In a nutshell, a title company ensures that the title on a property is marketable, but they wear many different hats. The biggest part is making sure that the person selling a home is the legitimate owner and they have the right to sell it. Title companies also often issue title insurance, coordinate closings, and act as escrow officers.
In order to determine the validity of a title, title companies do a thorough title search. They go through all of the past property records to determine if there is anyone else who could have a claim to the property. In their search, they will also look for any mortgages, liens, judgements, or taxes on the property that have not been paid. The title company will often work with the seller to ensure these are paid prior to the transfer of ownership.
Another role of title companies is issuing title insurance. There are two types of title insurance, one protects the owner and the other protects the lender/mortgage company. This insurance protects against any costs related to future disputes of the title. For example, it could pay for legal fees acquired due to someone claiming they have ownership of the home. Both the owner’s insurance and lender’s insurance are paid for by the buyer of the property.
Many title companies act as a closing agent. They schedule the closings and coordinate with the buyers, sellers, and lenders to get signatures on all of the closing documents and coordinate payments. They will also file the deed and mortgage with the county.
Lastly, title companies act as escrow officers. They are entrusted with the buyer’s money and the seller’s deed until they release them at closing.
Title companies play a critical role in real estate transactions. If you would like to learn more about title companies or hear more about our partner, Gibraltar Title, give us a call! Our office line is 651-203-1723.