What Does Title Company Do & Why You Should Hire One

What Does Title Company Do & Why You Should Hire One

When purchasing a home, a real estate title company and title report will shield you against unexpected risks. While your deed secures ownership, it can’t safeguard you from any potential claims or lawsuits by previous owners.

So, what does a title company do in this regard? Through title insurance, title searches, and settlement services, your title closing real estate company will make sure that your property rights are secure, giving you peace of mind in your new abode.

Defining A Closing Title Company & Other Important Terms

If you’re wondering what a real estate title company does, we answer all your questions! A closing title company safeguards you against potential ownership conflicts when dealing with real estate. It makes sure that the seller has the legal right to sell to you and offers title insurance to protect you from any conflicts originating from previous owners.

To better understand the purpose of a title company, let’s brush through a couple of terms we’ll be referring to in this article:

  • Title: This document represents your legal authority over a property. Before transferring ownership, you must confirm that the title is clear of defects and that no other claims exist.
  • Title Search: This explores property ownership to confirm that the seller has a right to transfer ownership by tracing the property's complete ownership history and uncovering any title issues before issuing title insurance.
  • Title Officers: They investigate a property's past by analyzing records and conducting property surveys to identify title defects.
  • Title Insurance: This policy protects against claims and lawsuits from past conflicts.
  • Escrow Company: Escrow and title company are not the same. So, what does a title and escrow company do? The former handles the transaction's financial aspects for future property purchases. The escrow officer manages funds, verifies paperwork, ensures that the closing timelines are met, and orders necessary property documents.

How Can A Real Estate Title Company Help You?

Let’s take a deeper look into what a title company does for the buyer.

A title company helps you in several ways:

  • A closing title company uncovers any problems with the property's title.
  • They can protect you from outstanding liens, disputes, or ownership conflicts.
  • The company provides title insurance to safeguard against financial losses.
  • It protects you from potential legal disputes or claims from the property's past.
  • A real estate title company verifies documents, ensures legal compliance, and facilitates a smooth closing process.
  • They handle the meticulous work of researching the property's history, minimizing the risk of unexpected legal or financial problems down the line.

What Is A Title Company Responsible For Before Issuing Title Insurance?

Now that we have a better understanding of what a title company is for real estate and its purpose, let’s explore how it uncovers any potential defects or encumbrances on the property.

Errors in public records, like unrecorded property releases or incomplete payments for contracted work, can result in unexpected liens. The real estate title company will investigate these records, secure information from previous owners and lenders, and verify if there are any liens or illegal deeds.

Furthermore, the closing title company will confirm the property's dimensions to avoid property boundary disputes. Concerns can also arise due to forged or illegal deeds and cases. The title company scrutinizes documents and notifies all heirs properly, facilitating the release of their interest in the property.

However, what does a title company do for the seller? Here, it facilitates a smooth transfer to the buyer. The company prepares the necessary documents, including the deed, and coordinates the closing process. It also safeguards the seller's interests by ensuring that all outstanding mortgages, liens, and taxes related to the property are paid and properly documented.

What Is In The Preliminary Title Report From The Real Estate Title Company?

The title report is a part of the title company process. It covers details about the property purchase or refinance, including the date of title certification, insured party information, type and amount of insurance, and how the current owners hold ownership.

In this report, the closing title company also summarizes the documents needed before the title insurance issuance, such as releases of tax liens, previous owners' deeds of trusts, estate documents, power of attorney papers, death certificates, judgments, and corrections.

Lastly, it may also list things like easements, mineral reservations, and restrictions like CC&Rs, which are limitations set by the original landowner.

What Does A Title Company Do At Closing?

During a house closing, your real estate title company is responsible for a couple of things to make things smoother for you:

  • Handling Changes (If Any): If there are changes in the transaction details (such as the loan amount or a new cosigner), your title officer will update the documents accordingly.
  • Reviewing Legal Documents: When transferring property, the closing title company officer ensures that all related legal documents align with title insurance requirements.
  • Identity Verification: The title officer also confirms identities by examining official documentation like a driver’s license or passport to ensure complete transparency and eliminate risks.

What Documents Does A Title Company Need?

For the title company process to proceed, you'll have to provide several documents to the company, including:

  • The purchase agreement contract outlining the terms of the property purchase.
  • Valid identification documents such as a driver's license, passport, or government-issued ID.
  • Documents related to your loan or mortgage (if financing the purchase).
  • The previous title insurance policy related to the property.
  • Documents proving the transfer of ownership history.
  • Survey reports outlining property boundaries and any associated easements.
  • Documents related to the property's homeowners association.
  • Records of property taxes paid (and any outstanding taxes).
  • Details about homeowner's insurance for the property.

Why Do You Need Title Insurance & What Are Its Types?

Title insurance is the culmination of the title company process, and it protects you, the new owner, from financial losses or legal expenses stemming from claims or lawsuits related to your property's past. It focuses on the property's history rather than future events.

There are two types: 

  • Lender's Title Insurance: This is required by mortgage lenders; it covers the loan amount, safeguarding the lender's interest.
  • Owner's Title Insurance: This may seem optional for homebuyers without a mortgage, but it can help you in several ways. It covers the amount paid for the home, providing long-term protection to homeowners, even through refinancing.

Though the owner's title insurance isn't mandatory, your real estate title company will insist that you get it as it offers peace of mind for as long as you own the property. Title companies even offer bundled policies and discounts to help their clients make the right choice.

But now comes the important part – who pays for all of this? Well, paying the real estate title company for a lender's title insurance falls on the homebuyer, even though it protects only the lender's interest. Homebuyers securing a mortgage must also get a lender's title insurance for the loan amount.

As for the owner's title insurance, this expense also falls upon the buyer. However, it is a one-time fee paid at closing, and it provides long-term protection, ensuring that the buyer's ownership rights remain secure, even if issues arise with the property's title in the future.

A small price to pay to your real estate title company for lasting comfort!

You Can Always Count On A Real Estate Title Company!

Looking to close on your dream property hassle-free in Texas? Trust a real estate title company that works with CertSimple USA, LLC.  They handle all the complexities, so you don’t have to. Say goodbye to worrisome surprises with their thorough title searches and comprehensive title insurance.

We and our Title Company partners serve customers in the following areas:

  • Dallas, TX 
  • Austin, TX 
  • San Antonio, TX 
  • Fort Worth, TX 

Secure your ownership rights and peace of mind with a CertSimple USA, LLC title partner to walk you through the title company process. Reach out to us today for a seamless closing experience!