Most people when buying or selling a home will first think about retaining a realtor, and selecting a mortgage loan financial organization, and then a professional home inspector. Because the mortgage process is quite involved, another important entity is involved – title companies. In general these companies work to ensure that there are no hidden or unknown problems with the transfer of the property title or transaction process. They are in essence an “overseer” to ensure that the components of a real estate transaction are legal and hassle-free. Through research, insurance and careful coordination, a title company is there to guide the process of the title to property being transferred legally and correctly from the seller to the purchaser.
To further understand what a title company brings to the table, here’s a breakdown of services that are usually offered:
Abstract’s
A title company will initially perform what is referred to as an “abstract” to research the history of a property being sold or purchased, and locate information as necessary. Secondly, a title search is performed to find out if you are buying the property from a person who is legally able to sell the property. This also reveals any past or current liens or judgments against the property from a legal standpoint. Often title companies will review the chain of the property title to look for any unseen past claims to the title that may be floating around.
Legal Claim
Once a property is cleared, title insurance is then issued to ensure that the purchaser holds a proper and legal claim to the title of the property. Title insurance is usually required by lending institutions including banks, credit unions and mortgage companies before a piece of property can be officially purchased.
The title company then creates an escrow account so that neither the seller or buyer, at any point during the mortgage process, can claim the money was mismanaged or used for other purposes other than closing the sale of a home. Title companies act as third parties in general, for both the benefit of the seller and buyer, and the realtors involved in the transaction.