It’s been a long time since houses were bought and sold directly from one person to another. These days, numerous parties are involved in every real estate transaction, including home buyers, home sellers, real estate agents, mortgage lenders, real estate attorneys, home inspectors and title companies. Most of these are familiar to the average home buyer, but the title company is not known as well as the others. You may be thinking, “What does a title company do anyway?” Understanding their importance is key to protecting the investment in your next home.
What is a Property Title?
Before you can understand the workings of a title company, it helps to understand more about property titles themselves. Essentially, “title” is the right to own and use a property. This is different from the deed, which is the formal documentation used to confirm you have title. Many people interchange the words “deed” and “title” but they are entirely different. A deed is a document while a title is a concept.
Every time a real estate transaction takes place, title is passed from the seller to the buyer. Confirming who has title can be a complicated process. That’s where the skills and knowledge of a title company are used in the real estate process.
What is a Title Company?
A title company is an intermediary that helps to ensure the legality of a real estate transaction. In other words, it is their job to make sure there are no legal issues with ownership of the property. They are a third party who generally act on behalf of the insurance company, the buyer, the seller and any other parties who are part of the real estate transaction.
Typically the home buyer will select the title company and pay for a lender’s insurance policy. That’s not always the case. Sometimes the seller will select the title company. When this occurs, the seller will typically pay for an owner’s title insurance policy. There are those instances when the buyer and seller both decide on the title company and each end up paying for part of the policy.
What Does a Title Company Do?
Title companies are a vital part of any home sale. They serve many functions. The three most important functions are: conducting title searches, issuing title insurance, and acting as the escrow officer and closing agent.
The title company will begin by conducting a title search on the property in question. The title search involves a deep dive into the property’s history. They will review all previous sales and any other records attached to the home. The title company will also look for any liens, unpaid taxes, judgments, second mortgages or other legal issues that could pertain to the property. As part of the title search, the title company may order a land survey to confirm the exact property boundaries and determine if there are any issues with easements or the surrounding properties.
Ultimately the title search performed by the title company helps to ensure that once you buy the property, you are the sole owner of that property, and no one else holds legal claim. It’s also critical for uncovering any potential legal issues. Most lenders will not issue a mortgage on a property where there are legal issues or complications like a disputed title. These issues are not common, but this is one way the title company plays an important role in protecting your investment in a new property.
A title company will also offer title insurance. What is title insurance? Essentially title insurance is a protection policy against any unforeseen issues with the title. For instance, a title search may not have revealed that the home was included in a forgotten will, or that one of the previous deeds was defective. This is rare, but it has happened. Having title insurance can assist with this unforeseen issue.
Escrow Officer and Closing Agent
A title company’s third main function is acting as the escrow officer and closing agent for your real estate transaction. When you sign your purchase agreement, your real estate agent will send your earnest money and any necessary documents to the title company to be placed in escrow. The title company maintains this escrow account until closing. Then, at closing, an agent from the title company will be on hand to mediate between parties and process the final documents to complete the sale.
When Do You Meet with a Title Company?
You may meet with your Homes for Heroes title specialist several times throughout the buying process, or it may just be at closing. However, the first meeting usually occurs when you’re shopping for title companies and trying to decide who to partner with. After the seller accepts your purchase agreement and your real estate agent sends your earnest money check to the title company, a title specialist may reach out to you if they have any questions. Once you reach closing day, you’ll meet your title specialist in person as they work to finalize the sale.
Save Money with Homes for Heroes Title Specialists
At Homes for Heroes, we’re dedicated to saving you money throughout the home buying process, including finding you savings on title fees. When you register with Homes for Heroes, you’ll be automatically matched with a real estate and mortgage specialist in your area. They will work with you throughout your journey, helping you get the perfect home and the best deal possible. As you get closer to making an offer, visit our local deals page to find one of our title specialists in your area. They offer great discounts that can save money.
Excited to save money on more than just your property title? Register with Homes for Heroes today and we’ll help you save an average of $2,400 on your home purchase when you work with our specialists.