Four Things to Know About What a Title Company Does and Why It’s So Important

A title company can protect you from risks you may not have considered, such as claims from previous owners or outstanding lawsuits.

The home-buying transaction is multifaceted, involving many steps and numerous participants. One of the key participants in the process is the title company. Their role is to ensure that the rights to the property are yours free and clear by providing title insurance, title search, and settlement services.

In this article, we will explore some important facts about title companies and why their services are so critical.

#1. The title process is more involved than you might think.

The title company makes sure a property title is legitimate so that the home buyers can be confident that they will be the rightful owners upon purchase. To ensure that the title is valid, the title company conducts a title search, which is a thorough examination of property records to make sure that the person or company claiming to own the property does legally own it and that no one else could claim full or partial ownership. Once that vaticination is complete, the title company backs the guarantee with title insurance, which protects the lender and/or new owner in the event that someone makes a claim to the property in the future. Title companies are often responsible for conducting the closing, also known as settlement. In this case, they maintain escrow accounts where closing costs are safeguarded until the settlement process is complete.

#2. They go to great lengths to ensure that the property is valid.

During the title search, the title company looks for any outstanding mortgages, liens, judgments, or unpaid taxes associated with the property, as well as any restrictions, easements, leases, or other issues that might impact ownership. They may require a property survey, which determines the boundaries of the plot of land that a home sits on, whether the home sits within those boundaries, whether there are any encroachments on the property by neighbors, and any easements that may impact an ownership claim. Before issuing title insurance, the title company will prepare an abstract of title, which is a short summary of what was found during the title search. The abstract of title is essentially a history of the property’s ownership. Lastly, the title company issues a title opinion letter, a legal document that speaks to the validity of the title.

#3. Title insurance is a smart investment.

Once the title is deemed valid, the title company issues a title insurance policy, which offers protection against claims or legal fees that may arise from disputes over the ownership of the property. There are two main types of title insurance: owner’s title insurance, which protects the property owner from title issues; and lender’s title insurance, which protects the mortgage company. Your lender will require that you buy a lender’s policy to cover its investment. However, the lender’s policy only covers the outstanding amount of the loan at the time a claim is made. It’s a good idea to also purchase an owner’s policy to protect your financial interests in the home. This one-time fee protects your property for as long as you or your heirs own it. The cost of owner’s title insurance is low in comparison to the protection and peace of mind it provides.

#4. They are usually responsible for preparing the settlement documents. 

At closing, the title company provides the buyer and the seller with the necessary documents.

Though title companies primarily benefit buyers, they assist sellers by handling all paperwork, coordinating the closing process, and negotiating any settlements or lien payouts to help the closing proceed.

Title issues can cause delays and serious issues in the home-buying process, so it’s important to know how all you can about the valuable services title companies provide.

Certified Title’s cutting-edge technology and client-centric philosophy are the foundation of our business practices. To learn more about Certified and how we can benefit your real estate transaction, please contact us anytime.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for industry-leading reliability and an exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.