What’s the Difference Between a Title Company & an Escrow Agency?
Often it is not said, or asked, instead it is misunderstood by many, witnessed by the fact that they usually use the term “escrow” when they mean “title” and vice versus. People say them interchangeably, as if they were the exact same thing.
A title company is the one who issues the title insurance policies, while an escrow agency is the one who attends to the many details involved in opening, maintaining, and closing a real estate sale transaction.
Title companies are almost always large, hugely diversified, publicly-traded corporations. Many title companies in Arizona also operate their own escrow offices under the same brand name as the actual title insurer, while other firms are exclusively in escrow side. This has been the case here in Arizona for many years and is now a growing trend throughout the country.
Stand-alone escrow agencies are not “title” as that is not their business; these are typically smaller entities with less “financial muscle” that a full-fledged title company. For purposes of illustration, let’s use the analogy of some of the common differences between a mortgage banker & a mortgage broker for comparison–a related segment of the industry that most do already understand the differences.
More often than not it takes a significantly larger amount of capital to be a mortgage banker than a mortgage broker. The same holds true with a title company versus being purely an escrow agency. Generally speaking, a title company is a more substantial operation with larger financial backing and stability, whereas escrow agencies are smaller, generally speaking.
You can know the difference at a glance, as it must be said on virtually all of their materials the word “Agency”. An “Agency” however many times has several Title Insurance Companies they are affiliated with and sometimes this benefits you in obtaining the best title insurance for your specific transaction. This can be very helpful in getting a competitive Insurance Policy that covers more with a specific type of property. For example a property in a recorded subdivision vs. a property by Metes and Bounds description. Also certain Title Companies will allow certain endorsements that others may not.
Ask for punch list of what the insurance policy covers, and the types of policies offered, including any endorsements that may be available for your transaction, and compare!