’s official website. Check all wire instructions by calling that number.
• If you wired money and something seems wrong, call your bank right away and file at ic3.gov. Speed matters.
• For land or absentee-owned property, ask how the title company verifies the seller’s identity and notary.

Real stories

Title insurance paid when forged deeds were exposed (2022)

Federal prosecutors said a Dallas man and co-conspirators filed fake deeds with fake notary stamps. They used them to take over mortgaged houses. Then they sold the houses as if the mortgages were gone. A Houston jury convicted him in 2022. Some title insurers had to pay the claims of buyers who bought those houses.

Lesson: An owner’s title policy is what protects a buyer when the seller turns out not to have good title.

FBI stopped $955,060 of a $956,342 closing wire (2024)

The buyers got a fake email that seemed to come from their real estate agents. It told them to wire $956,342 to close. Two days later they realized it was fake and reported it. The FBI’s Recovery Asset Team froze the receiving account, and the money was returned.

Lesson: If you suspect wire fraud, report it to your bank and the FBI (ic3.gov) at once. Fast reports are the ones that get money back.

Title company spotted an AI “seller” on a looping video (2024)

A title company president found red flags in a vacant-lot sale. There was an out-of-state ID, tax bills going to the Bahamas since 1978, and excuses that the owner was hard of hearing. On a video call, the “seller” turned out to be a looped video. The sale was stopped.

Lesson: A careful title company verifying the seller protects both the true owner and the buyer.

$160,000 down payment wired to a fake escrow officer (2024)

After being outbid three times, the couple got an email with wire instructions. It looked exactly like their escrow officer’s, and they wired $160,000. It was a scammer, likely inside the escrow company’s email. The money was not recovered. They closed only by borrowing from family.

Lesson: Never wire money based on an email, even one that looks right. Call your escrow officer at a known number first.

$307,000 life savings wired to thieves posing as their attorneys (2017)

The couple received closing instructions on their attorney’s letterhead. They showed the property address, title company details and the exact balance owed. The couple wired their savings two weeks before closing. At the closing table they learned the money never arrived. Their daughter bought the home for them.

Lesson: Real-looking documents prove nothing. Confirm wiring instructions by phone with someone you know.

Licensed title agent diverted over $9 million (2024)

A Utah-licensed title agent failed to pay off sellers’ mortgages, kept buyers’ earnest money, and diverted closing funds. In 2024 he was sentenced to two back-to-back prison terms of 1 to 15 years each. Over $6.5 million in restitution was still owed.

Lesson: Check that your title or escrow company is licensed and established. After closing, make sure payoffs are actually recorded.