When you are ready to purchase a new property, you want to make sure that the property is legitimate and you are able to hold onto the title free and clear. No one wants to purchase the property and find out that the person they gave the money to doesn’t actually own the property or that they have a bunch of liens on the property they are now responsible for. It is the job of the title company to do a title search, which means they look through all the public records, to ensure that the title will be free and clear to the new owners at closing.
Besides researching the property and helping to transfer the title from the seller to the buyer, a title company will also offer insurance. There are two options for title insurance: the owner’s insurance and the lender’s insurance. Both are there to protect the individuals from legal fees and any claims that may come up about the property. Most buyers will pay for this when they close on the property.
How Does the Title Company Help at Closing?
As you prepare to close on a home, the title company will take on the role of handling and transferring the title and all that this entails. It is common for the title company to handle the escrow accounts that come with the closing process as well. If the title company does manage the escrow account, they may do the formal closing on the home. What this means is they will send a settlement agent who then brings all the documents, discusses it with the parties, collects the closing costs, and then distributes it as necessary.
Along the way, the title company is also going to make sure that deeds, documents, and new titles are filed correctly for the new owners. This will help them have the peace of mind knowing that the documents are filed properly.
Who pays the Fees for the Title Company?
The way that you will divide up the title fees will depend on local laws and the terms that are listed in your purchase agreement. There are times when you can negotiate some of the terms of these fees with the seller, but in most cases, both parties will contribute something to the cost of the title company.
If these fees are enforced by local laws, then the seller will be the one who will enlist the services of the title company to do the title search. Then the buyer will be the one who pays the title company when it is time to transfer the title over to them and handle all of the escrow accounts.
Based on where you live, there could be a standard in place regarding who will pay for the owner’s title insurance. The standard could be that the seller will pay for it, and others will require the buyer to pay for it. In almost all situations, the buyer will be the one paying for the lender’s insurance. All of these can be negotiable and can vary depending on what the buyer and seller agree with in the beginning.
Is It Necessary to Use a Title Company?
In some jurisdictions, it is required for a title company to be used. The seller is legally obligated to purchase the title insurance for the buyer. Most mortgage lenders will require the services of a title company before they will offer the loan because this provides them with some protections as well.
However, there are times when a title company may not be necessary. Cash buyers or those who live in states that do not require one may decide to purchase any home without a title company. There are some risks to deciding to do this, especially when it comes to whether you are working with the actual owner of the property or not. It is often safer and in your best interests to work with the title company, whether you are required to do so or not.
The steps and actions that the title company follows are done to protect you from a home purchase from a seller who doesn’t have the rights to sell that property. Without title insurance in place, if there is a dispute or a claim that comes up, it is possible that you would lose the home and any money that you put towards it. And finding the person who duped you can be really difficult.
In addition, having a title company there to handle all of the escrow accounts and do a formal closing on the home is a benefit as well. If you decide to op-out of a title company, then you should consider working with a real estate attorney to make sure the paperwork is done well.
Which Title Company Should I Use?
The title company you use will depend on your preferences and the area you are located. If you are in a smaller area, then you may only have one choice when it comes to title companies you can use for your needs. However, if you live in a larger area, it may be possible for you to pick and choose from more than one company.
When the latter is the case, you need to take some time to research all of the options and see which one is best for you. Look at the reputation of the title company, their costs, and determine whether they will be a good option to help you do the title search, handle the escrow account, and keep safe during your real estate purchase.
When you are looking for the best title company in the area to take over your closing and ensure that everything goes as planned, then you need to trust Sunnyside Title. Our team of professionals knows how to get the job done quickly, without all of the hassles and hiccups that come with other title companies. Your closing is already stressful enough. Let us help take some of the stress out and make life a little bit easier.