What does a title company do?
It is our job to coordinate the interests of all parties to a real estate transaction, including the buyers, sellers, mortgage lender and real estate agents. We make sure that all requirements for settlement are fully satisfied. After the Sales Contract is ratified, it is sent to us to review for accuracy and completeness and to begin the title process, which involves the following steps:
1) Title abstract: We research the title to the property through a title abstract, which provides a history of the property and its ownership. It is our job to examine the title and clear any liens or claims on the property so that the new buyer receives clear and marketable title to their new property.
2) Survey: Most lenders require a survey, or house location drawing of the property. We will order a survey, with the buyer’s authorization, and review for any potential problems. Should any issues arise on the survey, we will notify the real estate agent, lender and the new buyer immediately. The survey will be given to the buyer at settlement.
3) Property taxes: We verify with the local or state taxing authority that the property taxes have been paid. Similarly, we check with the water company and Homeowners Association to confirm that all payments are current. On the HUD-1 Settlement statement, we will prorate the amounts based on the billing period and the settlement date.
4) Title insurance policy: We prepare the insurance commitment for the lender’s title insurance policy and issue both owner’s and lender’s coverage. There are two types of Title Insurance: Lender’s, which is required by the mortgage company, and protects the lender’s investment in the property; and Owner’s, which may be purchased at settlement for the benefit of the new owner. It is strongly recommended that all buyers receive an owner’s title insurance policy which protects them against any unforeseen claims, hidden risks, or fraud against the property. The insurance policy provides protection from financial loss as well as payment of legal costs necessary to clear such claims.
5) Loan documents for closing: We also coordinate with the mortgage lender to receive the loan documents for closing. Once received in our office, we review all forms and comply with the lender requirements for closing. With these documents, we are then able to complete the HUD-1 Settlement Statement. This settlement statement is one of the most important documents to sign because it details all of the costs associated with the purchase and sale of the property. We also prepare the deed and other documents necessary to comply with state and federal laws.
6) Closing: At closing, all documents are explained to all parties prior to signing. Settlement lasts approximately one hour. After closing, we disburse all the monies collected at settlement and pay vendors such as the termite company and surveyor. We also pay off and release the existing mortgages on the property and prepare the loan documents to be returned to the lender.
7) Documents recorded in courthouse: It is our responsibility to make sure all documents are properly recorded in the courthouse, such as the new deed and mortgage. We also ascertain the release of any existing liens on the property.