For many people, a home will probably be the single largest financial investment they’ll ever make in their lives, which makes protecting that investment absolutely critical.
Title companies play an important role in helping you protect your investment, providing assistance throughout the real estate transaction, and even well after its closing. Before entering into any kind of real estate transaction or taking any estate loans, it helps to understand just what it is that title companies do and how they can be of service to you.
In this guide, California Probate gives you a quick rundown of what title companies do.
Title Companies Review Titles
Title companies will often have a complex system of departments that work together to search and review titles. These organizations review public real estate records in order to provide the necessary information (often submitted as title reports or commitments to title insurance) to everyone involved in the transaction.
Title companies provide clients with information related to foreclosures, estate tax, as well as information of legal cases involve real estate properties.
Title Companies Act as Closing Agents
Title companies often function as the closing agents for real property transactions. In other words, the company represents each party in the negotiation and transaction process.
As a closing agent, the title company does all the “dirty” work in buying property, which includes:
- Securing all necessary documents
- Having these documents affixed with signatures
- Receiving and distributing transaction payments
Once all involved parties have signed all pertinent documents, the title company will keep these as record documents in the local land records office.
Title Companies Issue Title Insurance
Once a title company identifies a title to be valid, it will then proceed to issue a title insurance policy to insulate the lender or owner against legal problems that may arise from ownership disputes and other similar issues.
Title insurance is unique because it provides protection against future claims that stem from past issues. Title insurance policies also have no annual premiums, with the property buyer paying a one-time premium based on the sale or mortgage value of the property.
There are generally 2 kinds of title insurance:
- Owner’s title Insurance – Protects the real property owner from title claims and other issues
- Lender’s title insurance – Protects the mortgage company
Title Companies Also Act as Escrow Officers
Title companies can also function as escrow officers, holding documents and money as instructed by one of, or both of the involved parties.
For example, the property buyer can give the title company the money needed to pay for the down payment of the property. On the other hand, the seller can provide the title company with a signed deed.
As acting escrow officer, the title company will only release the payment and deed once the specific conditions of both the buyer and seller have been met.
When choosing a title company, don’t hesitate to speak to an agent as many times as you want. You may also want to choose to meet with agents from a shortlist of title companies you’re eyeing before buying the property.