First-time homeowners are usually surprised by the sheer complexity of the process of buying a house. It is a far cry from the olden days when a good handshake was enough to seal the deal. The modern-day process requires a lot of documentation and verification that is designed to protect the interests of both parties.
To buy a house these days you need to involve a lot of people to handle different aspects of the process. This is usually the first time you will hear of title companies. If that is the case, then this guide will help you understand more about what a title company is, and what it can do for you.
What Is a Title Company?
A title company conducts a title search to confirm the property’s ownership history. It also provides a full property description and reveals any existing liens.
History:
In the past, conveyancers handled this process, but they differ from title companies. Conveyancers avoid legal accountability, while title companies offer guarantees and insurance to protect you if something goes wrong.
What a Title Company Can Do for You:
The first and most important mandate of a title company is to research, acquire, and hand over the house title to the buyer. It provides the buyer with the assurance and confidence that the property they are buying has no outstanding liens to it or any unknown owners that will show up and make claims on it.
Now that you have a better understanding of title companies, the following is a brief discretion of the services you can expect when you engage a title company:
Chain of Title
The chain of title will expose any unknown owners who might have legal rights and claims to the property. These may include current owners with a stake in the property or past owners who never received full compensation.
The title search reveals any liens from legal or debt actions before you take ownership and responsibility for them.
The title company will take a step further and research any personal debts that the owner might have which might affect the sale. These might include things such as outstanding payments to contractors for any repair and renovation work done on the property.
Property Survey
Although not as common these days as in the past, property disputes do still occur over disagreements on property boundaries. If the disputed land holds high value or involves a family feud, the conflict can become complicated and costly to resolve.
As a buyer, you don’t want to enter that situation, and a title company protects you by researching the property boundaries. Upon completion, you will be given a report called a title abstract for you to review before closing any deals.
Title Insurance
You may wonder how you can trust the title company to research everything and what happens if claims appear later. Title insurance protects you by covering hidden issues that existed before you bought the property.
Generally, the payment of the insurance fee is the responsibility of you and the seller. The seller will pay for your part of the fee and you will handle that of the mortgage lender since they also have a stake in the deal. Unlike other types of insurance that require multiple installments, title insurance is a once-off payment.
Defining the Title Holder
Something as simple as the wording of a title can have a ripple effect that will affect the legal ownership of the property. In cases where you are the sole owner of the property and you are single, then this is a simple matter. However, sometimes extenuating circumstances such as a marriage, or a community of state arrangement, can murky the waters a bit, and the right wording becomes very important. Title companies handle all ownership scenarios to prevent future disputes.
Closing
The final settlement, or closing, marks the moment when both parties agree on every part of the deal. This includes an agreement on all of the above-mentioned key points, which when taken into account, will affect the settlement cost of the property.
This stage matters and must follow state law, which may require a real estate attorney or agent.
Transfer of Ownership
Buying a property usually requires large amounts of money, which buyers rarely pay in one lump sum. All parties, including the lender, set a payment plan, and the title company oversees it.
The title company receives the funds and holds them in escrow. It then releases the money each month according to the agreement.
Conclusion
A title company plays a vital role in handling ownership transfers. Skipping their services exposes you to major risks, including costly mistakes or even losing the property.
Beycome offer title services but you can choose from many title companies, so pick one that fits your property’s size and cost.
Frequently Asked Questions
Does a Title Company Remove Liens?
The purpose of a title company is to research and inform you of any liens or legal requirements attached to your intended property. Only the seller can remove those issues; the title company has no authority to do it.
What Happens When Liens Or Debts Are Uncovered?
Your title company agent will have handled many such cases and can advise you on the best course of action.
Can I Research The Property Title Myself?
Although most of the required information is a matter of public record, undertaking the research on your own is not advisable because the consequences of overlooking vital information are dire.