You might not know exactly what a title company does, but if you have ever bought or sold a home, you likely have benefitted from their work.
Title companies wear a number of hats. They commonly serve as research investigators, insurance issuer, closing agent and escrow manager. They spend their time digging around in public records databases and searching courthouse files to make sure the home you are about to purchase is free and clear and they try to ensure that the everything goes smoothly. They make sure your insurance is in place before you move in and will usually be the place where you will meet up to sign your closing documents and pick up the keys to your new home.
Because their work often seems invisible, it’s easy to take a title company for granted. However, they can save you, as a home buyer, a lot of headaches. That's why it's important to choose your title company carefully. It’s a good idea to get recommendations from your lawyer or real estate agent, or ask local friends for referrals.
Title companies conduct important research.
A title company has several essential responsibilities related to real estate transactions. One of the company’s primary duties is to research the title of a property, verify that it is legitimate and confirm the rightful legal owners. Specifically, this process is intended to confirm that the sellers are the legal owners of the property and have the right to sell it—and that nobody else has any type of ownership rights to the property.
The title research also involves identifying any liens, judgments or other claims that may filed against the property. If the title company discovers any unexpected surprises in the form of obligations against the property that were not known or disclosed by the seller, this can have a significant impact on the transaction, because those encumbrances will need to be satisfied either before the sale or as part of the terms of the closing.
Title insurance protects buyers and sellers.
After conducting this research, if the title report doesn’t reveal anything unexpected or concerning about the property, the title company will then issue title insurance. This protects the buyer and seller—along with any lender that may provide a mortgage on the property—from financial loss, should some problem with the title be discovered later. My administrative assistant found out just how important Title Insurance is when they bought their home in Omaha 25 years ago. The transfer of title didn't get recorded before taxes were due and the county inadvertantly thought there was an overpayment of property tax. They sent the supposed "overage" to the seller who have moved out of state and gladly accepted the funds. About 18 months later, my assistant discovered that their home was being sold on the tax sale for back taxes owed! One call to the title company is all it took. The title company handled it and they are still happiliy living in their Omaha home.
Title companies perform other services, too.
The title company will sometimes also serve the role of escrow officer, maintaining escrow accounts to maintain and protect funds from the buyer and/or seller before and during the sales transaction. In addition, a title company representative may serve as a closing agent, coordinating the closing, obtaining necessary signatures, processing paperwork, and recording the executed documents so they are official legal records.
Fees for a title company can vary.
Exactly what the title company charges will vary widely depending on the specific services they provide. The cost of title insurance will also depend on the amount of the mortgage and the region in which the property is located. The charges are a one-time fee, typically paid by the Buyer before or during the closing. While you may be tempted to skip the Title Insurance, don't. It pays to shop around but just make sure you choose a reputable title company.
Until Next Time...