What Does a Title Company Do
A title company plays a crucial role in real estate transactions by ensuring that the title to a property is clear and can be legally transferred from the seller to the buyer. Here are some key functions and services provided by a title company:
1. Title Search The title company conducts a thorough examination of public records to trace the history of the property's ownership. This search helps identify any liens, judgments, easements, or other encumbrances that may affect the title.
2. Title Insurance Based on the results of the title search, the title company issues a title insurance policy. Title insurance protects the buyer and the lender from financial loss in case there are undiscovered defects in the title, such as undisclosed heirs, forged documents, or errors in public records.
3. Closing Services The title company often serves as the escrow agent during the closing process. They hold the earnest money deposit and relevant documents in escrow until all conditions of the sale are met. Once the conditions are satisfied, the title company facilitates the transfer of funds and documents to complete the transaction.
4. Document Preparation The title company prepares various documents required for the closing, including the deed, closing statement, and other necessary paperwork. They ensure that all documents are correctly executed and filed with the appropriate authorities.
5. Closing Agent A representative from the title company may act as the closing agent during the real estate closing. The closing agent oversees the signing of documents, explains the terms and conditions to the parties involved, and ensures that all necessary payments are made.
6. Recording of Documents After the closing, the title company ensures that all relevant documents, such as the deed and mortgage, are properly recorded with the appropriate government offices. This step is crucial for establishing the new ownership of the property and securing the lender's interest.
7. Payoff Processing If there are existing mortgages or liens on the property, the title company ensures that these are paid off and released, clearing the title for the new owner.
By performing these functions, a title company helps minimize the risks associated with real estate transactions and provides confidence to both buyers and lenders that they are acquiring a property with a clear and marketable title.
