So what do real estate title companies actually do? Real estate title companies research a title that is attached to a property to make certain that it is legitimate.
Once they determine that the property is legitimate, they provide title insurance for said property to lenders and/or buyers involved in the real estate transaction.
Title insurance protects the owner and/or the lender against lawsuits, and any claims against the property that may happen based on disputes against the property.
Real estate title companies also provide escrow services for funds involved in a real estate transaction.
These escrow service ensure that the monies held are used only for the express purposes involved with closing costs, and settlement of the real estate transaction.
Real estate title companies also provide a settlement agent to perform the actual closing of the home. Their duties include bringing the required paperwork to the closing, explaining the paperwork to the parties involved, and making sure that all documentation is signed and dated.
They also disperse the monies that are a result of the settlement of the property. The title company also files the deeds, new titles, and other related paperwork to the proper offices, and departments.
The Title Search
The purpose of the title search is to ensure that the title to the property is indeed valid. By ensuring that the title is valid, the homeowner can be assured that they are the rightful owners to the property.
To make certain that the person or company claiming to be the rightful owner of the property actually is, a complete examination of said property records is undertaken.
This assures that they are the legal owner, and no other person or entity can claim partial or complete ownership of the property.
Real estate title companies are looking for any active mortgages, liens, unpaid taxes, restrictions, judgements, leases or any other encumbrances that could challenge, or effect ownership.
The title company also often orders a property survey to ensure that the property boundaries are correct, and to reveal any possible encroachment, or easements that might affect ownership.
Once the title search is completed, the title company will create an abstract of title. This abstract of title explains the findings of the title search in a short, consolidated manner.
If any title issues are uncovered during the title search, the real estate title company will work with related parties to clear these issues.
A title opinion letter is then presented. This letter is an opinion written by an attorney describing the current rights of ownership of the property.
How does Title Insurance Work?
Title insurance is an insurance policy written by the real estate title companies to guard the owners or the lenders of the property against ownership challenges and the lawsuits, and corresponding fees that may develop as a result.
If a party or parties come forward with a claim on the property that is proven legitimate, the title insurance company will cover the claim by likely paying the owner the value of the home, and paying the lender the amount of the loan.
The two predominant types of title insurance are owner’s policies, and lender’s policies. The owner’s title insurance policy protects the owner of the property, and the lender’s title insurance policy guards the lender from claims or challenges against the title to the property.
The property buyer usually pays for the lender’s title insurance policy. Sweet deal for the lender, bad deal for the buyer.
The owner’s title insurance policy is usually paid by the buyer, but the seller buys in some states.
How Much Does Title Insurance Cost?
The cost that real estate title companies charge will vary from state to state, and will depend on the cost of the property being purchased.
Lender’s policies average in the $400-$500 range, and owner’s policies tend to average about $200.
Title Closing Agent
A title closing agent, is a person appointed by the real estate title companies to handle your file or deal. This agent will have prepared the paperwork, including the settlement statement, and have funds ready for disbursement.
At the closing, the title closing agent will explain the various documents, and have the buyer or seller sign and date them. They will also go over the settlement statement, and explain costs, payouts, etc. involved in the transaction.
If there is anything you don’t understand, be sure to have the closing agent explain it to you. These agents are knowledgeable and helpful, and they will gladly help you understand the documents.
How do I find a Good Title Insurance Company?
The best place to find a good title insurance company is with your realtor. Real estate agents work with many title insurance companies, and can usually tell you who is the most professional, the most efficient, and who charges the lowest fees.
If you have a lender that you trust, you can ask them what title insurance company they recommend. Lenders deal with title companies every day, and they will know who the good, reputable companies are, and which aren’t.
If you have friends or relatives in the area that you are moving to, you can ask them what title insurance companies they have used, and what their opinion is of these companies.
Short all of these sources, there is always the internet. Go to Google, or one of the other search engines, and type in best title insurance company in your city.
You may be able to get some good feedback from people that have used different title companies in your new area.
You can also try searching for title companies in the area you are moving. Go to their website. You can find out a lot about a company from their website.
You may want to know how long they have been in business. What services they offer. The background and education of their employees. What feedback customers of theirs have left.
You may also want to know how many locations they have, and where they are located. Ideally, you want your title company to be in reasonably close proximity to where you live or work.
Real estate title companies provide key services to the real estate transaction. Finding one that you are happy with can make the difference to a hassle free experience, and one that is not.