Like elves toiling away behind the scenes, the title company staff members work their magic from their computers, often digging around in public records databases and search courthouse files.
Title companies wear a number of hats. They commonly serve as a research investigator, insurance issuer, closing agent and escrow manager.
Because their work often seems invisible, it’s easy to take a title company for granted. However, they can save homebuyers a lot of headaches—and possibly help them avoid losing a lot of money. A reliable and qualified title insurance company is especially important for any buyer who hopes to get a mortgage. 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. Depending on the circumstances, items detailed in the title report may impact the buyer’s ability to get approved for a mortgage to buy that property.
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. Often, this insurance is available in two separate formats, one that protects the buyer and another for the mortgage lender. The specific types and terms, along with rules dictating the party responsible for paying for this insurance, can vary by location.
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 loan and the region in which the property is located. The charges are a one-time fee, typically paid before or during the closing.