Title Insurance and Escrow in a US Transaction: What Protects You and What Does Not

1Why do you need title insurance in the US, and is a land registry extract not enough?

Because in most of the US there is no government land registry that guarantees who the owner is. The county recording offices (County Recorder) record documents - deeds, mortgages, liens and judgments - but do not confirm that title is valid.

The practical implication for an Israeli investor is significant. In Israel the land registry extract reflects a recorded status that the state stands behind, and in many cases it is the starting point for a check. In the US, by contrast, the check is done by a title insurance company or its agent (Title Company), which searches the chain of recorded documents, issues an insurance commitment (Title Commitment), and at closing issues a policy. The policy is in effect what replaces the certainty that the registry does not give: if a defect in title that predated the purchase and was not excluded is discovered in the future, the insurance company is supposed to defend you legally and compensate you up to the amount of the policy.

2What is the difference between an owner's policy and a lender's policy?

The lender's policy (Lender's Policy) protects the amount of the bank's loan, and the owner's policy (Owner's Policy) protects you and your investment. According to the US Consumer Financial Protection Bureau (CFPB), most lenders require a lender's policy, while the owner's policy is optional.

3What does title insurance cover?

Title insurance covers defects in rights that already exist on the day of purchase and that were not expressly excluded in the policy. The CFPB gives as an example a claim of a right in the property from the period before the purchase, such as an unpaid tax debt or a contractor claiming he was not paid for earlier work.

• Forgery or fraud in the chain of title - for example a deed signed by someone who was not the owner.
• Liens, attachments and mortgages that were not discharged and were not discovered in the search.
• Recording errors, an incorrect description of the property or a document that was not recorded properly.
• Heirs or spouses whose rights were not settled in a prior transaction.
• The legal defense costs against a claim based on a covered defect.

4And what does title insurance not cover?

The policy does not cover what is excluded in it, what you knew and did not disclose, and what arises after the closing date. In addition, it is not structural insurance and not an engineering inspection.

• Specific exceptions listed in Schedule B of the policy - easements, covenants, use restrictions, existing liens that the buyer takes on.
• Standard exceptions - first and foremost matters that a current survey would reveal (Survey Exception), such as a fence that encroaches onto the neighbor's land or a structure that exceeds the building line.
• The physical condition of the property: dampness, foundations, roof, systems.
• Construction violations, missing permits or use that does not conform to zoning - unless a suitable endorsement was purchased.
• Defects that arose after the date of the policy, and defects that the insured knew about and did not disclose.

5How do you read a Title Commitment before closing?

The insurance commitment is the most important document in the legal due diligence, and it should be read as soon as it is received - not on the closing day. It is usually divided into three parts, each with a different role.

1. Schedule A - who will be the insured, the amount of coverage, the description of the property and who the current record owner is. You check that the insured is the right entity (for example your LLC) and that the description of the property matches the contract.
2. Requirements (Requirements) - what needs to happen for the policy to be issued: discharge of an existing mortgage, signatures, entity certificates, payment of tax debts. Each requirement is a task with a responsible person and a date.
3. Exceptions (Exceptions) - the list that sets the limits of coverage. Each exception needs to be checked: request the recorded document, understand what it says, and decide whether to demand its removal, obtain an endorsement, or accept it as part of the price.
4. Comparison against the purchase contract - in most contracts the buyer has a period of time to object to the exceptions (Title Objection). Someone who misses the deadline loses the right to withdraw or to demand a cure.

6Which endorsements (Endorsements) are worth requesting?

Endorsements add coverage for matters that the basic policy excludes, and they are the main tool for turning a generic policy into one that fits the property. Availability, wording and price vary between states and between companies.

• Deletion of the survey exception - generally requires a current survey approved by the insurance company. For commercial properties a detailed survey to ALTA/NSPS standards is usually required.
• Endorsements from the ALTA 9 series - cover violations of recorded restrictions, encroachments of structures and matters related to the survey. Versions 9.1 and 9.2 are intended for owner's policies (vacant land and improved property, respectively).
• Endorsements on zoning and use, access to a public road and contiguity of parcels - especially relevant in projects and on land.
• Endorsements for protection against forgery of a deed or mortgage - the title insurance association (ALTA) publishes dedicated endorsements for this; availability in the specific state should be checked.

7How much does title insurance cost, and who pays?

Title insurance is purchased by paying a premium at closing, and the price depends on the value of the transaction and the state. In some states the rate is set under regulation: in Texas, for example, the state's insurance department (TDI) sets the premium rates, and all insurance companies charge the same basic premium according to the value of the transaction. The current rate schedule in Texas took effect on March 1, 2026 (as of October 2026).

