How Do Title Companies Help In Real Estate Transactions?

By Nina Lopp

You do not generally buy more than a single property in your lifetime. It is a high value transaction involving legal risks. Besides using a professional home inspector for pre-inspection of the home, the buyer has to rely on a number of other professionals such as real estate attorney and a title company.

The most important responsibility that title companies have is to make sure that the title goes from the seller to the buyer easily and actually is what it is supposed to be. If it supposed to be a 10 acre parcel, the title company ensures that, as well as any existing liens or other encumbrances on the property.

The title company makes sure any and all liens, including mechanics liens and tax liens, are taken care of before the transfer. They also confirm legal boundaries just in case there may be a discrepancy.

As soon as both parties sign the purchase and sales agreement, the file is sent to the title company who immediately start working. They assess the compliance with all local and federal laws and regulations and take care of the following:

Verification of the seller

Their main role is to establish the seller in whose name the property is registered as per the legal documents submitted with the State. The title companies find out the legal owner of the property by examining and verifying the public land record held by state.

Property has Clear Title

The title company also confirms that the buyer can take title in a clear manner. This confirms that all liens and encumbrances have been cleared out and there are not any other remaining issues with the title.

Insuring the title

In many instances, the title company also organizes for title insurance to the buyer against any legal risks that might surface in the future. This would insure the buyer against any ownership issue emerging in future and costs involved in litigation and other matters related to settling any dispute regarding the sale being made by the actual owner of the property. Though the buyer has the right to choose his title insurer, the buyer usually prefers the same company with whom the lender takes tile insurance cover.

When a title company is satisfied with respect to title of the property, they issue a document called as the "Commitment of Title Insurance" to the mortgage lender along with a copy to the other parties involved in the deal i.e. the buyer, seller, Realtor and the real estate attorney. As a buyer it is essential that you understand the role and responsibility of the title company.

Your responsibility to investigate the property you are interested in does not stop at trusting the professionals you hire to take of things. You must also act to disseminate the liability of the transaction through as many responsible entities as necessary for your own protection. - 31382

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