Responsibilities of a Title Company

When buying a home, a common term that will come up is “title”. Although it’s a common term, do you really know what it means or what a title company does for you and the home seller? Let’s take a look at what to expect from a title company during your home buying process.

What is a title company?

The role of title company spans across a couple different spaces in real estate, but it’s main priority is to verify the title to the property or real estate given to the home buyer is legitimate. To put it simply- the make sure all the bases are covered and the seller has a right to sell the property.

Once the verification is complete, the company will guarantee the property title with title insurance. This insurance protects the owner in the event that someone or multiple people come along and claim ownership.

What do they look for?

We mentioned the main thing your title company will look for is whether or not other people have rights to the property you are looking to buy. But they also search for other issues including the ones below.

Easements: A large portion of a title search will be looking for easements. These are agreements that have been made on behalf of a previous owner that allows the right of another person/group to use part of the property for a specific purpose. This could include a city claiming part of your property be untouched by landscaping or a neighbor having the right to park in a designated area.

Existing Liens: A lien on a property could include an existing home equity line of credit or an existing loan to pay off for a specific amenity of the home. These will need to be paid before the closing.

Outstanding Mortgage: Any current mortgage tied to the property will need to be paid off completely at closing in order for the title to be transferred to your name.

HOA Dues: This varies based on the existing Home Owner Association contract, but any unpaid dues will need to be addressed before closing.

Restrictions: These are most common in designated age communities, such as 65+ living. The title company will ensure the buyer is not in violation of any area or community restrictions.

What to expect when working with a title company?

To start, you will want to ask your real estate agent if they have a title company they recommend. Oftentimes, they have a trusted title partner they work with and can help you get connected with them quickly and efficiently. Once you choose a title company, you should feel comfortable calling them anytime you have questions or concerns about the property. They are there to protect you! So utilize them.

There are two types of insurances they will offer, lender’s and owner’s title insurance. Lender’s insurance protects the mortgage company, and is required if you are taking out a loan to purchase the home. Owner’s insurance protects the property owner from title issues. Owner’s insurance is usually optional, meaning who pays for it can be negotiated. Lender’s insurance, on the other hand, will be your responsibility as a buyer.

Lastly, your title company may also be responsible for conducting the closing process. They will maintain escrow accounts, which will be used to hold your closing costs until the day you close on your new home.

For any further questions regarding title companies or how they can help you in the home buying process, visit our website and connect with a local expert near you.

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