Ask SCUDO: What is The Role of the Title Company in a Transaction?
When one thinks of buying or selling a home, they typically think of 2 parties involved- the Buyer & the Seller. In reality, most transactions have the following parties involved; Buyer, Seller, Buyer’s Agent, Seller’s Agent, Mortgage Lender, Inspector, Appraiser, etc each with separate roles. When it comes to keeping the interests of all parties in a real estate transaction, the role of Title Company comes into picture.
In order to make sure all the requirements are met and duly verified, there is process followed to protect all parties in the transaction. Once the Sales Contract is signed by the Buyers, Sellers, and their Agents, the Title company completes the following process:
- A title abstract based research is done on the history and past ownerships of the property. It is a clear examination of the title and any claims attached to the property. This makes sure that the buyer has can start afresh with the title of the property.
- Secondly, if selected, is the Survey, which can be part of the lender’s requirement or elected by the Buyer. The survey is on the property location and boundaries. A survey is ordered by the buyer to look for any existing or upcoming issues. If in case an issue arises in a survey, the parties involved are notified on priority. The survey is handed over to the buyer at the time of settlement.
- The verification is done with the taxing authority of the state that the taxes of the property have been duly paid. Likewise, the Homeowners Association and the utilities are contacted for any payment that is due on the previous owner’s end. It is then noted on the Settlement statement information on billing cycles and last date of settlement.
- The Title Insurance Policy is prepared as a step towards reaching final transaction. A lender’s Title Insurance Policy, Owner’s coverage and Lender’s coverage is made by the Title Company. Therefore the two types of Insurances: Lender’s copy which is necessitated by the mortgage company and the Owner’s copy for the advantage of owner. The lender’s copy of insurance is liable to protect the investment rights of the Lender in the property. The owner’s copy of insurance deals with the new property’s security in terms of paperwork. The policy aids in protection against any frivolous claims, risks of any sorts or any scam against the property. It also covers protection from financial loss and the payment of legal costs in order to clear any claims.
- The loan documents on closure are also provided by the title company. The mortgage lender is contacted and it is received by the office of the title company. The forms are reviewed and checked for fulfillment with the lender constraints so that it can be preceded for closure. Once these have gone through, the settlement statement is brought to closing. This is the most important document to sign. The title company provides all the information necessary to sign the relevant documents. The documents are prepared keeping in mind the state and federal laws.
- The closing statement is made with the explanation of all the relevant points to the involved parties. Closing can take anywhere from minutes to an hour, depending on Buyer’s familiarity with the documents, and any special Lender requirements. All closing statements must be signed by both the Seller & the Buyer to be valid, although they do not typically sign at the same appointment. The closing is followed by the disbursement of funds at settlement. The Realtors, any closing costs, and payoff of existing mortgages on the property are paid after which the loan documents are processed to be sent back to the lender.
- Lastly, the title company makes sure that the documents are recorded in the courthouse. The mortgage and new property fall under this window.
These are the general, and hugely important roles played by the title company in transaction.
If you have more questions about how the closing process works, how to pick a Title company, or any other real estate related matters- contact SCUDO today! We’d be happy to discuss your specific questions and needs!