The Role of Title Companies in Real Estate Sales


The real estate sector can be confusing at times, with many different parties needing to come together in order to make deals a reality. Aside from real estate agents and lawyers, there is an often-underrated type of company that plays a significant role in the sale of properties, and these companies are referred to as title companies.

So, what does a title company really do and what role do they play in the real estate sector?

What is a Title Company?

Before a person is able to sell a property, there are certain checks that need to be performed to ensure that the sale is legal. These checks include making sure that the seller has the right to sell the property in question. This is where title companies come in, although as you will see, they play an important role in the entire process.

Why Title Companies Are Important

Title companies perform an extensive search of property records in order to determine if the seller of a property has a legal right to do so and to check if there are any full or partial claims on the title that could affect ownership. This is a vital step in the process of selling a property, as any outstanding legal or financial issues relating to a property could have massive repercussions later on. This focus on the legality of the sale is the reason that some title companies are attorney-owned, like Bay Title Company.

After checking to make sure there are no unpaid taxes, open second mortgages, judgements or demands or other legal or financial issues affecting the property, the title company then draws up a comprehensive report detailing any issues that need to be resolved before a sale can take place.

In some sales, after this title check is done, the title company moves on to examining the physical property through the ordering of a Property Survey. The goal of this step is to find out if there are any encroachments by neighboring properties on the title. Once the title search and property surveys have been done, the title company will issue an Opinion Letter which confirms that the title is valid and available to sell.

Once a title has been confirmed to be valid, the title company issues a title insurance policy which aims to protect owners or lenders against claims that may arise from future disputes over property ownership. There are two types of title insurance; lenders and buyers, but only lenders insurance, which is included in the fees you pay at closing, is mandatory. Buyers insurance is always recommended but is not necessary in order for the sale to be completed.

Closing the Deal

After all this has been completed, the title company often takes on the role of closing agent where they are responsible for:

Organizing closing meetings

Compiling all the relevant documentation

Confirming the financial details of the sale with the lender

Receiving all the payments and documents involved in the transaction and making sure payments reach the correct parties at the right time

Obtaining all the signatures on the sale documents and ensuring all parties have their own copy of the documentation

…and finally, registering the new deeds and other applicable items with the land registry office to complete the sale.

Title companies play a role in almost every step of the real estate selling process and act as the combined agent of all the parties involved in the transaction, making them a vital part of the real estate sector.

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