What is a Title Company and What Do They Do?
Title companies ensure that the title to real estate is legitimate by conducting a thorough examination of property records. This examination includes confirming that the seller does in fact legally own the property and has a right to sell the property. While searching the title, the title company will also search for any mortgages, liens, judgements and unpaid taxes on the property. When buying or selling a property, the closing agent will need to payoff ALL existing liens to that property to get clear title for the new owner. The title company will then prepare an abstract of title which is a summary of the title search and then issue a title opinion. The title opinion is a legal document that validates the title.
A title company also issues title insurance. Title insurance is a type of insurance that protects the owners and lenders against claims from others in the event that they claim ownership of the property. It is important to note that there are two types of title insurance. One type covers the lender (the most popular) and another type covers the owner in the event of a claim or dispute over ownership. Mortgage lenders typically require lenders title insurance and that does not cover the owner. If an owner wants title insurance they will need to purchase their own policy.
How Do I Choose a Title Company?
Ask for recommendations from your realtor, your mortgage lender, and/or your friends. We recommend that you choose a title company with years of experience. It is always a good idea to search the company through the Better Business Bureau site in order to see if the company has any complaints.
How Much is Title Insurance?
Well, that depends on where you live and the amount of your mortgage loan. The price can vary quite a bit. You will need to ask for quotes to compare to ensure that you are getting the best premium. The good news is that you only have to pay it one time, at closing. It is not an ongoing expense. Don’t forget that if you decide to buy an owner’s policy, it will be more expensive.