Title & Escrow FAQs

A title company protects everyone in a real estate transaction. It performs a title search to confirm the seller legally owns the property and to surface liens, easements, judgments, or other claims; resolves anything that would cloud ownership; issues title insurance to protect the buyer and lender against past defects; and serves as the neutral escrow/settlement agent that holds the funds, prepares and reviews the closing documents, and records the deed with the county. The result is a clean, insured transfer where money and documents change hands correctly.

Title insurance is a policy that protects a property owner or lender against financial loss from defects in the title that already existed when you purchased. That covers things a title search might not reveal, such as forged signatures, recording errors, undisclosed heirs, unpaid liens, or fraud. If a covered claim arises, the title insurer defends your ownership in court and pays valid losses up to the policy amount. It’s a one-time premium paid at closing, not a recurring bill, and it looks backward at the property’s history rather than forward at future risk.

A title search and examination catch the great majority of issues, and a good title company resolves them before closing. But some defects simply aren’t discoverable in the public record, like a forged signature in a prior sale, a missing or unknown heir, a clerical error in how a document was recorded, or outright fraud. Title insurance exists precisely for those hidden risks: if a covered claim surfaces years later, the insurer defends your title and pays valid losses. The search reduces risk; the insurance covers what the search can’t reach.

There are two distinct title policies. The lender’s (loan) policy protects the bank’s interest up to the loan balance and is almost always required when you finance a purchase; it decreases as you pay down the loan and ends when the loan is paid off. The owner’s policy protects you, the buyer, for the full purchase price and lasts as long as you or your heirs own the property. Because the lender’s policy does nothing for your equity, an owner’s policy is how you protect yourself. Many buyers purchase both at closing.

The two are easy to confuse but cover opposite directions in time. Homeowners (hazard) insurance protects the physical property against future damage and liability: fire, weather, theft, injury. You pay it for as long as you own the home. Title insurance protects your legal ownership against defects that already existed in the property’s history, such as liens, errors, or fraud, and you pay it once at closing. A homeowner generally carries both: one guards the structure going forward, the other guards your right to own it.

An owner’s title policy stays in force for the entire time you own the home, and its protection can extend to your heirs after you. There’s no expiration date and nothing to renew. Even after you pay off your mortgage, which ends the separate lender’s policy, your owner’s policy keeps protecting your equity against covered title defects from the property’s past. It’s one of the few protections you buy once and keep for the life of your ownership.

A title search is the research step behind every title policy. The title company examines public records, including deeds, mortgages, court judgments, and tax rolls, to build the property’s chain of ownership and reveal anything that could affect your rights: outstanding liens, unpaid property taxes, easements, boundary issues, or competing claims. Whatever turns up is listed and, where needed, resolved before closing. The search is what lets the company issue title insurance with confidence, and it’s why a clean closing usually means problems were found and fixed before you ever signed.

After the title search, the title company issues a title commitment (also called a preliminary title report). It lays out three things: who currently holds title, the requirements that must be met before closing (such as paying off an existing loan), and the exceptions, which are the items the future policy will not cover, like recorded easements. Reviewing the commitment is an important step: it tells you and your lender exactly what condition the title is in and what needs to happen before the company will insure it. Once the requirements are satisfied, the commitment becomes the actual policy.

Every title commitment lists exceptions: matters the policy expressly does not cover. Most are normal and expected: a utility easement across the yard, recorded subdivision restrictions (CC&Rs), or mineral or water rights that belong to someone else. Listing them isn’t a red flag by itself; it’s the company being precise about what’s insured and what isn’t. It’s worth reading the exceptions with your title officer, because occasionally one reveals something you’ll want to investigate, like an access easement or a right that affects how you can use the property. Knowing them up front prevents surprises after closing.

A cloud on title is any unresolved issue that could undermine the owner’s clear right to the property. Common examples include an old mortgage that was paid but never released, a contractor’s or tax lien, an error in a previously recorded deed, a boundary discrepancy, or an heir who was never accounted for in a prior transfer. Clouds don’t necessarily mean a deal can’t happen. Most are resolved through payoffs, corrective documents, or releases. The title company’s job is to identify and clear them before closing so you receive marketable, insurable title.

