Escrow and Title Companies are not the Same

Title Insurance Company vs. Escrow Company

  Question: When we bought our Gilbert home last month I heard the terms “title insurance company” and “escrow company” used interchangeably. What is the difference?

  Answer: The escrow company handles the paperwork relating to the closing of the transaction, for example, execution of the deed and affidavit of property value, and the funding of the loan from the mortgage lender. The escrow company is licensed and regulated by the Arizona Department of Financial Institutions. The title-insurance company is responsible for insuring the title to the home, and will generally issue title-insurance policies to the buyer and the mortgage lender at the closing of the transaction. The several title-insurance companies issuing title-insurance policies in Arizona are licensed and regulated by the Arizona Department of Insurance. The reason the terms are frequently used interchangeably is that the same company, especially if it is a large company, can be both the escrow and the title-insurance company in the transaction. Smaller firms generally can act only as an escrow company.

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