What Do Title Companies Do?
The Role Of Title Companies In Real Estate Transactions
If you are considering purchasing a piece of property or you have purchased a home, you may have questions about what a title company does. You can find out more about how a title company can protect your investment and help you avoid lawsuits.
Protect you from a claim or lawsuit
The good old fashioned lawsuit is a real thing. There are literally thousands of them swarming the courts in any given year. A lawsuit can be a drain on any budget, a real time killer for any business and a real stress killer for your personal life. However, there are some things you can do to protect yourself. You can make sure that your assets are in tip top shape before the courtroom doors close on your life.
A financial advisor is your best bet at ensuring that your assets are well protected. As a general rule of thumb, you want to separate your personal and business assets as if you were a divorce lawyer. Even though you might be a business owner, you are still a person and your personal privacy is just as important. It's no secret that the best attorneys aren't exactly cheap, so be prepared for the worst. And while you are at it, do yourself a favor and get some insurance. This might be the only way to keep your family safe.
As with anything in life, it's best to be proactive rather than reactive. To this end, you might want to check out your local state department of insurance. Ensure that you are covered for the inevitable tussles and make sure that you are aware of your insurance deductible, so that you aren't surprised if you have to pay out the cash for the unexpected.
Perform a title search
A title search is an important part of a real estate transaction. It determines whether the property has a clean title, or whether there are any legal issues that may affect the purchase. This process is typically performed by a title company.
Title searches are done through public records and include a variety of legal documents. These documents may contain information on mortgages, debts, loans, special assessments, tax liens, and more. The title search should be thorough, so that the buyer knows about any potential problems before deciding to purchase.
In some cases, a title search will uncover problems that have existed for a long time. These problems might include a past dispute over property line. If the problems aren't resolved before the purchase, they can sour the deal. They can also be difficult to clear up.
However, there are instances where a title search can reveal issues that are easily fixed. For example, there might be an open security deed. Or, there might be a lien filed on a property by a utility company.
Fortunately, the most common problems are generally easy to clear up. Other problems can take time, but they are usually easy to resolve.
Some of the more complicated issues can be solved through a title search. An investigator might scour county courts and recorders of deeds to find the underlying documentation that proves that the seller has the legal right to sell.
When you perform a title search, you'll be able to find out who owns the property and how much it is worth. The title report should include a complete legal description of the property, as well as any relevant zoning bylaws and other laws that govern the property.
You might also uncover liens on the property, which are legally protected claims. Mechanic's liens are an example of this type of lien. Liens can be filed by anyone with a financial claim. Examples include a mortgage, a tax collector, or a contractor.
A title search can be performed by a title company, or it can be done by an attorney. Either way, it's vital that you hire a professional.
Shop for title insurance
It is important to shop for title insurance when purchasing a new home. There are many options available and it can be confusing. Luckily, you can get a good deal if you shop around.
Title insurance protects the buyer and lender from any claims and liens that may affect the property. A title agent will check the public records and ensure that the property is clear of any liens and encumbrances.
Homeowners can purchase an owner's policy of title insurance, which will protect their rights to the property for as long as they own it. This policy also covers issues that may arise after the home is purchased, such as zoning violations from the previous owner.
Lenders typically require a homeowner's policy of title insurance when granting a loan. Usually, the cost of the policy is less than 1% of the loan amount.
When shopping for title insurance, it is important to ask a variety of questions. Some of these include:
During your search for title insurance, it is important to find a company that has a strong reputation in your state. Ask family and friends for references.
Make sure the company you choose offers a high level of customer service. Many companies will offer a discount if you bundling policies.
In addition to asking about fees, it is important to focus on the level of service the title company provides. You should inquire about escrow, closing and settlement costs.
In some states, the premiums for title insurance are set by the state. However, in others, it is up to the individual insurer. Regardless of the rate, most states don't allow much wiggle room when it comes to fees.
If you live in a highly regulated state, it is important to shop around for the best rates. The FDIC encourages home buyers to do so.
If you live in a state that doesn't have a set price for title insurance, you should still consider shopping for a good deal. In addition to shopping around, you may be able to receive a discount from the seller on closing costs.
