If you’ve ever been involved in a real estate transaction,
you might have heard of a title company. Title companies don’t necessarily get
all of the credit they deserve.
companies do a lot for a home sale, and without them it would be hard to become
a legal homeowner. Luckily, the best
home warranty company (that’s Landmark!) is here to explain the role of a title
company, and what they do to finalize a home sale.
Title companies are brought into a real estate transaction
when a home is under contract. That is, when a home has been on the market, and
a potential buyer has made an offer on the home. When the home seller and home
buyer have come to an agreement on the right price to sell the home, the home
is under contract. Once the home is under contract, the real estate agents
involved will contact the title company and they’ll get to work.
The first thing a title company does when entering into a
real estate transaction is a title search. They investigate the property to
make sure when the buyer of the home procures the title they will legally be
the homeowner. A title search will make sure there aren’t any claims on the
property, like outstanding mortgagees, or liens. They will ensure that the
property tax has been paid, and the utilities (like water bills or homeowners
association fees) are up to date. The title company will write these findings
in a document called the Title Abstract.
Why is a title search
Most lenders require a title search before entering into a
mortgage on a piece of property. It ensures that there are no legal restrictions
on the property, which means the lender’s investment in the property through
the mortgage is safe.
Many lenders will also require a property survey. The title
company also completes this task. A property survey draws out the property
lines to see how large the piece of land is and if neighboring properties have
encroached upon the property lines. If there are any problems with the property
survey, the title company will contact the real estate agent and lender. If
there aren’t any problems with the property, the title company will present
this to the buyer during closing.
Why is a property
Lenders require a property survey before they enter into a
mortgage. They want to know the property is actually worth the amount they are
lending to the buyer for the mortgage.
Title Opinion Letter
After completing the title search and property survey, the
title company creates a legal document stating the title is valid and available
to sell to the buyer. This document is called the Title Opinion Letter.
Most title companies offer two types of title insurance. The
first is lender’s insurance. This protects the lender or bank from any claims
or legal fees that might come up from property ownership disagreements. The
second type of title insurance is that of owner’s insurance. This protects the
buyer from disputes over home ownership. Sometimes owner’s title insurance has
to be purchased, other times it is free.
Why is title insurance
Owner’s title insurance makes sure that if the title was
incorrectly sold to the buyer, and they are not actually the owner of the
property, they will be reimbursed or paid the value of the home.
Choosing the Best
Home Warranty Company
Another task that the title company completes is choosing
the best home warranty company for the new owner of the home. Sometimes a real
estate agent or seller includes home warranty insurance on the home to protect
the buyer from paying exorbitant prices on appliances and systems that have
failed from normal wear and tear. If the listing agent or buyers agent don’t
specify from what home warranty company the home repair insurance should be
purchased, they will choose the best home warranty company. To find more
information about home warranty coverage, you can visit our page at
The title company may also act as an escrow agent for the
real estate transaction. This means they will be an impartial party and pay
money to the correct vendors, banks and parties. We (the best home warranty company) will
explain this more in the next section.
Settlement Agents at
At the end of the real estate transaction, the title company
acts as an escrow agent and a settlement agent. They prepare all legal loan
documents, like the deed, tax certificates, title insurance policies and other
state law required documents. They explain these documents to the seller and
buyer during closing. Then, when acting as escrow agents, they collect the
money from the buyer and seller and make sure the money is transferred to the
correct parties, be that to the lender to pay off a mortgage, or to vendors.
Finally, after everything has been signed and made official, the title company
presents these documents to the court and files them to make the transaction