Escrow & Title Information

1. What Is a Title Search?

A title search is an examination of public records to determine the legal ownership of a property and to identify any claims, liens, easements, or encumbrances that may affect the transfer of ownership. Title searches are a critical step in every real estate transaction and are typically performed by a title company, closing attorney, or licensed abstractor.

1.1 What a Title Search Examines

• Chain of title — The history of ownership transfers, ensuring an unbroken chain from the original grant to the current owner
• Outstanding mortgages and liens — Any unpaid debts secured by the property, including mortgage liens, tax liens, mechanic's liens, and judgment liens
• Easements and rights of way — Legal rights held by third parties to use portions of the property (e.g., utility easements, shared driveways)
• Restrictive covenants — Deed restrictions that limit how the property can be used (e.g., HOA rules, historical preservation requirements)
• Tax status — Whether property taxes are current or delinquent, and whether any tax sales or forfeiture proceedings are pending
• Judgments and bankruptcies — Any court judgments or bankruptcy filings that could create claims against the property
• Encroachments — Structures or improvements that cross property boundaries
• Pending legal actions — Any lawsuits or lis pendens filings that could affect title

1.2 Why Title Searches Matter

Without a thorough title search, a buyer may unknowingly purchase a property with outstanding liens, unresolved ownership disputes, or other defects that could result in financial loss or even loss of the property. A clear title is required by virtually all mortgage lenders before they will fund a loan, and title insurance companies require a search before issuing a policy.

2. What Is Title Insurance?

Title insurance is a form of indemnity insurance that protects the holder from financial loss sustained from defects in title to a property that were not discovered during the title search. Unlike most insurance policies that protect against future events, title insurance protects against past events — claims that originated before the policy was issued but were not found during the search.

2.1 Types of Title Insurance

• Lender's title insurance (loan policy) — Required by virtually all mortgage lenders. Protects the lender's interest in the property up to the outstanding loan balance. The buyer typically pays for this policy. Coverage decreases as the loan is paid down and terminates when the mortgage is satisfied.
• Owner's title insurance — Optional but strongly recommended. Protects the buyer's equity in the property for as long as they (or their heirs) own the property. Coverage amount equals the purchase price and, with enhanced policies, may increase over time.

2.2 What Title Insurance Covers

• Forged deeds, releases, or other documents in the chain of title
• Undisclosed or missing heirs who claim ownership
• Errors in public records (indexing mistakes, incorrect legal descriptions)
• Liens filed by contractors, taxing authorities, or judgment creditors that were missed in the search
• Fraud or impersonation in prior conveyances
• Boundary and survey disputes (enhanced policies)
• Encroachments discovered after purchase (enhanced policies)
• Building permit violations by prior owners (enhanced policies)

2.3 What Title Insurance Does NOT Cover

• Defects known to the buyer before purchasing the policy
• Government regulations (zoning, building codes) unless an enhanced policy is purchased
• Environmental contamination or hazardous waste
• Native American land claims (in some jurisdictions)
• Issues created by the insured party after the policy date
• Eminent domain or government seizure

2.4 Cost of Title Insurance

Title insurance is a one-time premium paid at closing. Costs vary significantly by state and are often regulated by state insurance departments. As a general guideline, owner's title insurance typically costs between $500 and $3,500 for an average home purchase, depending on the property value and location. Many title companies offer a "simultaneous issue" discount when both an owner's and lender's policy are purchased together.

3. What Is Escrow?

Escrow is a legal arrangement in which a neutral third party (the escrow agent) holds funds, documents, or other assets on behalf of the buyer and seller until all conditions of the transaction have been met. The escrow agent acts as a fiduciary for both parties, ensuring that money and documents are exchanged according to the terms of the purchase agreement.

