When buying a house, an agency that is involved in the entire process is the title company. The title company is a third party that is used to verify the title of the real estate that has been given to the buyer. They verify if the seller has the right to sell the real estate property to the buyer. The title company may also act as an escrow officer in a real estate transaction. An escrow officer holds the required documents or money which is part of the transaction on the instructions which have been given by the parties involved in the transaction. Title companies issue policies of title insurance on behalf of title insurance companies. 

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Do you need a title company to sell your house?

Before the property is sold, it is important to check whether the person who is the current owner of the property, is invested with the rights to sell the property. For selling a property, the person should have a clear title over the property. 

A title company will perform a title search to ensure that there is a clear title over the property. If a person has a clear title, it indicates that such a person has the legal rights to own, use and sell the real estate property. It also ensures that no other third party can raise a claim over the property.

The title company will perform a title search by looking into the records available and the history of the property in order to identify the encumbrances that may still exist over the property. It will help to identify any defect such as any outstanding tax, bankruptcy charge, or mortgage which is associated with the property.   

What does the title company do for the buyer?

The title company is usually playing the role of an agent for the buyer. The title company is responsible for the review of the title of the property, facilitates closings, files and records paperwork pertaining to the agreement regarding the sale of real estate property.

The title company reviews the title of the property in order to establish the presence of a clear title. This is to ensure that the property is free from any encumbrance which may affect the buyer of the property. It also looks into any outstanding taxes that have not been paid by the seller of the property. The title company verifies the seller as the true owner of the property and having the right to sell the property.  

In the role played as an agent, the title company is responsible for obtaining signatures on the necessary documents. After obtaining the required signatures, the company records the required documents such as a deed at the local authorities. 

The title company may conduct a property survey in order to discover any potential encroachment of property by the neighbours and so verify the boundaries of the real estate property. They will also prepare an abstract of the title, which is a legal document documenting the entire ownership history of a particular property. It includes records related to tax sales, court litigations, etc. It helps to verify the title of the real estate property.  

What does the title company do for closing?

A title closing company has to ensure that the documents which are required to prove ownership over the property are in order before the real estate transactions are executed. 

The title company is a neutral third party to the real estate transaction that is there between the buyer and the seller. In the closing of the transaction, they ensure that the necessary protocols are followed, ensuring the signatures of the buyer and the seller. They also act as escrow officers. In most situations, the buyer of the property will give the title company with the money which is required for the purchase of the property, and the seller would give the company with the necessary documents of the property.

The title company, acting as an escrow officer will release the documents and the money based on the instructions given to it by the parties. After the closing of the transaction between the parties, the company has the responsibility to register the documents at the local authorities. 

How does the title company get paid?

Title companies make money in various ways. The first manner of getting paid is by conducting a title search which is requested either by the seller or the buyer of the property. In a title search, the company will ensure that a clear title exists over the property. A clear title will ensure that there are no encumbrances or unpaid taxes or mortgages that exist over the property which may affect the usage of the property by the buyer. For this purpose, the company will go through all the records of the property available with the local authorities, and the documents present in order to determine the existence of a clear title.

The title company also gets paid by selling the title insurance. It is to be noted that the title company does not issue the insurance. The title insurance is provided by insurance companies. The title company acts as an independent agent of the insurance company and receives a commission for issuing a title policy.