If you’re buying or selling a home, you’ll need the service of a title company. So what does a title company like Title Partners of Florida do in real estate? In short, we protect the interests of everyone involved in a real estate transaction. Whether you’re buying or selling a property, providing financing or you’re a Realtor, we’ll ensure all the requirements for a professional, engaging and memorable closing are satisfied.
Even if you’re preparing to refinance your existing mortgage or purchase a new home, your mortgage lender may require you to find a title company to work with fairly early on in the loan process. If you’re not familiar with the loan process, you may not be certain what a title company actually does.
The title company is one of the most important third parties you may work with throughout the entire transaction. A title company provides three important services:
Research the Property’s Title History
Early in the loan process, the title company will begin researching the property’s title history and will issue a preliminary title commitment. This title commitment will show all of the property’s previous owners as well as legal documents that were signed and notarized that show the legal transfer of the property. Ultimately, the title commitment should show a clean, unencumbered line of ownership that leads to the current owner.
If the title history research shows that the current owner does not own the property legitimately or that there may be a dispute, work is completed to generate a clean title history (“clear title”).
Facilitate the Closing Process
The title company also facilitates all aspects of the closing. This involves providing the mortgage company with the title documents they need to close, researching the current payoff figures and creating a Closing Disclosure and/or ALTA Settlement Statement. The Closing Disclosure and/or ALTA Settlement Statement shows all of the financial transactions related to the closing, such as the appraisal fee, the property inspection fee, tax service fees and more.
The title company will handle all financial disbursements related to the closing, including sending wires or preparing checks for all of the vendors who will be paid for their services at closing.
Issue Title Insurance
A final service offered by the title company is the preparation of a title insurance policy for the lender and/or the Buyer. The title insurance protects the lender and/or buyer from financial liability in the event there is a dispute over the ownership of the land later on. This type of dispute can create costly legal fees and can ultimately strip the property’s ownership from the owner. Title insurance will pay for these legal expenses and for the loss if one occurs.
What Does a Title Company Do for You at Closing?
Here are some important steps a reputable title company will take care of for you when you want to buy or refinance a home or represent your clients as an agent:
1. Order a Property Survey
Many lenders will ask for a survey or a location map of the property. Title Partners of South Florida will:
- Order a survey with the buyer’s consent.
- Review the survey to discover any issues that can occur during the closing process or afterward.
- Notify the agent, lender and buyer instantly if any issues come up during the survey.
- Hand over the survey to the new buyer on the settlement date.
2. Verify Property Expenses and Tax Payments
It’s our duty to verify the current status of all property expenses. To avoid any dispute over taxes and unpaid bills, we:
- Check with relevant government agencies and districts which impose taxes to ensure that both state and local property taxes have been paid.
- Contact the water utility company and the relevant homeowner’s association to verify all bill payments are up-to-date.
- Confirm that fees are up-to-date so the district will not record a lien against the property if it’s in a business improvement district.
- Prorate bills and taxes based on settlement dates and billing periods on the settlement statement.
3. Manage Escrow Accounts
During the real estate transaction, we hold vital documents and deposits till the completion of the closing process. The escrow account protects the lender, buyer and seller.
We ensure the closing experience is great for all parties and everyone gets what they’re owed. We also collect all outstanding fees, premiums and commissions and disburse them appropriately. Plus, we keep the documentation of loan agreements before the transfer of the property is concluded. At closing, we pay off the existing mortgage on the property and complete the loan documents that will be sent back to the lender.
4. Coordinate Insurance Policies
We prepare insurance policies for the lender and the buyer. The lender’s insurance protects the mortgage company’s investment. The owner’s policy protects buyers from any hidden risks, unexpected claims or fraud. Both insurance policies provide coverage against financial losses due to liens and legal costs.
5. Manage Title Documentation
We obtain all loan documents from the lender for closing. With appropriate loan documents, we’re able to complete the HUD-1 settlement agreement. We also prepare the title deed and documents required to comply with federal and state laws. At closing, we provide full explanations of all documents to all parties involved before signing takes place. Finally, we ensure all documents, such as the mortgage and new title deed, are filed with the court.
As you can see, a title insurance company is a critical player in the real estate transaction, providing important services to all parties. When you are selecting a title insurance company to work with, you may want to consider getting recommendations from friends and family, as well as your real estate agent, for a title company/escrow officer to work with. You may also search online to compare reviews of local title insurance companies on popular business review sites like Google My Business.