What Does a Title Company Do?

Getting ready to buy or sell a home? When the time comes to make one of the most important transactions you will ever make, you should know the key players to its success. A title company holds a central role in a real estate transaction — serving multiple essential needs for interested parties.

 

What is a Title Company?

A title company typically acts as a combined agent of the buyer, the seller, the insurance company, and other interested parties, such as mortgage lenders, that are involved in the home/property sale.

 

What is a Title Company Responsible For?

In general terms, a real estate title company is there to ensure that the title to a home or property is, in fact, a legitimate title. It also issues title insurance to protect both the buyer and the lender. Additionally, a title company acts as an important partner in a successful, timely, and efficient closing.

 

Performing the Title Search

A title search is one of the most critical components of the real estate transaction. The title company will perform a thorough title search to determine if there are any issues with ownership, among other factors that can cause problems with legitimacy. The various potential issues that could be uncovered include:

• Second mortgages or other unpaid liens
• Legal judgments associated with the home/property
• Unpaid taxes
• Previously undiscovered or unknown heirs
• Previously unknown land mineral rights
• Existing easements or other assessments
• Unpaid homeowner’s association dues

Without performing a comprehensive title search, it is unclear if the sale is legitimate — leaving the new owner liable for any legal or financial issues/obligations that may arise. Insofar as timing goes, the general time frame for a title company to clear a title is on average about two weeks. Although, depending on the particular circumstances of the home or property, this time frame can vary widely.

Providing Title Insurance

A title company also provides critical title insurance that is tied to the real estate transaction. Doing so protects the homeowner’s rights to the property.

There are two types of title insurance: the Owner Policy and the Lender Policy. In some locations, the buyer is responsible for the Owner’s Policy. Depending on the particular negotiated agreements for the home purchase, the buyer or seller may pay for the Lender Policy.

• Owner Policy— protects the owner’s legal rights to the property and their financial future
• Lender Policy — protects the lender’s legal rights in the real estate transaction if there is a new loan/mortgage on the property

Title insurance is so important because it not only protects the buyer during the process of closing if something comes up that could sabotage and end the sale, but it also serves to safeguard the owner financially for as long as they own the home. If some legal issue comes up down the line, it’s covered.

A key difference between title insurance and other types of insurance is that it is an affordable one- time cost. The amount will depend upon several factors, including:

• Loan amount or purchase price
• Fixed fees and state regulations (if there are any that are applicable)
• Negotiations with the seller on how much each party is responsible for
• Negotiations for the full components of the policy
• Any bundle discounts that may be available
• Any extra coverages included in the policy above standard coverage for title insurance

In Florida, and other states such as Texas, there are state regulations where the government fixes title insurance premiums. Cost of title insurance can range from several hundred dollars to about a thousand dollars per each policy for the owner and the lender. This one-time cost is minimal compared to what the owner could be liable for in the future if something comes up with property rights or liens after closing.

 

 

Ordering the Property Survey

In conjunction with performing the title search and providing the title insurance, a real estate title company may order a property survey (with the permission of the buyer). This is additional protection important to both the buyer and the lender — ensuring accuracy on the legal borders of the property, location of structures, and other information as appropriate. A property survey may bring up a question or issue, so it is vital to have this performed efficiently to prevent unresolved (and problematic) issues during the closing.

 

Acting as a Closing Agent

A title company works hard across multiple real estate transaction elements to provide a better, streamlined closing experience. They act as a closing agent for both the buyer and the seller. Typically, the title company will serve as a disinterested third party to the transaction and receive and surrender payments/any closing fees, and obtain appropriate signatures for the legal documentation.

Once the closing is complete, the title company will record the official documentation, including deeds and mortgages in the local land records office.

 

The Benefits of Using a Title Company

A good title company provides many benefits to ensure the success of a real estate transaction. From sellers to buyers, and lenders and other interested parties too, a good title company is important for legitimacy, peace of mind, and financial security.

If a title isn’t properly cleared, the closing can be delayed or even fall through entirely. If title insurance isn’t present, lenders could face financial problems, and buyers could run into legal trouble later that can lead to financial disaster. If a buyer or seller attempts to go through closing on their own, it can be very stressful, complications can arise, and official documentation may not be handled properly — leading to legal and financial issues that could have been prevented.

Bay National Title Company Has You Covered

As an independent national title company, we offer a better closing experience. Helping individuals, families, entrepreneurs, and businesses in Florida and across the United States have successful, streamlined closings for their real estate transactions.

Our expert team makes the complicated simple. Providing an unparalleled level of service, BNTC professionals are with you every step of the way, communicating clarity in processes and eliminating confusion. Whether you are a buyer or a seller, we are here for you.

Contact us today to learn more about our services from the best in the business. We are confident we can help you have a better closing experience.