How Does a Title Company Work?
The purchase of real estate is a complex, multi-stage transaction that can take a long time. One of the more tedious legalities of the process has to do with titles, and there are professionals who specialize in handling this on behalf of home buyers and sellers.
- The seller must have the right to sell the property. This means that the title
will have to be researched so that their ownership can be confirmed.
The title search may also show liens against the property along with
mortgages or unpaid taxes. A title company will perform this search
on behalf of a buyer. They will look through public records and
determine the party who has the right to sell the property. This is
called a title search or an “abstract of title”. - Your title
company may also issue this type of insurance, which acts as a
method of protecting a new homeowner if the property has liens or
unpaid taxes against it that were not discovered during the title
search. - After checking the title, the title company will issue a title
opinion letter that states what needs to be resolved before the
person who wants to buy the house can get “good title.” Until
their name appears on the deed to the house, the person buying the
property does not legally own it. - After any problems
with the title have been cleared up, the process moves into closing.
The title company’s role in closing involves handling the
interests of all parties involved in the transaction. They act as
witnesses and handle the exchange of funds between buyer and seller.
They also will ensure that the buyer is recorded on the deed as the
owner.