What Exactly Does a Title Company Do? Let Us Explain.

Oct 4, 2021

What Exactly Does a Title Company Do? Let Us Explain.

What is a Title Company?

Did you know that while your title company is maintaining escrow accounts, they are also making sure that titles to real estate properties are legitimate?

It’s true! The title insurance that title companies provide protect both lenders and owners against lawsuits or claims against properties. Title companies are equipped to handle disputes between parties that may occur. When title companies handle escrow accounts it ensures that money is used only for settlement and closing costs. Your title company’s settlement agent will bring any documentation needed to properly close the home and answer any questions the buyers or sellers have.

What Do Title Companies Do?

In addition to handling escrow accounts and making sure that titles to real estate properties are legitimate. Title companies perform title searches, take property surveys, and provide you with title insurance.

Title Searching

Title companies are there to assist you and create a seamless transfer of ownership. They start the process by title searching. Searching for titles includes looking for potential obstacles along the way to avoid conflict. A title search can detect outstanding mortgages, any unpaid homeowner association dues, or unpaid tax liens. Title searches also look for issues with leases and easements.

Property Surveys

A survey or drawing of the property is required in some buying and selling situations. If it is necessary, the title company will order you a survey of the property to identify any potential encroachments.

Surveying and having a drawing of your property is beneficial because any encroachments that can cause damage will be noticed before a problem occurs. If you need reassurance that there are no encroachment issues with the property, you should speak with a title company to ensure protection.

Providing Title Insurance

Title companies issue a title insurance policy that is used to protect lenders or owners against claims or legal fees.

When closing a house, the two main types of title insurance are the owner’s title insurance and lender’s title insurance. By obtaining owner’s title insurance, it protects property owners from title issues and lender’s title insurance protects the mortgage company. If someone sues or makes a claim against the home from before the homeowner purchased it, owner’s title insurance is designed to protect homeowners. With lender’s title insurance, your mortgage lender is protected if any issues are to arise in the future. Your mortgage lender will require you to have lender’s title insurance in order to protect them. If anything goes wrong, the insurance policy will cover the loan amount.

How much do title companies charge?

The size of the loan and state you are located in will affect the cost your title company charges for title insurance. Your expense is usually paid at the closing and is not an ongoing charge.
For example, the Federal Reserve describes how “a lender’s policy on a $100,000 loan can range from $175 in one state to $900 in another.” Be sure to ask if your title company provides special discounted rates depending on when your property was last sold.

Choosing a Title Company

The title company you choose will maintain an escrow account for you, answer any questions you may have, and help you get in touch with an agent who can provide you with details on that account. Title companies work towards answering all questions about title searches, title abstracts, title insurance, escrow accounts or closings.

When choosing a title company you should always consider the title insurance cost because it varies across the United States. Remember, real estate is local. Try to find a local title company if possible that is in the area you wish. Last, if you’re hesitant when choosing a title company, always remember how important and beneficial it is to protect your investments. Taking action can prevent possible or future disputes and issues late down the road.

Boundary brings dedication and expertise to every transaction with the single goal of providing exceptional title and settlement experiences for all of our customers. Whether you are a buyer, seller, real estate agent, builder or lender, as your closing provider we will deliver truly remarkable service and responsiveness. Learn more about how we can serve you today.

This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.

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