3.1 How Escrow Works in a Real Estate Transaction

1. Opening escrow — Once the buyer and seller execute a purchase agreement, an escrow account is opened with a title company, escrow company, or closing attorney. The buyer deposits earnest money into this account.
2. Due diligence period — During escrow, the buyer conducts inspections, secures financing, and reviews disclosures. The seller may complete agreed-upon repairs. The title company performs the title search and prepares title insurance commitments.
3. Contingency removal — As contingencies (inspection, financing, appraisal) are satisfied or waived, the transaction moves closer to closing. If a contingency cannot be met, the buyer may have the right to cancel and receive a refund of earnest money, depending on the contract terms.
4. Closing preparation — The escrow agent prepares the settlement statement (Closing Disclosure or HUD-1), coordinates the signing of documents, and calculates all prorations, credits, and debits for both parties.
5. Funding and recording — The buyer's lender wires loan proceeds to the escrow agent. The buyer wires any remaining funds. Once all funds are received and documents are signed, the escrow agent records the deed with the county recorder's office.
6. Disbursement — After recording, the escrow agent disburses funds: paying off the seller's existing mortgage, paying commissions, fees, and prorations, and sending the net proceeds to the seller.

3.2 Escrow for Earnest Money

Earnest money (also called a "good faith deposit") is a deposit made by the buyer to demonstrate serious intent to purchase the property. This money is held in the escrow account and is typically applied toward the buyer's down payment or closing costs at closing. The amount varies by market but is commonly 1% to 3% of the purchase price.

4. How to Find a Title Company or Closing Attorney

Choosing a reputable title company or closing attorney is one of the most important decisions in a real estate transaction. Here are guidelines for finding the right professional:

4.1 Title Companies

• Verify licensing — Confirm the company is licensed to operate in your state through your state's department of insurance or real estate commission
• Check for underwriter backing — Reputable title companies are agents for national underwriters such as Fidelity National Title, First American Title, Old Republic Title, or Stewart Title
• Ask about closing fees — Request a detailed fee schedule upfront, including title search fees, closing/settlement fees, document preparation fees, and wire transfer fees
• Read reviews — Check Google Reviews, Better Business Bureau ratings, and ask for references from past clients
• Confirm insurance coverage — The title company should carry errors and omissions (E&O) insurance and fidelity bond coverage
• Verify wire security practices — Ask how they handle wire instructions and what fraud prevention measures they use (secure portals, verbal verification, etc.)

4.2 Closing Attorneys

• Verify bar membership — Confirm the attorney is licensed and in good standing through your state bar association's online directory
• Look for real estate specialization — Choose an attorney who primarily practices real estate law, not a general practitioner handling an occasional closing
• Ask about experience — How many closings does the attorney handle per year? Are they familiar with your type of transaction (FSBO, for-sale-by-owner)?
• Understand the fee structure — Attorney closing fees typically range from $500 to $1,500 for a standard residential transaction. Ask whether the fee is flat-rate or hourly
• Confirm title insurance issuance — Many closing attorneys also act as title agents and can issue title insurance directly

4.3 Resources for Finding Professionals

• American Land Title Association (ALTA) — alta.org for finding title companies and understanding title insurance
• State bar associations — Most state bar websites offer attorney search tools filtered by practice area
• Your mortgage lender — Lenders often maintain lists of approved title companies (though you are not required to use their preferred provider)
• Local real estate attorneys — Many offer free initial consultations

5. All Fund Transfers Happen Outside Varden

Varden's platform facilitates property listings, buyer-seller communication, and transaction coordination. When it comes to the actual transfer of funds, you will work directly with your chosen title company or closing attorney. Varden has no access to, control over, or visibility into any escrow accounts, wire transfers, or financial transactions related to your home sale or purchase.

