What Does a Title Company Do for You?
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 South Florida do in a real estate transaction? In short, we protect the interests of everyone involved in the transaction. Whether you’re buying or selling a property, providing financing or you’re a real estate professional, we’ll ensure that all requirements for a smooth closing and clear title are satisfied. If you’re preparing to refinance your existing mortgage or purchase a new home with a loan, your mortgage lender should require you to find a title company to work with fairly early on in the loan process. If you’re not familiar with the home buying, selling or refinancing processes, you may not be certain what a title company actually does. The title company is one of the most important third parties you will work with throughout the entire transaction. A title company provides three core services:
1. Research the Property’s Title HistoryEarly in the process, the title company will begin researching the property’s title history and will issue a title insurance commitment. This title commitment will show all of the property’s owners as well as the requirements to transfer clear title to 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 or other issues with the title, work is completed to generate a clean title (“clear title”).
2. Facilitate the Closing ProcessThe title company also facilitates all aspects of the closing. This involves preparing 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 lender’s fees, title fees, hazard and flood insurance fees, real estate fees, taxes, escrows, payoffs and other miscellaneous fees involved in the closing based on which type of property you’re buying or selling. 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.
3. Issue Title InsuranceA 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 or a lien later on. These types of disputes can create costly legal fees and could also strip the property’s ownership from the buyer. Title insurance, in accordance with the policy, will pay for these legal expenses and for any loss if one occurs.
More Specifically – What Does a Title Company Do for You During The Closing Process?Here are ten important steps a reputable title company will take care of for you when you buy or sell a home:
1. Verify Property Tax Status and PaymentsIt’s the title company’s duty to verify the current status of all property taxes. To avoid any dispute over taxes and unpaid bills, they:
- Check with relevant government agencies and districts which impose taxes to ensure that both state and local property taxes have been paid.
- Prorate bills and taxes based on settlement dates and billing periods on the settlement statement.
2. Order a Property Survey (if a single family home or townhome)Many lenders will ask for a survey or a location map of the property. A title company 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.
3. Order Estoppel Letters from AssociationsIf you are purchasing or selling a condo, townhome or single family home with an association, the title company will order an estoppel letter from the association(s) which will advise the title company of the following;
- Financial status of the account.
- If there are any violations against the property.
- If there are any special assessments due or pending.
- If the utilities are paid by a master meter or to the city.