In other states there is price competition. The CFPB notes that you can usually choose a title insurance company separately from the lender, and that the total cost is usually lower when the same company issues both the lender's policy and the owner's policy. Even when the premium itself is fixed, the closing and service fees that the company charges alongside it may vary. Who pays - the buyer or the seller - is determined by local custom and by what is written in the contract, so it is a subject for negotiation and not an assumption.

8What is Escrow, and who holds your money?

Escrow is a neutral third party - an escrow company, the title insurance company or a closing attorney, depending on the state - that holds the funds and documents in a trust account and releases them only when all the conditions of the transaction have been met. Usually, the earnest money (Earnest Money) is deposited with it already upon signing the contract.

It is important to distinguish between two uses of the term: the Escrow of the transaction, which ends at closing, and the escrow account that the lender manages throughout the life of the loan in order to pay property tax and insurance from it. Remote investors not infrequently confuse the two, and discover late that property tax was not paid because there was no such account.

The ALTA Best Practices framework (Best Practices) includes a dedicated chapter on managing trust accounts: accounts identified as trust accounts, a prohibition on commingling funds and regular account reconciliations. Not every company is bound by it, but it is a legitimate question to ask the closing company before transferring money to it.

9What Escrow does not protect against: wire fraud

Escrow does not protect you if you transferred the money to a criminal's account. The common scenario: an email that looks as if it was sent from the closing company or the broker, with updated wire instructions. The money leaves Israel, and arrives at an account that is not the escrow's.

According to coverage of the FBI's 2025 internet crime report, about 12,368 complaints of real estate fraud were reported to the IC3 complaint center with losses of about $275 million, and in the business email compromise (BEC) category losses of more than $3 billion were reported. For an investor from Israel the risk is especially high: time differences, communication by email only, and time pressure around closing day.

1. Receive the escrow's account details at the beginning of the transaction, and verify them in a phone call to a number you found independently - not from the email.
2. Treat any change in wire instructions as suspected fraud, until verified by phone.
3. Send a small test transfer when time allows, and ask for confirmation of receipt before transferring the full amount.
4. Coordinate the transfer with the bank in Israel in advance, including foreign currency conversion and timing, so as not to be under pressure on closing day.
5. Ask the insurance company whether it issues a Closing Protection Letter and what exactly it covers.

10What is important to know as an Israeli investor buying remotely?

Three subjects recur among investors from Israel: the ownership structure, remote signing and changing reporting requirements.

• Buying through an LLC - the entity that registers title must be the insured under the policy. Transferring the property to another entity after closing may affect coverage, so it is preferable to decide on the structure before closing and to check the wording of the policy.
• Signing from Israel - closing companies accept signatures in various ways: authentication at a US consulate, a notarial certificate with an apostille, or online notarial signing in states that permit it. You should find out in advance what the company and the lender accept, because a document rejected on closing day delays the entire transaction.
• Reporting to FinCEN - a federal regulation that required reporting of non-financed residential real estate transfers to entities and trusts was vacated by an order of a federal court in Texas on March 19, 2026, and FinCEN appealed to the court of appeals in May 2026. As of October 2026 the legal situation may change, and it should be checked with the closing company at the time of the transaction.
• On the future sale - when a foreign seller sells a US property, the buyer (and in practice usually the closing company) is generally required to withhold 15% of the proceeds under FIRPTA, subject to exceptions. It is worth knowing this already at the purchase stage, because it affects the exit cash flow.

11Checklist: what to check before closing

1. An owner's policy has been ordered, and the insured is the right entity.
2. The Title Commitment has been read in full, and every exception has been checked against the recorded document.
3. Objections were filed on time under the contract, and a commitment to discharge existing liens was received.
4. A current survey was ordered if needed to remove the survey exception, and suitable endorsements were selected.
5. The escrow account details were verified by phone, and a procedure for changes was set.
6. The method of remote signing was approved in advance in writing by the closing company and the lender.
7. A draft Settlement Statement was received and all the lines were checked, including the insurance premium and fees.

12What to do before signing, and how we accompany you

Title insurance and Escrow are a safety net, not a substitute for a review. The real work is done in the days between receiving the Title Commitment and closing: reading the exceptions, negotiating their removal, selecting endorsements and coordinating the ownership structure, remote signing and transferring the funds from Israel. We accompany Israeli investors at this stage together with a local attorney and the closing company, so that the policy you receive covers what really matters, and the money reaches the right destination.

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The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.