Title Company FAQ
How does a title company determine a title is valid?
We do a title search which is a thorough examination of the records about the property to make sure that the person claiming to own the property is the rightful owner and that no one else can claim partial or full ownership of the property. During the title search, we look for outstanding liens, mortgages, judgments, or unpaid taxes on the property as well as any easements, restrictions, leases, or other issues that may have an impact on the ownership of the property.
We may also order a property survey, to determine the exact boundaries of the land the home sits on, and whether the home is within these boundaries. The survey also shows if neighboring properties have any encroachments on the property in question. Before we issue title insurance, we prepare an abstract of the title, which is a short summary of the results of the title search. The summary typically includes the ownership history of the property. Later, we issue a title opinion letter, which is a legal document describing the title's validity.
What is title insurance?
Title insurance protects lenders and owners against legal fees or claims that could arise from a dispute over the ownership of property. There are two types of title insurance: owner's title insurance, which protects property owners, and lender's title insurance, which protects the mortgage company. The home buyer usually pays for the lender's title insurance at closing, but it's a good idea to have owner's title insurance as well. In some areas, the buyer pays for both policies, and in others, it's the seller that pays for them. If you have title insurance, and someone later comes forth claiming to be the true and rightful owner of the property, and they are proven correct, the title insurance policy will likely pay the value of the home to you, and the value of the loan to the lender.
What does title insurance cost?
The cost of title insurance varies widely depending on a number of factors, including state and loan size. The buyer's policy may cost a little more than the lender's policy. The good news is that you only pay it once, rather than it being an ongoing expense. Also, there may be a discount available if the property was sold within the prior five years.
When do you meet with the title agency?
You may meet with your title agent before you even start the home search process. You may also meet with them to set up the escrow account. You will meet with them during the closing, where the settlement agent will explain all of the documents you'll sign, and proceed with the signing process. The title agent will also be available to you if there are any problems with the title, or to answer questions regarding title insurance, title abstracts, escrow accounts or closing.