Imagine that you have just bought a home, moved in, and now you have found out that the home belongs to someone else? This was common back in the day, which seems unbelievable. Someone would sell a home, thinking that they had the legal right to do so. Then a long-lost relative, spouse or neighbor would come to claim that the home was sold illegally because they owned the title to the property. Today, title companies prevent this from happening.
Title Search
Title companies specialize in ensuring that the transfer of title and property ownership between seller and buyer is legal and valid. They do this by conducting a thorough investigation of public records to ensure that the sellers own the property and can produce a deed to prove it. They also look for any outstanding liens, mortgages, judgements, unpaid taxes, leases, or easements. They provide the report to the buyer so that any unpaid expenses do not get passed along to you.
Title Insurance
Title companies also provide Title insurance. This is an insurance policy that protects the buyer and their lender against financial losses due to defects in the title of a property. Defects is a term used to describe issues that could arise once a title is transferred from the seller to the buyer that didn’t originally present themselves during the initial title search. These defects could include undisclosed liens, errors in public records, undisclosed heirs claiming ownership, or forgery in the chain of the title.
Title insurance is typically bought during the closing process of a real estate transaction. The buyer of the property pays a one-time premium, which is generally based off of the purchase price, then obtains coverage. The insurance policy stays in effect for as long as the insured party or their heirs have an interest in the property.
If any title defect or issues arise after the closing, the title insurance company will defend the insured party and will compensate them for any financial losses up to the policy’s coverage limit. This protection provides peace of mind to buyers and lenders, ensuring that they are not financially responsible for any issues in the title that existed prior to the purchase of the property.
Title Company Escrow Services
Title companies also provide a range of escrow services to facilitate a real estate transaction.
Handling Funds
The title company will hold the buyer’s earnest money deposit, down payment and other funds related to the transaction in an escrow account. These funds are held in escrow until the conditions of the sale are met and the buyer and seller go to closing on the property.
Document Management
The title company collects and manages important documents related to the real estate transaction, including the purchase agreement, loan documents and title insurance policies. They ensure that all necessary documents are properly executed and distributed to the appropriate parties in the real estate transaction.
Closing Coordination
The title company coordinates the closing process. They schedule a time and location for closing that is convenient for all the parties involved. They prepare the closing statement, which outlines the financial details of the transaction, and ensures that all required documents are signed and notarized.
Disbursement of Funds
Once all conditions of the sale have been met, the title company disburses funds from the escrow account according to the terms in the purchase agreement. The disbursement may include paying off the seller’s existing mortgage, transferring funds to the seller, paying closing costs and fees.
Recording Documents
Finally, the title company ensures that all necessary documents, including the deed and mortgage, are property recorded with government authorities after the closing. This officially transfers ownership of the property from the seller to the buyer.
How We Can Help...
We work with lots of amazing title companies. If you’re thinking about buying a home, a great title company will make the transaction as smooth as possible. Call, text or email us at hello@yourpcola.com for recommendations.
