What Do Title Companies Actually Do?
Updated: Jun 9
Thanks for asking! We are rather like the yeast that makes the bread rise, and the icing that makes the cake perfect. Without a first class title company, real estate transactions just wouldn’t be the same. Title insurance was introduced in the late 19th century to protect buyers against loss resulting from defects in title, pre-existing liens and other encumbrances. Title insurance also protects mortgage lenders, so they know the property used as collateral to guarantee the loan is secure. The title company, therefore, is responsible for doing the research and other work that enables the contracted parties to complete the real estate transaction securely and on time.
Title Search and Review
Our first step after receiving a title order is to research public records to verify every previous owner. This is what we call the chain of title
We also establish an accurate history of liens on the property
We look to discover if there are any other known factors that could affect how an owner can use the property, and to see if there are any obstacles to the owner achieving ‘quiet enjoyment’. There might be, for example, an old right-of-way or other easement that the new owner or lender does not know about
We then review all the details for accuracy and to see if anything could become an impediment. If so, we and our attorneys work to remove it.
We can hold monies and documents on behalf of seller, buyer, lender and title insurer. We guarantee to hold everything in safe-keeping and to distribute it all in accordance with the contract or other agreed written instruction
If the new owner and/or lender require a survey, we can, as a courtesy, arrange for one. If the survey indicates a problem, such as the property line being different from what it is thought to be, we could be called in to assist
Paying Off Debts
The current owner might have a mortgage or HELOC in place. These will need to be paid off to complete the transaction. We liaise with the current lender(s) to agree how much should be paid to them to close their files. Old debts, contractor liens, property taxes, HOA fees, outstanding utility bills and so on, will also need to be dealt with. We make sure that sale proceeds, if sufficient, are used to pay off those outstanding debts and that pro-rated charges are correctly divided between seller and buyer
We liaise with the new lender, if there is one, to ensure that the money is available to the buyer for passing to the seller, and that the buyer pays all associated costs, unless otherwise agreed
We prepare all appropriate documents for all parties, including the title documents, title insurance policies, etc. and make sure they are appropriately, and correctly, distributed, then signed and notarized
Once the transaction is complete, everything has been signed, monies transferred, and the buyer has ownership, we send all documents to their appropriate destinations, we inform local government of a change in ownership, etc and we close the files.
All of us at Liberty Land Transfer work diligently to ensure that properties change hands securely and on time. We go into a great deal of detail to see that this happens. We hope this brief explanation has been helpful. It is an honor to be asked to do all of this for our clients, so if you would like to raise a title order with us, or if you have any questions at all, please contact us by clicking here.