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Buying and selling real property can be a mind-boggling experience in Cape Coral, Fort Myers, or anywhere else in Florida. Unfortunately, making the process more user friendly is not something that’s going to happen soon, so learning some basic terminology goes a long way toward relieving the headaches associated with buying or selling real estate. Whether you’re looking to purchase or sell, understanding what title insurance and escrow are will assist you in your real estate ventures.

The Value Of Title Insurance

While title insurance might appear to be an unnecessary expense, it’s almost always a requirement if the buyer is purchasing property with someone else’s money. The reason for this is that even though the purchaser receives a deed for the property, it doesn’t always mean that there is only one legal owner. Prior owners, their spouses, partial owners, and creditors who have a stake in the property could come forward at any time and claim their share of the property, leaving the purchaser with a debt they are not responsible for. Title insurance protects them and their lending institutions from financial loss due to unforeseen title defects and liens.

A title insurance company will defend the insured if a lawsuit is filed. Additionally, it will reimburse insured parties for monetary losses if there are errors on the property that need to be cleared from the chain of title before the purchaser and their lending institution can have a clear title on the property.

Protecting Your Interests With An Escrow Account

Although escrow is not formally called insurance, its basic purpose is to insure that a stipulation or set of stipulations is met. In escrow’s most basic form, it is a deposit of funds, a deed, or any other item by one party for delivery to another party upon completion of set conditions or events. The most common usage of escrow is for the down payment of a home purchase.

Title insurance and escrow accounts are terms many first time property buyers and sellers have never heard and ones that even some second and third time property buyers and sellers may not understand. Working with an established title company can make the difference between a smooth transaction and one that’s riddled with problems and unanswered questions.


At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.

In case you missed it, check out our last Title Junction post: What Is A Short Sale?

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