Purchasing a piece of real estate is going to involve the assistance of a lot of different types of professionals. Inspectors, realtors, attorneys — it can become a little overwhelming when you try to take it all in at once.
However, you can find comfort in the fact that these professionals are all included in the process in order to make it more safe and fair for everyone involved. They are there to help and each of their services provides very real benefits for both sides of the transaction.
One of these essential roles is that of the real estate title company. First-time property buyers might not be familiar with this role or what benefits they provide to the transaction as a whole.
Real estate title companies are very important to protecting the buyer and ensuring all of the proper paperwork and protections are in place moving forward. They not only help move the transaction along to closing day, they also provide protection to the lender.
In an effort to clear up any confusion, we thought we’d go over what a real estate title company does and what benefits they provide.
Here’s what you can expect from a real estate title company:
Facilitate Title Insurance
Assistance with Escrow
Unless it’s a newly-constructed structure, homebuyers are not going to have direct knowledge of the entire history of their potential new home. This information is not only useful because it gives more background on the home, it can also play a huge role in the sale of the property.
A real estate title company will dig through the public records to find anything relating to the title of the property in question. They are looking for anything that could make the transfer of ownership less than clear.
This is meant to verify that the person selling the property has a legal right to do so, as well as to be perfectly clear on any potential encumbrances on the property itself.
This could include:
A real estate title company might also perform a property survey to verify the property lines and find any other issues before the sale is completed. For instance, a neighbor might have built a shed in their backyard that crosses over the property line. This is what’s known as an encroachment, which can lead to some issues.
All of this information will be compiled. The real estate title company will attempt to rectify any outstanding issues so they don’t become larger problems down the road.
Facilitate Title Insurance
A title search is thorough, but there is always the chance that another issue is found in the future, perhaps when you are selling the home you’re currently trying to purchase.
This is where title insurance comes in. It protects in certain scenarios from any fallout from title issues. The real estate title company will offer two different types of insurance.
1. Lender’s Policy
This type of title insurance is often required by the institution that provides the loan to the homebuyer. This type of policy will be in place until the full amount of the loan is paid off. It extends protection only to the financial institution in the case of future title issues.
2. Owner’s Policy
This type of insurance policy protects the buyer from potential title issues. And while this policy is generally optional, it is recommended in most cases (excluding new construction purchases). In most cases, the coverage will last as long as the homebuyer owns the property. It can’t be passed onto heirs, for instance.
These insurance policies work to reduce the amount of risk associated with the purchase of a property. And should an issue come up, the policy will provide a real estate attorney to work on your behalf.
The real estate title company will often also act as the closing agent for the real estate transaction. They will send a representative to arrange the closing process and compile the necessary documentation.
This includes verifying the necessary funds are available as well as acting as an escrow agent to disperse them when necessary.
The real estate title company is to act as a neutral third-party in this role. They are not there to seek advantages for their client, but instead to make sure everything is properly addressed, signed, and filed.
These services are essential to a smooth and proper legal transfer of a piece of real estate. There are bound to be many other professionals involved in the process. A real estate title company provides some of the most important services that help all involved parties find an agreeable conclusion.