Most Common Questions About Title Companies

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By Rochford Law Posted on October 15, 2018 at 11:59 AM

A title search is a crucial part of the closing process. It benefits and protects both the buyer and the seller from a fraudulent or defective deal. Because homes cost thousands of dollars and owning property requires the payment of federal taxes, a lot of tedious work is involved in protecting the investment. While title insurance isn't legally required, lenders usually require a policy to be taken out to protect the new purchase. A title search and insurance are necessary to close on a new home, but many people aren't aware of what it is they are purchasing.

How do title companies work?

Purchasing a house costs thousands of dollars and requires a payment of taxes by potentially both the buyer and the seller. Therefore, the entire process is shrouded in legal paperwork. The process also requires the parties to take steps to protect themselves from any financial problems that could become their responsibility. The title company's role in the closing process in real estate is searching and verifying the title to the home. The company with go back through real estate records and pull information such as:

  • Judgments
  • Liens
  • Unpaid taxes
  • Documents identifying the legal owner

When the process is complete, the title company offers a "commitment of title insurance" on behalf of the buyer. This document states that according to the research conducted, the property is free from any outstanding issues that could prohibit the transferring of the title.

What could make a title defective?

There are a few things that could make the title defective. Knowing about these issues in advance will ensure no issues are standing in the way of ownership. Problems can include:

  • Fraud
  • Heirs
  • False affidavits
  • Unpaid judgments
  • Unfiled liens
  • Errors in tax records

A good title company will find these defects before closing is complete. However, if you manage to make it through the transaction and a defect presents itself down the line, your title insurance will kick in to help protect you and your lender from losing out on your investment.

What does a title company do for the seller?

Title companies are essential to both the buyer and the seller during a real estate transaction. Selling a large property that costs thousands of dollars requires a lot of legalese to protect the seller and purchaser from a deal that could go bad. So, the title company's main role is to ensure the title for the property in question is free and clear from possible blemishes that could disrupt the process. While it sounds more like an issue for the buyer, the seller should take a vested interest in the outcome. If for any reason the search of the title company comes back with issues, it will be the seller's responsibility to rectify them before they can continue transferring the property into someone else's name.

Can the seller choose the title company?

In the state of Tennessee, the seller can recommend a title company. Ultimately, the buyer and lender hold the rights to choose whichever company they want. In most instances, the buyer will probably decide based on the recommendation from their lender or real estate agent. If they are already working with a trusted real estate lawyer, it's possible their legal representation will make suggestions for title companies. If you as a buyer have had a great experience with a trusted real estate title company, it would be in your best interest that option  to suggest to your buyer. It's possible your preference overlaps with names on their shortlist.

Who pays the title company at the closing?

The answer depends on the individual contract. Some contracts include information that states the seller will pay for the buyer's policy and the buyer pays for the lender's policy. In Tennessee the buyer typically pays the buyer’s closing fee and the seller pays the seller’s closing fee. The payments will usually be tacked on to the final expenses on the closing statement. It is not required of the buyer to choose the same title insurance company for both the owner and the lender's policy. However, it sometimes makes for a much smoother transaction.

Title Company nashville 

Rochford Law & Real Estate Title is one of Middle Tennessee's leading title insurance agencies. The  company was developed out of a growing need to provide clients with superior title service from a reputable business. Led by Attorney John C. Rochford a licensed real estate broker, attorney, and a licensed and bonded Tennessee Title Insurance agent, clients can rest assured they are receiving the unparalleled service for all their title search and insurance needs

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Topics: Commercial Real Estate Law, Residential Real Estate Law, Title, Closing Process