Although property buyers and sellers invariably hire the services of title companies, very few of them understand the roles of these companies and why it is mandatory to include them in your real estate deals. Nearly everyone knows that they are crucial in the process of closing on a property, but very few people outside the real estate industry understand the title company definition and their specific roles in the real estate business.
What are some of the roles of a title company? To get the answer to this and other questions, here is the “title company definition” and insight on the roles that title companies play in the real estate business.
Title Company Definition
A title company’s task is to ensure that the title to the property being sold or bought is legitimate and problem-free. Meaning that they guarantee that the title of the property in question is legally owned by the seller and clear of encumbrances. Once they’ve established the title is lien-free, or “clear“, they issue an insurance policy for the piece of real estate. The insurance policy protects the buyer or lender against future claims and unwanted lawsuits resulting from disputes.
Functions of a Title Company
Title search and review
Title companies have special title search and review units which dig deep into the provided public records and provide all the necessary information on a piece of land to all the interested parties through a preliminary report.
Issue title insurance
A title company issues title insurance to protect the buyer or lender against any lawsuits or costs arising from legal cases pertaining a bought piece of real estate.
A title company doubles up as the escrow officer. Here, the company holds crucial documents or even money depending on the rapport between the involved parties. The company will only release the records, or the cash held, based on the agreement between the parties involved.
Finally, a title company can be the closing agent of a transaction. Here, the company is the agent to all the involved parties and collects all the required signatures, documentation and conveys the payment between the parties. Finally, they will file the completed records with the local county offices.