5.1 What Varden Does

5.2 What Varden Does NOT Do

• Hold earnest money or any buyer/seller deposits
• Act as an escrow agent or fiduciary
• Provide or arrange title insurance
• Conduct title searches or issue title commitments
• Facilitate wire transfers or fund disbursements
• Provide closing or settlement services
• Record deeds or other legal documents
• Hold sale proceeds or commission payments
• Act as a real estate brokerage
• Provide legal, tax, or financial advice

6. Varden Never Holds Earnest Money or Sale Proceeds

Earnest money deposits must always be held by a licensed escrow agent, title company, or attorney. In most states, these entities are required to maintain separate trust or escrow accounts that are audited and regulated. The escrow holder is legally obligated to follow the terms of the escrow instructions and cannot release funds without proper authorization from both parties or a court order.

Sale proceeds are disbursed at closing by the escrow agent or closing attorney. After all liens, mortgages, fees, commissions, and prorations are paid, the net proceeds are wired or delivered to the seller. Varden is not involved in any part of this process.

7. Closing Costs for Sellers

When selling a home, sellers are responsible for various closing costs. By using Varden instead of a traditional real estate agent, sellers can significantly reduce one of the largest costs — the real estate commission. Below is a comprehensive breakdown of typical seller closing costs:

7.1 Real Estate Commissions

Traditional real estate transactions typically involve a total commission of 5% to 6% of the sale price, split between the listing agent and buyer's agent. By listing on Varden, sellers can eliminate the listing agent's commission (typically 2.5% to 3%), potentially saving thousands of dollars.

Note: Sellers may still choose to offer a commission or concession to a buyer's agent. This is a business decision that should be made based on your local market conditions and the level of buyer agent activity in your area.

7.2 Title Insurance (Owner's Policy for Buyer)

In many states, the seller is customarily responsible for purchasing the owner's title insurance policy for the buyer. This is a one-time cost paid at closing. Costs vary by state and property value but typically range from $500 to $3,500. In some states (such as parts of the Northeast), the buyer customarily pays for their own owner's policy. Check local custom in your area.

7.3 Transfer Taxes and Recording Fees

Most states, counties, and some municipalities impose a transfer tax (also called a documentary stamp tax, conveyance tax, or excise tax) on the sale of real property. Rates vary widely:

• State transfer taxes — Range from $0 (some states have no transfer tax) to over 2% of the sale price in some jurisdictions
• County recording fees — Fees charged by the county recorder's office to record the deed, mortgage release, and other documents. Typically $25 to $250 per document
• Municipal transfer taxes — Some cities impose additional transfer taxes. For example, certain cities in Pennsylvania, Ohio, and other states levy their own transfer taxes on top of state and county taxes

Who pays the transfer tax (buyer or seller) varies by state and local custom. In many states, the cost is split. Check your purchase agreement for specific allocation.

7.4 Attorney Fees

If you use a closing attorney (required in some states, optional in others), attorney fees for a standard residential closing typically range from $500 to $1,500. This may include:

• Reviewing and preparing closing documents
• Conducting the title search (if the attorney also acts as title agent)
• Facilitating the closing and supervising document execution
• Recording documents with the county recorder
• Disbursing funds from the trust account

7.5 Prorated Property Taxes

Property taxes are prorated between buyer and seller at closing based on the closing date. The seller is responsible for taxes from the beginning of the tax period through the day before closing. If the seller has prepaid taxes beyond the closing date, the buyer will reimburse the seller at closing. If taxes are in arrears, the seller will owe a credit to the buyer.

7.6 HOA Fees and Special Assessments

If the property is in a homeowners association (HOA), the seller may be responsible for:

• Prorated HOA dues — Similar to property taxes, HOA dues are prorated through the closing date
• HOA transfer fee — Many HOAs charge a fee (typically $100 to $500) to transfer the membership to the new owner
• HOA document preparation fee — The fee for preparing the resale certificate, CC&Rs, financials, and meeting minutes required by the buyer (often $200 to $500)
• Outstanding special assessments — Any unpaid special assessments may need to be paid at or before closing. Check your purchase agreement for how current and future assessments are allocated

