What Does A Title Company Do?
There are normally three parts to a real estate purchase transaction- getting a loan, finding the perfect home, and transferring ownership from the seller to the buyer. Key Title handles the documentation and funds required for the transfer. Our role in a refinance transaction is the same, although we are dealing with documents and funds required to close out an existing mortgage and establish the new mortgage.
Typically, title companies are known as the people who conduct the actual settlement and, while that is the most visible part of what we do, it represents only a small part of our responsibility in the transaction. Behind those folks sitting at the settlement table explaining the documents and process is an entire team of professionals working to get everyone there.
As an independent title company, we are chosen by the buyer for purchase transactions or by the borrower for refinance transactions. For a purchase transaction, our job begins as soon as the contract of sale is signed by all parties. The contract is forwarded to us and we begin the process of making certain all parties to the sale (buyers and sellers) are legitimate and have the legal authority to enter into the contract. This process requires us to review the ownership records in the county office of Land Records to make certain the sellers are the true owners and that there are no individuals or entities from the past who could claim an ownership interest in the property. Owners are described as holding “title” to the property so this review of the ownership history is called a title search.
At times, this process can be tedious and complex, as it may include prior foreclosures on the property, owners who have deceased and may or may not have opened an estate, heirs whose location is unknown, and many other scenarios. In addition, we are responsible for making sure that there are no liens against the property that would make it impossible for the seller to transfer clear title to the buyers. These liens could include unpaid bills for county property taxes or water, federal income taxes, and/or court imposed judgments. There is also the potential that mortgages belonging to prior owners were unpaid or paid and not released in Land Records. All files are reviewed for these potential title issues by the title company and, at Key Title, our in-house attorney. Any items discovered that could create a problem with the title are then cleared by us, with help from various outside parties as needed.
As a way of protecting both the lender and the consumer from the issues that could affect them having clear title to their home, title companies also issue title insurance. In a purchase transaction, title insurance is available to protect both the lender and the buyer. Interestingly, all lenders will require that the borrower pay for a Loan Policy of Title Insurance to protect the lender from possible claims to ownership in the property from unknown parties. Borrowers also have the right to purchase that same coverage to protect themselves against these types of claims- this is called an Owner’s Policy of Title Insurance. For refinance transactions, only the Loan Policy of Title Insurance is required.
Finally, we have a fiduciary responsibility to all parties in any transaction- specifically, to ensure all funds needed for the transaction (buyer, seller, or lender) are received and verified and that all disbursements are made properly and timely according to the terms on the Closing Disclosure or HUD-1.
When our investigation is complete and we are satisfied that title is clear, we will work with you, your lender and realtors to schedule a date, time and place for your settlement to occur.