What Does a Title Company Do?

January 12, 2023

5.64 million existing homes sold in 2020. While many homes sell each year without a hitch, others have title problems that need to be resolved before a deal gets closed.

If you're purchasing real estate, you need to be sure that the title is legitimate and that there aren't any issues to be aware of. A real estate title company can help to verify the legitimacy of a title and can identify issues before they become major headaches.

In this guide, we'll tell you more about what title companies do in real estate.

What is a Title Company?

A title company is a third-party service provider that aids buyers and sellers during real estate transactions. The company will work to transfer property rights from one owner to another and will verify that there aren't any encumbrances on the property's title.

Title companies can help ensure that a title is clear of any issues or problems that could affect a buyer when owning the home. They'll verify that the seller has the right to sell the home and will help prevent any type of fraud from occurring.

A title company will check for title defects such as unpaid taxes, prior mortgages, property liens, and other restrictions that could affect a buyer. They can also provide other services as well, such as holding escrow funds.

What Do Title Companies Do?

So, what are some of the main things that a title company will do? Here are some of the responsibilities of the title company.

  • Chain Of Title: Title companies will review the full history of a home's ownership and check for existing liens, second owners, and unpaid property taxes.
  • Property Surveys: Title companies will collect property surveys to verify property lines.
  • Title Insurance: Title companies will provide title insurance to protect lenders and buyers from any claims and issues that arise after the sale.
  • Check Title Information: A title company can also help to verify that the wording regarding property ownership, property taxes, and fees is correct.
  • Managing Closing Documents: A title company helps to manage your home's property closing and appoint a real estate attorney to finalize a sale by executing closing documents with buyers and sellers.
  • Recording Closing Documents: Title companies record the final closing documents in the County where the property is located.
  • Hold Escrow Funds: A title company can hold escrow funds on behalf of lenders and buyers.

What is Title Insurance?

One of the main ways that title companies can help is by issuing title insurance. Title insurance is a type of insurance that will protect lien position of lenders and property rights of owners while they own the property.

Title insurance can protect a buyer from any issues that may come to light after a property sale closes. It protects them from unforeseen circumstances. This could be due to unpaid liens, forgeries, undisclosed information, human error, and many other potential issues.

Getting an owner's title insurance policy often isn't a requirement. However, it can help to give peace of mind and security after buying a home or property.

In addition to owner's title insurance policies, there are also lenders' title insurance policies. These policies will help to protect a lender against any title problems that might affect the lien position of the mortgage loan.

Understanding Real Estate Title Services

If you're wondering how a title company can help when buying real estate, be sure to consider the information above. Hiring a title agent can help you ensure that your real estate transaction goes smoothly and can minimize the risk of buying a property with title problems.

Need real estate title services along the Emerald Coast? Contact us today to learn more about the benefits of title companies.

Questions? Contact Us!

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