When you are buying a home, you will deal with several different types of companies, such as a title company.
In these real estate transactions, these companies have several significant key roles to play.
Generally, these companies operate as the agents of both the seller and the buyer, the insurance company involved, and also any parties involved in the transaction.
A good example of any other party that can be involved in the real estate transaction is the mortgage lenders.
You may fail to comprehend the purpose of the tittle company in these undertakings, but you ought to know that they play a very significant role by protecting you from legal issues that you may not be aware of.
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What Does a Title Company Do?
- Do a title search into the legitimacy of a deed to a property.
- Act as the escrow agent, holding deposits and other payments until the transaction is completed.
- Title Company Ensures the Seller is Legitimate and has Maximum Rights to Sell the Property
- Issue title insurance for the buyer and lender, protecting them against any claims or issues with the property.
- Orders the property survey
- Acts as closing agent; The final closing for a home is typically held at the office of the title company.
They carry out a title search
This is one of the most significant duties performed by these companies. Tittle searching enables you as the buyer to acquire the information on the history about that particular home that you intend to buy.
This information basically explains who were the buyer and the seller of that particular property, and also the dates that the transactions were carried out.
The title search ensures there are no outstanding issues with the property such as;
- Unpaid taxes
- Open second mortgages and HELOC loans
- Special assessments
- Judgements or demands
- Unpaid HOA fees
- Liens for unpaid taxes
- Other legal issues specific to the area
After the completion of the tittle search, these companies finally come up with a comprehensive report basing the information on their findings.
In the home buying process, this report is very significant as it entails any problems that might probably stall the sale of the home.
What is uncovered by the tittle search is used to come up with an abstract of the title.
Finally, a legal document referred to as the tittle opinion letter indicating the validity of the tittle is issued.
Title Companies also Serve as the Escrow Officers
These companies acts as escrow officers by holding either money or any kind of a document, under the instructions of either of the parties involved.
This can be further explained by a situation where the seller surrenders a signed deed to the company while the buyer gives the money to the company.
As professionals in practicing this role, the company only releases the money and the signed deed to the property as instructed by the buyer and the seller in a written form.
Ensures the Seller is Legitimate and has Maximum Rights to Sell the Property
These companies have the mandated duty to carry out a wide research on the history of the property.
This is done mainly to enable the company involved to verify and determine whether the seller is the legitimate owner with the maximum rights to sell the property.
To avoid cases where the original owner of the property died and one of his sons want to sell the property without involving the siblings, then these companies have to look into a couple of issues to establish this.
Hidden issues a complete title search will reveal
- Undisclosed heirs
- Forgotten wills
- Defective deeds
- Previously unknown land mineral rights
- Invalid court proceedings
Issues the buyer with the tittle insurance
After the validity of the tittle has been established, the company involved goes on and issues a title insurance. Title insurance protects the new owner from any issues that may come up from the previous ownership disputes among other problems.
The advantage that comes with this kind of insurance policy is that the buyer pays a one-time premium depending on the value of the property bought unlike other insurances that have annual premiums.
In this case, the insurances involve are the owner’s and lender’s title insurances protecting the property owner and the mortgage company respectively.
Orders a property survey
Most of the lenders definitely ask for a location map of the property, therefore, with the consent of the buyer, the company orders a survey to be done.
After the survey is done, they review it to ensure that no issues will arise during the closure of the process or later on. In case of any issues detected, both the lender and the buyer are notified.
On the settlement date, the survey is handed over to the new buyer.
The title company acts as a closing agent
For all the transactions involved in home buying process, the tittle companies are often the closing agents.
This basically means that the company acts as an agent of both the buyer and the seller during the transactions.
As a closing agent, they receive and surrender all kinds of payments related to the transactions and also obtain the signatures on all the documents involved.
After signing the documents, all those that require to be recorded including the mortgages and the deeds are recorded by the company in the land records office.
The above are some significant services offered by a title company.
Their services can be very helpful if you are looking to purchase a house. A reputable title company should help you through the process.
Randall has over 15 years of experience in the mortgage and credit industries. He spends a chunk of time helping consumers understand their credit, advise them on how to increase their credit, and lending his mortgage expertise to help them find the right type of loan. Randall lives in Dallas, Texas with his two sons.