If you’re a first-time homebuyer, seller, or simply new to the world of real estate in general, it can be easy to find yourself feeling confused and overwhelmed by all the ins and outs of a home sale. A lot of work goes into real estate transactions, and knowing who is responsible for what is important for every party involved.
Many new buyers and sellers find themselves asking, “what exactly is a title company?” and “what will my title company do for me?” As the leading title company in St. Louis, Investors Title is here with the answer!
What is a title company?
Title companies play an essential role as an independent third-party who helps to coordinate the real estate closing process. They act as a combined agent of the insurance company, the buyer, the seller, and any other parties involved in the real estate transaction. The task of any title company is to attempt to ensure that the entire title transaction process goes as smoothly as possible.
What does a title company do?
Title companies do quite a bit throughout the course of a home sale. Without one, it would be very difficult to become a legal homeowner.
Performs a title search
Title companies search and examine public records to detect and resolve dig up documentation, liens, or encumbrances tied to a house (such as outstanding mortgages, unpaid taxes or utilities, and more) prior to closing. A title search is designed to ensure that you have a “clear title.” In other words, when you procure the title to your new home, you are legally the homeowner.
Protects and defends you if necessary
If your title & claim to ownership are challenged, your title company is equipped to defend you. On occasion, unrecorded claims — such as mistakes in public records, forged deeds or prior owners claiming ownership interest — can surface after closing. Your title company will guide you safely through the processes both before and after your transaction has closed.
Your title company will also issue a title commitment. This describes the anticipated title coverage and sets out requirements that must be satisfied in order to insure your title accordingly. Then, through your title company, you will also receive “title insurance” which protects you against losses that might arise due to defects in your ownership interest in a property. (See our title insurance guide for more details on why title insurance is important, and learn the differences between residential title insurance and commercial title insurance.)
Acts as a central clearing house
Title companies are responsible for collecting necessary documents, following the lender’s instructions, and making arrangements for proper distribution of funds.
Serves as the escrow officers
Your title company may also act as an escrow agent, meaning that they will manage the escrow account for the property sale. A title company’s duty in this role is to safeguard money and documents related to the sale, and to serve as an impartial party that disburses payment to the appropriate vendors, banks, and other parties (with written permission from the buyer and seller).
Acts as closing agent
Arguably the most important part of any real estate transaction is the closing. After all the hard work you’ve put into buying or selling your home, you deserve and want a smooth closing when you arrive at the signing table.
Your title company will do everything within their power to ensure that this is the case. Title companies will draft the final paperwork and documentation, oversee signatures on the closing documents, ensure that the property title passes from the seller to the buyer, and again, oversee the disbursement of funds from the escrow account including closing costs and fees.
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Every title transaction is unique and can present its own challenges, so it’s important to choose an experienced title company that you can trust. With over 40 years of experience and an in-house team of highly skilled attorneys, closers, and examining personnel, Investors Title is well-equipped to handle even the most complex title matters that most other companies can’t.
For more information and guidance on your title transaction, take a look at our helpful resources. Have questions, or ready to get started? Get in touch today!
Reference: Alliant National Title Insurance Company