Transaction Roles
What Is a Title Company and What Does It Do?
A title company is a specialized firm that examines property titles, provides title insurance, and often acts as the escrow or settlement agent in a real estate transaction. Nearly every residential real estate closing in the United States involves a title company or attorney performing these functions.
What Title Companies Do
Title Search
Examines public records — deeds, court records, tax records — tracing the chain of title to ensure the seller has the right to sell and the title is free of defects.
Title Insurance
Issues lender's and owner's title insurance policies protecting against undiscovered title defects — forgeries, missing heirs, recording errors, fraud — that might emerge after closing.
Escrow & Closing
Acts as neutral third party (escrow agent) holding funds, documents, and managing the closing process: coordinating with lender, real estate agents, buyers, sellers, and recording the deed.
Title Company FAQ
Who pays for title insurance?
Customs vary by state and market. In many areas, the seller pays for the owner's title insurance policy (which protects the buyer). The buyer typically pays for the lender's title insurance policy. In some markets (NorCal, parts of TX), the buyer pays for both. Always check local customs — they can affect negotiated closing cost credits.
Is a title company the same as an escrow company?
Often yes — most title companies also provide escrow services. But in some markets (particularly California), escrow companies operate separately from title companies. The escrow company holds funds and documents; the title company provides the title search and insurance. Buyers sometimes work with both separately.
Can buyers choose their own title company?
Yes. Under RESPA, buyers have the right to choose their own title company when taking out a federally regulated mortgage. Real estate agents cannot require buyers to use a specific title company (a RESPA violation). However, sellers can choose the title company in transactions where the seller is paying for the owner's policy — a common negotiating point.
What is a title commitment?
A title commitment (or title binder) is the title company's preliminary commitment to issue a title insurance policy, subject to specified conditions being met before closing. It identifies the current owner, existing liens and encumbrances that will need to be cleared, and exceptions that will appear in the final policy. Review it carefully before closing.
Related Resources
Definition Page Pillars
Use this term page as a concept layer, then return to pillar pages for full workflow review.