Title companies play an integral role in processing real estate transactions. From start to finish, a title company works with all parties involved in a transaction, including buyers, sellers, real estate agents, surveyors, inspectors, and appraisers. Acting in the interest of every party involved, the goal of a title company is to establish an accurate ownership and lien history of real property, determine what other factors may affect the usability of said real property, ensure the accuracy of closing documents and, as a result, assist in the consummation of real estate transactions. To accomplish this goal, title companies perform the following five functions.
Title Reviews
In a title review, public record research is performed to verify the accuracy of the title abstract. Though the title abstract should be complete and accurate, title companies create a timeline of property ownership to ensure that no details have been overlooked. In the process of review, discovered liens or other ownership issues will be identified by the title company before proceeding to the next step.
Land Survey
If a survey is required before closing, a prior survey may be acceptable. As a courtesy, a title company can assist in the acquisition of a new survey, provided that they’ve secured permission from the buyer to schedule it. Once authorization is obtained, a survey of the land is performed and provided to the buyer and the title company. Any potential problems related to the survey are provided to the buyer. During each stage of the survey process, from authorization to reporting, the title company may be called upon to provide assistance.
Debt Recovery
Property is subject to local taxes, state taxes, Homeowner Association fees and outstanding utility payments. Prior to the issue of title insurance, the title company must conduct research to verify that all secured debts and other security interests in the subject property have been paid. Certain forms of debt, such as money owed for a property-related construction project, are more difficult to detect than others. It is the role of the title company to uncover these debts before insurance is issued.
Title Insurance
Required by mortgage companies, lender’s title insurance is issued by the title agency and protects the lender in the event a challenge or claim is made regarding the validity of the lender’s security interest in the subject property. A lender’s title policy also insures that in the event of default on the mortgage, the lender will be able to foreclose upon the subject property. Optional owner’s coverage is also available. Once a title company is satisfied with the completeness and accuracy of a title, all insuring requirements have been met, and all premiums have been paid, a title insurance policy may be issued.
Closing & Document Filing
Once a real estate transaction makes it to closing, it is the responsibility of the title company to ensure all relevant documents are completed by the involved parties. Part of this process involves a review of lender closing instructions, and a review to ensure adherence to all state and federal regulatory requirements. After signatures are obtained from all parties, certain legal documents must be filed in the real property records before the process is complete.
An integral part of any real estate transaction, a title company protects the interest of all parties by ensuring accuracy at each stage of the process.
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