Title companies play a crucial role in real estate transactions by verifying the ownership and legal status of a property. In essence, the title company acts as an intermediary between the buyer and the seller, ensuring that the transfer of property ownership is legal and secure. In this blog, we delve deeper into what a title company does, the benefits it provides to real estate transactions, and the various services it offers.
One of the main functions of a title company is providing title insurance. Title insurance is a type of insurance policy that protects property owners and lenders against any claims or legal issues that may arise in the future. When a property is sold, the title company conducts a comprehensive search of public records to ensure that the title is free and clear of any liens, encumbrances, or legal disputes. If any issues are found during the search, the title company will work to resolve them before the sale is completed. Once the title is deemed clear, the title company issues a title insurance policy to the buyer and lender, which gives them peace of mind. Without title insurance, a property owner or lender could be left responsible for any legal claims or disputes that arise in the future, which could result in significant financial loss.
In addition, title companies offer a range of services to facilitate real estate transactions, such as escrow services, which involve the safekeeping of funds and documents during a real estate transaction, and closing services, which involve the finalization of the sale and the transfer of ownership from the seller to the buyer.
Escrow services are particularly important because they provide a secure way for buyers and sellers to exchange funds and documents. During an escrow transaction, the buyer places their funds into a neutral third-party account, which is often, but not always, held by the title company. The title company then ensures that all necessary documents are in order and that any necessary inspections or repairs per contract addenda have been completed before releasing the funds to the seller.
Closing services involve the finalization of the property sale-purchase transaction, which typically occurs at a meeting between the buyer, seller, and their respective agents. During the closing meeting, the buyer signs various documents, including the deed and mortgage papers, and provide payment for any closing costs and fees. The title company will also verify that all necessary documents have been signed and that all funds have been transferred before officially transferring ownership of the property from the seller to the buyer. By the way, remote closings are now becoming more commonplace, and so it’s entirely possible that the buyers and sellers never meet face to face.
Other services of title companies may include property surveys, which involve the measurement and mapping of a property and can help to identify any potential boundary disputes or other issues.
Experience is important in the title business, so look for a company with a great reputation, in addition to seeking the best rate. Your real estate professional can refer you to some great title companies.