When making a real estate purchase, a title company performs several vital roles.
They are a necessary partner in any real property transaction.
What do they do
When the wheels are in motion to purchase a property, a title company is contracted to conduct a title search, formally known as an “abstract of title.” The information the abstract produces contains:
- The legal owner of the property
- Any liens or judgments against the property, or any taxes that need to be addressed before a sale or purchase can take place.
- Provide details of any easements, restrictions, or leases that may affect the property.
Once the abstract of title is completed, the title company composes an “title opinion letter” and presents it to the lender and the buyer. If a title insurance policy will be issued, a “Commitment of Title Insurance” will be prepared and given to the appropriate parties.
These two documents will explain in detail everything that needs to addressed and completed, and any problems that need to be corrected before the buyer can purchase the property and receive “good title.” It is the title insurance company’s responsibility to complete all the required documents and endeavor to correct any problems. Once this work has been completed, the parties involved can begin the process of closing.
At closing, the title company the purchase money from the buyer and lender as well as all settlement costs from all involved parties. With these monies, the title company pays all transaction expenses, existing mortgages (if any), and remits to the seller the net proceeds of the sale, in accordance with the Housing and Urban Development 1 settlement statement.
Following closing, the title company records the deed, mortgage, assignments, and other legal documents at the county courthouse and returns the originals to the rightful party. New owners receive the deed. The lender gets the original mortgage documents which are held until the mortgage is paid. Once discharged, the lender releases the lien against the property at the courthouse.
In brief, a title company performs almost all of the tedious, behind-the-scenes legwork of real estate transactions. A good title company keeps the process moving smoothly along so any issues can be addressed that may impede the sale.