Title company: is it important to use their services?

Whether you are buying or selling a property for personal or commercial use, the services of a title company are highly recommended. After all, buying or selling a property is, for most people, one of the largest, if not the largest financial endeavor they will ever undertake. You need to secure the professional services of a title company to efficiently and accurately handle this complex transaction.

The role of a title company is extremely important. They are involved in examining and insuring title claims for real estate purposes. As such, the company verifies legal ownership of real property and determines the valid owner through a thorough examination of property records in a Title Search. It will also reveal any mortgages, liens, judgments or unpaid taxes outstanding on the property and details any existing restrictions, easements or leases that affect the property.

It is important to say that the title company does not represent the buyer nor seller, but rather acts as an escrow agent, holding the earnest money and documents in escrow until it is required to disburse the funds, according to the terms of the contract. It is their job to coordinate the interests of all parties to a real estate transaction, including buyers, sellers, mortgage lender and real estate agents. The goal is to make sure that all requirements for settlement are fully satisfied.

Here are some of the main responsibilities of a title company:

Title Review = review the public records related to the real estate, in order to determine the status and condition of the title of that property. Typically, they provide this information to each of the parties in the form of a preliminary title report, or commitment for title insurance. It is extremely important to the buyer to carefully review this title as it will disclose any defects in the title itself. For instance, it will show if there are any easements, deed restrictions or liens on the property and whether there are other people who have an interest in that property. Also, if the transaction is subject to lender financing, most lenders will require this type of survey. Ultimately, the objective is to ensure that the transaction is a go and that the new buyer receives clear and marketable title to their new property.

Closing Agent = title companies are often the closing agents for real estate transactions. This means the title company is an agent of each party to the transaction. In its role as an agent, they obtain signatures on all the closing documents and receive and distribute payments related to the transaction. After the parties have signed all the documents, the title company will record the documents that need to be recorded, such as deeds and mortgages, in the local county offices.

Escrow Officer = they generally act as escrow officers in connection with real estate transactions. In these cases, they hold documents or money as a part of the transaction and according to the instructions of the parties, and release the deed and the money in accordance with the written instructions of the buyer and the seller.

Insurance Issuer = the title company may act as an independent agent of the insurance companies, facilitating the paperwork for issuing the insurance policy. Consequently, and in most cases, the title company that issues the policy is not actually the insurance company. Basically, there are two types of title insurance: (a) lender’s, which is required by the mortgage company and protects the lender’s investment in that property; (b) owner’s, which may be purchased at settlement for the benefit of the new owner.  It is strongly recommended that all buyers receive an owner’s title insurance policy which protects them against any unforeseen claims, hidden risks, or fraud against the property.

So, the answer to that initial question is … yes, it is crucial to use the services of a trusted and reputable title company when performing a real estate transaction. Simply put, using their services is a wonderful way to minimize the chances of getting a headache – literally and figuratively – reducing the causes of worry, annoyance, and troubles.

At Florida Connexion our team of real estate agents and business brokers can assist you in identifying the title company that will bring you peace of mind with that deal. This will allow you to focus on what matters: successfully developing your new business or enjoying your new house at full potential.