7.7 Mortgage Payoff Costs

If the seller has an existing mortgage, additional costs may include:

• Loan payoff amount — The remaining balance plus any accrued interest through the payoff date
• Prepayment penalty — Some loans (especially commercial loans or certain older mortgages) carry a penalty for early payoff. Review your loan documents
• Recording the mortgage release — A small fee to record the satisfaction of mortgage with the county
• Wire fee for payoff — Your lender may charge $25 to $75 for receiving the wire payoff

7.8 Additional Seller Costs

• Home warranty — If the seller agrees to provide a home warranty for the buyer, costs typically range from $300 to $600 for one year of coverage
• Repair credits — Credits agreed upon during negotiations to address inspection findings
• Survey costs — If a new survey is required and the seller is responsible per the contract, costs range from $300 to $800
• Termite/pest inspection — If required by the contract or lender and the seller is responsible, typically $75 to $200
• Notary fees — Fees for notarizing closing documents, typically $10 to $25 per signature

8. State-Specific Closing Requirements

Real estate closing procedures and requirements vary significantly by state. One of the most important distinctions is whether your state requires an attorney to be involved in the closing process.

8.1 Attorney-Required States

The following states generally require an attorney to be present at closing, to conduct the closing, or to prepare certain closing documents. Requirements and interpretations may vary, so verify with your state bar association or department of real estate:

• Connecticut — Attorney must supervise closing
• Delaware — Attorney must prepare and review closing documents
• Georgia — Attorney must supervise closing (considered practice of law)
• Massachusetts — Attorney typically conducts closing
• New York — Attorney involvement customary and strongly recommended; required for certain documents
• North Carolina — Attorney must supervise closing (considered practice of law)
• South Carolina — Attorney must conduct closing and be physically present
• Vermont — Attorney must conduct closing
• Virginia — Attorney must supervise settlement
• West Virginia — Attorney must supervise closing

Additional states may require attorney involvement for specific aspects of the transaction, such as preparing deeds or reviewing title opinions. States including Alabama, Kentucky, Louisiana, Maine, Maryland, Mississippi, Nebraska, New Hampshire, New Jersey, North Dakota, Ohio, Pennsylvania, Rhode Island, and the District of Columbia have varying levels of attorney involvement requirements.

8.2 Escrow States vs. Attorney States

States generally fall into two categories for how closings are conducted:

• Escrow states — Closings are handled by escrow companies or title companies. Common in Western states such as California, Washington, Oregon, Arizona, Nevada, Hawaii, and Alaska. The buyer and seller may sign documents separately, and the escrow officer coordinates the exchange.
• Attorney/round-table states — Closings are conducted by attorneys, often with all parties present at a closing table. Common in Northeastern and Southeastern states. The attorney oversees document execution, answers legal questions, and ensures proper recording.

Some states use a hybrid approach where either a title company or attorney may conduct the closing. Check with your chosen title professional about the specific requirements and customs in your area.

8.3 Community Property States

In community property states, both spouses may need to sign closing documents even if only one spouse is on the title. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you are selling property in a community property state, consult with your closing attorney about spousal consent requirements.

9. Timeline of a Typical Closing Process

The closing process typically takes 30 to 60 days from the date the purchase agreement is executed, though cash transactions may close in as few as 7 to 14 days. Below is a general timeline for a financed purchase:

Days 1–3: Contract Execution and Escrow Opening

• Purchase agreement is fully executed by buyer and seller
• Earnest money is deposited into the escrow account (typically within 1 to 3 business days)
• Title company or closing attorney opens the escrow/file and orders the title search
• Buyer submits loan application to lender (if not pre-approved)

Days 3–14: Due Diligence and Inspections

• Buyer conducts home inspection (general, termite/pest, radon, mold, sewer scope, etc.)
• Buyer reviews seller disclosures and HOA documents (if applicable)
• Buyer requests repairs or credits based on inspection findings
• Seller responds to repair/credit requests; parties negotiate
• Title search is completed; title commitment is issued to buyer and lender
• Any title defects or issues are identified and resolution is initiated