A lien is a creditor’s recorded claim against a property as security for a debt. Mortgages are the most common, but liens can also come from unpaid property taxes, court judgments, or contractors who weren’t paid (mechanic’s liens). Because a lien travels with the property, it generally has to be satisfied before ownership can transfer free and clear. At closing the title company identifies every lien, arranges payoff (typically from the seller’s sale proceeds), and obtains the releases. Catching and clearing liens is a core reason the title search and escrow process exist.

Finding a problem is the system working as intended. When the title search surfaces an issue, whether an unreleased mortgage, a lien, a clerical error, or a boundary question, the title company sets about clearing it: getting payoffs and releases, recording corrective documents, tracking down missing signatures or heirs, or resolving competing claims. The large majority are handled routinely and the closing proceeds once the title is clear. If something can’t be fully resolved, the company explains your options, which may include curative work, a negotiated solution, or specific policy coverage. You won’t be left to insure a title that isn’t clean.

Chain of title is the sequence of recorded owners stretching back through a property’s history, each link a documented transfer from one party to the next. Title professionals trace this chain during the search to confirm there are no breaks, gaps, or conflicting transfers that would cast doubt on who legitimately owns the property today. A clean, unbroken chain supports clear, marketable title. A gap, say a deed that was never recorded or an estate that was never properly settled, is a cloud that has to be resolved before the company will insure the transfer.

A refinance pays off your old loan and creates a new one, so the new lender wants its own lender’s title policy protecting that specific loan. That means a new lender’s policy is issued, and a fresh title search runs to catch anything recorded since you bought, such as new liens. Your owner’s policy, however, is untouched: you bought it once and it continues to protect your equity regardless of how many times you refinance. Many companies offer a reissue or refinance rate that lowers the cost of the new lender’s policy, so it’s worth asking.

A survey is not required to close, but it answers questions a title search cannot. The title company works from the recorded legal description; it does not go to the property to measure where the boundaries actually sit. A current survey locates the corners and lines on the ground and can reveal encroachments (a fence, shed, or driveway over the line), access and easement locations, and whether improvements sit within setbacks. On rural acreage, waterfront, and unplatted parcels in North Idaho, a survey is often well worth it. Boundaries may never have been marked, and the high water mark on a lakefront lot affects buildable area. A standard owner’s policy also takes a general exception for matters a survey would disclose; ordering a survey (and, where available, a survey-based endorsement) is how a buyer can address that. If a clean boundary picture matters for your plans, get the survey during your inspection period.

When a home is built or substantially improved, the contractors, subcontractors, and material suppliers who are not paid can record a mechanic’s lien against the property. In Idaho these liens can relate back to when work or materials first began, which means a lien recorded after closing can still take priority based on an earlier start date. That creates risk for a buyer or lender on a newly built or recently renovated home. Title companies manage this with extended-coverage policies, lien waivers from the contractor and subcontractors, and sometimes an indemnity or disbursement of construction funds through escrow so suppliers are paid as the work progresses. If you are buying new construction or financing a build, ask the title company how mechanic’s-lien risk is being covered and whether the lender requires extended coverage. Confirming that everyone who worked on the home has been paid before closing is what keeps a fresh build from becoming a title problem later.

Title and escrow is local work: the records, the recorders, the surveyors, and the property itself are all here in Kootenai and Bonner counties. A locally owned title company knows the ground: the plats and subdivisions, the lakefront and rural parcels, the access and water-rights quirks of North Idaho, and the people at the County Recorder and assessor’s offices who help resolve a problem quickly. Decisions are made in the office you can walk into, not at a corporate headquarters in another state, and the escrow officer handling your closing is part of the same community you are buying into. Kootenai Title Company has been doing exactly this work here since 1974, and it is the only 100% locally owned title company serving both Kootenai and Bonner counties. For most buyers and sellers the cost is comparable to a national chain. The difference is local knowledge and accountability.