The Title Company's Role In Real Estate Transactions

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Although seldom known and often misunderstood, a title company plays a major role in almost every real estate transaction. Generally speaking, your home will prove to be your largest financial investment. The importance of fully protecting your investment cannot be overstated. After you sign the agreement of sale, the first thing you need to do is select a title company to protect your interest. Your real estate broker or your attorney should advise you on this selection. Once you have made your choice, you need to understand the function of the title company.

Your title company works closely with the other real estate professionals to see to the transfer of real estate. Unlike the purchase of personal property, like a car or washing machine, real estate has always been there and will be there after your term of ownership. Therefore searches of the public records for the terms of ownership of the predecessors in title must be made to determine if any previous owners have enhanced or diminished the total and free use of the land. The search will also disclose if there are any outstanding liens that could be charged against the real estate which you could ultimately end up paying. Your title company has trained professionals who search all of the pertinent records to determine that the person or persons who claim to be the owners are in fact, the proper persons to transfer title and that no one else may claim any form of ownership. The search will also determine the existence of outstanding mortgages, judgments, liens or taxes that remain unpaid along with any restrictions, easements, right of ways or other matters of record that may affect your ownership.

From this search a report of the title is compiled and examined and furnished to your real estate broker, attorney, lender and other persons who have a need to review this report. This report is known as a "Commitment for Title Insurance", a "Title Report", and "Interim Binder" or a similar name depending on the local custom of the area in which the real estate is situated. After a review of the report it is determined which matters of record must be cleared up prior to your taking ownership and which matters will remain as "running with the land". Once this report has been reviewed, your title company will coordinate with all concerned, a time and place for your closing. At the time of closing all documents necessary to clear title and convey ownership will be produced and examined and the necessary documents will be recorded at the Court House.

Your title company is there to protect you against financial loss by reason of the nondisclosure of any of the above items. In addition, there are things that cannot be determined by the most prudent search of the records, such as fraud, forgery, incompetency, missing heirs or similar matters which could prove a real danger. Again, your title company is there to protect against hidden defects.

Your title company has the responsibility of collecting and disbursing all of the funds necessary to complete the sale and transfer of real estate.

At the time of closing your owner's title policy begins protecting you against a financial loss by reason of any claims against your ownership. Simultaneously a mortgage title insurance policy will be issued to your lender affording the lender the protection necessary to protect their interest in the property.

Your title company is involved from the signing of the agreement of sale through the acquisition of the keys and then beyond. For the one time fee which is paid at closing, they protect you for the entire term of ownership and your heirs should you die while owning the property.