Days 14–21: Appraisal and Loan Processing

• Lender orders appraisal of the property
• Appraiser inspects the property and prepares the appraisal report
• If the appraisal comes in below the purchase price, buyer and seller negotiate (price reduction, buyer covers gap, or deal is cancelled)
• Lender's underwriter reviews the loan file, appraisal, and title commitment
• Lender issues conditional loan approval with a list of remaining conditions

Days 21–30: Condition Clearance and Closing Preparation

• Buyer satisfies remaining lender conditions (updated paystubs, bank statements, explanations)
• Seller completes any agreed-upon repairs
• Lender issues "clear to close" — the loan is fully approved
• Title company or attorney prepares the Closing Disclosure (CD) and sends to buyer at least 3 business days before closing (TRID requirement)
• Buyer reviews the Closing Disclosure and compares it to the Loan Estimate
• Buyer obtains homeowner's insurance and provides proof to lender

Days 30–45: Closing

• Buyer conducts final walkthrough of the property (typically 24 to 48 hours before closing)
• Buyer wires closing funds to the title company or escrow agent
• Buyer and seller sign closing documents (may be at a closing table, separate offices, or via mobile notary)
• Lender funds the loan (wires loan proceeds to the title company)
• Title company or attorney records the deed and mortgage with the county recorder
• Escrow agent disburses funds: payoff of seller's mortgage, commissions, fees, and net proceeds to seller
• Keys are transferred to the buyer (per the terms of the contract — at recording, at closing, or at an agreed-upon date)

10. Frequently Asked Questions

Do I need title insurance if I'm paying cash?

While a lender's policy is only required when financing is involved, an owner's title insurance policy is strongly recommended even for cash purchases. Without it, you bear the full risk of any undiscovered title defects, which could include forged prior deeds, unknown liens, or undisclosed heirs claiming ownership.

Can I choose my own title company?

Yes. Under the Real Estate Settlement Procedures Act (RESPA), you generally have the right to choose your own title company. While your lender or the other party's agent may recommend a title company, you are not obligated to use their recommendation. In some states, local custom dictates which party selects the title company (e.g., in some markets, the seller traditionally selects; in others, the buyer selects).

What happens to the earnest money if the deal falls through?

If the buyer cancels within the terms of a contingency (inspection, financing, appraisal), the earnest money is typically returned to the buyer. If the buyer cancels outside of a contingency period or without a valid contractual reason, the seller may be entitled to keep the earnest money as liquidated damages. Disputes over earnest money are resolved according to the terms of the purchase agreement and applicable state law. The escrow agent cannot release disputed funds without mutual agreement or a court order.

How long does a title search take?

A standard title search typically takes 3 to 14 business days, depending on the complexity of the property's history and the efficiency of the local county records office. Properties with complex ownership histories, multiple liens, or title defects may require additional time to research and resolve.

11. Disclaimer

The information on this page is provided for general educational purposes only and does not constitute legal, financial, tax, or professional advice. Real estate laws, regulations, customs, and costs vary significantly by state, county, and municipality. The information presented here may not reflect the current laws or practices in your jurisdiction.

You should consult with a licensed real estate attorney, title professional, tax advisor, or other qualified professional in your area before making any decisions related to escrow, title, closing, or any other aspect of a real estate transaction. Varden makes no warranties or representations regarding the accuracy, completeness, or applicability of the information provided on this page.

Varden is not a title company, escrow company, law firm, real estate brokerage, or financial institution. Varden does not provide title insurance, escrow services, legal advice, or any services related to the closing of real estate transactions. Any reliance on the information provided on this page is at your own risk.

12. Contact Us

If you have questions about escrow, title, or the closing process, we recommend consulting with a licensed professional in your area. For questions about the Varden platform or to report suspicious activity: