Buying or selling real estate is a significant event. It normally requires the services of many professionals, including a title company. A title company is an important part of your real estate “team” and they play a key role in looking out for your best interests. Whichever party pays the title policy premium has the right to select the title company. This is customarily a seller expense, and is an important decision that deserves careful consideration.
WHAT DOES A TITLE COMPANY ACTUALLY DO?
The title company plays two roles:
Title companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders and others who have an interest in the real estate transaction. Title companies provide assurances that the transfer of title takes place efficiently and that your interests are protected under the terms and conditions of the title policy.
Title insurance is an agreement to protect against damage or loss from a defect in title as evidenced by a policy of title insurance. Following a search and examination of public records and in exchange for a premium paid, title insurance companies will assume the risk that title to a parcel of real property is as stated to be in the policy of title insurance.
Title companies also protect purchasers against claims that can be made against the title (ownership) to the property. Problems with the title can limit your use, ownership or enjoyment of the property as well as potentially cause you significant financial loss.
Approximately 1 in 5 title searches reveal a title problem.
Some examples of potential title issues that may or may not be revealed during a title search are: mechanics liens, unreleased trusts, tax liens, missing heirs, frauds, and forgeries. Title professionals work to identify and resolve these issues before you go to closing. This is a labor intensive exercise that requires the hard work of experienced professionals. Title insurance is unique in that it emphasizes retrospective risk elimination. This means that title professionals are looking back in time to research and examine the history of title and working to eliminate any potential risk to your ownership.
Your title insurance policy will protect you if a covered issue arises and was not found during the initial search.
Most people take care to choose an experienced insurance agent when purchasing life, auto or home owners insurance. Your title insurance agent is no different. For most people, their home is their largest asset. Choose a title company that is staffed with experienced experts who can guide you through the choices that you have pertaining to title insurance so that your asset is properly protected. They play an integral role in managing the closing process and representing all the parties to the contract. This work requires significant staffing and a keen attention to detail.
A title company is also your closing or settlement agent. They play an important role in managing the closing process as well as conducting the closing itself. These professionals ensure that the transaction is carried out in compliance with the terms of the contract and the instructions of all involved. Some examples include paying the seller their proceeds, ordering payoff numbers from the existing lender, obtaining money from the buyer and the new lender, ordering surveys, collecting necessary documents from pest companies or inspectors, preparing the settlement statement and closing disclosure, ordering deeds or releases, collecting recording fees and taxes for the local governments and filing the necessary paperwork at the courthouse.
The title company will also conduct the closing. Real estate transactions can be tenuous, challenging and sometimes emotional. It is important to have a settlement agent who understands this and can handle the sometimes tricky situations that present themselves leading up to or during a closing. It is not unusual for a settlement agent to have to assist in resolving issues or disputes that arise. This can sometimes mean the difference between closing your transaction or walking away from the table unsuccessful. The settlement agent is also tasked with reviewing and explaining the documentation that will be signed at closing. A good settlement agent will be familiar with all sorts of transactions, willing and able to explain the key factors in a language you can understand, and will have good working relationships with local lenders and service providers in case issues or questions come up.
At Gregg County Title, your property is our priority. Let us join your real estate "team" and help look out for your best interests during one of the most important decisions of your life. Have further questions? You can contact our office at 903.653.4188.
* The following is a courtesy contribution (not an affiliation): original article written by Keith Barrett, Vesta Settlements.