In a real estate transaction, the title company generally acts as the combined agent of the insurance company, the buyer, the seller, the mortgage lender and any other parties involved in the transaction. Essentially, they oversee the incredible number of details involved in buying and selling real estate, and are responsible for the closing process from start to finish.
The top duties and roles of a title company in a typical real estate transaction
Reviews Title
The first task of the title company is to perform a title search by reviewing public records to inform all interested parties on the status and condition of the property’s title, as well as information related to any type of legal action involving the property, such as a foreclosure. Typically, they’re looking for “clouds,” or defects to the deed such as property liens or unpaid taxes. Information is presented in the form of a preliminary title report, which serves as commitment for title insurance.
Issues Insurance Policies
Often acting as an independent agent on behalf of a title insurance company, the title company will typically issue title insurance policies. The title company simply facilitates the paperwork for issuing the policy, while the actual insurance premium goes to an underwriting company, which bears the risk of any loss under the policy.
Facilitates Closings
Title companies often serve as the closing agents for real estate transactions, which means they act as an agent for each party to the transaction. At the closing, the title company will gather signatures on all closing documents and also receives and distributes any payments related to the transaction.
Acts as Escrow Officer
Additionally, the title agency commonly acts as an escrow officer in connection with a real estate deal. In this role, the title agency holds any money or documents as part of the transaction. Any money or documents held, such as a signed deed to the property, are only released according to the written instructions of the buyer and seller.
Files and Records Paperwork
Following the closing, after the parties have signed all necessary documents, the title company will record the deed and mortgage as well as any additional documents that need to be recorded in the county land records office.
For more information about the home-buying process, including Why Do I Need Title Insurance?, Tips to Ensure a Timely Closing, and Preparing to Close on Your New Home, visit our blog.