What Does A Title Company Do?
The title company oversees the interests of all parties – buyers, sellers, lenders and REALTORS®- and coordinates the transfer of money and property at the time of closing. Prior to settlement the title company researches the ownership history of the property (title examination) to determine that the title is free of any liens or claims. At the closing table, the title company collects and distributes funds from the transaction, transfers ownership of the property, and issues title insurance.
The title company opens the file by contacting the city or county offices where the property is located. They conduct a full property search in the local record to learn everything about the property’s history.
The title company examines the title to verify that all outstanding liens are satisfied. An investigation of the property survey determines if the house is built on the correct lot or if there are encroachments on border properties.
A title commitment is prepared for the lender, which ensures their protection against a title claim. Owner’s title insurance protects you, the buyer, from any fraud or hidden risk undetectable during the title search.
Next, the HUD-1 Settlement Statement is prepared based on the figures provided by the lender and other entities. After the loan and settlement papers are signed, the title insurance company disburses the mortgage package, making sure everyone from the seller to the termite inspector is paid. The package is returned to the mortgage company and the deed and the new mortgage are recorded.
Finally, the title company records the release of the seller’s mortgage.
What is Title Insurance and Why do I Need It?
Title insurance protects you as the property owner and the lending institution that holds your mortgage from unforeseen claims that may arise against your property. The policy provides protection from financial loss and payment of legal costs associated with such claims.
Some of the risks protected under a title policy include: forged documents, clerical errors in public records, fraud, unpaid taxes, signature of minors, deeds from mentally incompetent persons, and undisclosed or missing heirs or previous owners of the property.