Buying or selling a home is not as simple as exchanging money and signing a few documents. There are also property rights that must be transferred between the seller and the buyer. That’s where a title company comes in.
What does a holding company do? a lot of. In addition to conducting a title search and providing settlement services to close the transaction, a title company provides title insurance to the home’s new owner and mortgage lender. Here’s what you need to know.
What is a proprietary company?
A title company (a title search or title insurance company, depending on the scope of their services) is a third party involved in a real estate transaction. It is independent of the lender, buyer and seller.
Justin Napola, a real estate attorney in Hollywood, explains that the title company is primarily responsible during the sale of a home. “They confirm that there are no liens on the home and that the seller is the legal owner of the property,” Napola says.
|Typical title company services|
|Title Search: Identifying the true owner of the property|
|Holding escrow funds|
|Doing property surveys|
|Guarantee of title|
|Preparation of closing statements / control of the closing|
First of all, as the name suggests, the title company verifies the title of the house – all the rights, uses and privileges associated with the ownership of the property – defects or things that can affect the buyer. Use of the house.
According to Patty DeGennaro, chief implementation officer of Title Alliance, Ltd. Media, a Penn-based title company, common title defects that a title company can dig up and fix for you include:
- Fraudulent transfers
- Unknown heirs
- Previously unpaid taxes
- The judgments of the court of appeal
- Previous loans
- Restrictions such as rights of way and easements
What does a holding company do?
To verify these and other issues, the title company conducts a public records or transaction history search for the property and its title. The company verifies who owns the asset, as well as the “quality” of that title (ie “cloud” as opposed to free and clear ownership).
“This is important to ensure that the buyer is taking the rightful ownership of the property from the owner of the property or someone authorized to transfer title on behalf of the owner of the property,” said Rajeh Sadeh. Real Estate Attorney in Somerville, New Jersey.
Saadeh added that these services are ordered directly by an experienced real estate attorney on behalf of the buyer.
Title companies can help with settlement services during the closing process, such as facilitating a screener or deed notarization, or filing the deed with the county, said Ben Heller, a real estate attorney at Zweibeck, Fisset & Coleman Law in Los Angeles. Be firm.
“Settlement services typically act as an independent third party for the title company to help buyers and sellers close the transaction, or the title company can be registered by the buyer and seller to help close the loan transaction,” says Heller.
Finally, title companies offer title insurance, which protects the lender if the title is granted and may also be the buyer of the policy. Imagine, for example, that after you buy a house, but before closing on it, you find out that someone has a legal claim to the property due to an undisclosed court settlement. If you don’t have title insurance, you may be concerned about such situations, especially if the purchase agreement does not include a warranty deed that protects you.
What is a title guarantee?
Providing title insurance is one of the most important functions that a title company serves.
“A title bond is the only type of insurance that guarantees the past to the present, and is a one-time payment that protects the owner as long as the property exists,” Napola said.
There are two types of title insurance policies:
- Lender’s policy – A lender’s title insurance policy protects the lender from any title defects that could affect the security of the mortgage loan, says DeGenaro. “This policy is based on the amount of the mortgage, and it decreases when the loan is paid off.” Almost all mortgage lenders require this type of policy.
- Owner’s policy – A title insurance policy is not always required, but it is strongly recommended for homeowners to protect against future claims against their property. “Even if the lender has a title policy, the buyer needs a title policy to protect their interests,” DeGenaro says. “The coverage lasts as long as the buyer or the buyer’s heirs have an interest in the property.”
How much do title company services cost?
Title services usually start around $1,000 but can exceed $1,500. The cost often depends on the amount of services needed, such as probation or if a prison search is necessary, according to Saadeh.
The cost of title insurance is usually regulated by your state’s insurance department, which ensures that the cost is the same no matter which title insurance company you choose – although what you pay depends on the amount of coverage you choose.
Generally, costs come in at $1,000 for an owner’s policy and $1,000 for a lender’s policy. “In most states, the buyer pays for the title service and title warranty,” Sadeh says. However, before the sales contract is signed, the buyer and seller may choose to negotiate who will pay for these services.
How to choose a proprietary company
Title companies are often recommended by the buyer’s real estate agent, lender, or real estate attorney involved in the sale of a particular home. But you don’t have to choose the title company mentioned for you.
“Ask for multiple recommendations and spend your time researching and talking to each company,” Napola advises. “Know their prices and any fees charged and check online reviews carefully.”
Also, be prepared to ask the title company:
- How long have you been in business?
- Who is your subtitle?
- How much liability insurance do you have?
- What is your claim ratio with customers?
- Have you had any claims?
- How do you protect yourself from crow scams?
- What were some of the challenges you faced while searching for a title, and how did you overcome them?
- How long does the title search process take and who conducts the title search?
- How much title insurance coverage do I need and why?
“Try to choose a title company based on the answers to these questions, as well as customer service, reputation and expertise with other professionals involved in the transaction — preferably including your real estate attorney,” advises Sadeh.