If you are purchasing a home, you will work closely with a title company that handles key aspects of the transaction on your behalf. But what exactly does the title company do for buyers during the real estate process?
What does a title company do for the buyer?
The title company, also called a settlement agent or escrow company, provides services that protect the buyer’s interests and investment in the home such as researching the property’s title history, providing title insurance, working with your lender to balance the allocation of funds going to all parties, handling the closing and escrow process, paying off any existing liens, and filing all required documents.
1. Research the Property’s Title History
The title company performs a title search to uncover any issues like liens, legal action, or ownership gaps tied to the property before you buy. They work to clear title issues to avoid future claims against your rights.
2. Provide Title Insurance
At closing, they issue a title insurance policy that protects your ownership claim against undisclosed title flaws, errors, forgery or deed issues. This safeguards your legal rights as the new owner.
3. Handle Closing and Escrow
They prepare closing documents, conduct the closing appointment, collect and disburse funds, and ensure the process adheres to laws and regulations for a compliant transaction.
4. Pay Off Any Existing Mortgages or Liens
If the property has any current loans or owed taxes, the title company ensures these are paid off from the seller’s proceeds so you receive free and clear title.
5. File and Record Documents
They properly submit deed and title paperwork to the county clerk’s office and will forward recorded copies to you as proof of the legal transfer.
6. Hold Funds in Escrow
Earnest money deposits you provide are held in escrow accounts until closing. The title company accounts for these and other funds to reconcile all funds going in and out of the transaction.
7. Resolve Title Concerns
They research and fix any title discrepancies that could prevent clean title conveyance, like an unknown heir claiming ownership rights.
The title company handles all the closing and conveyance logistics on your behalf to ensure the property securely transfers to you, the buyer. Rely on their expertise for a smooth transaction. They are your main partner through the buying process.
Title Company vs. Settlement Agent
In some states, a settlement agent may oversee these tasks instead of a title company. The settlement agent performs the same services related to closing, documents, and facilitating the transaction.
Either a title company or settlement agent is required in nearly all real estate deals to protect the buyer legally and handle the myriad transaction details.
Selecting Your Title Company
Buyers should research options and select their preferred title company early in the home buying process. Some key factors to consider:
- Total estimated costs and fees
- Level of experience with local real estate transactions
- Responsiveness and availability for questions
- Ability to close on time with proven workflows
- Professionalism and communication skills
Your choice of title company or settlement agent plays a major role. So take time to find the right fit. Adler and Herbach (Real estate attorney firm serving Chicagoland) has partnered with United Settlement Services (Title company) to give you a streamlined closing process.
Contact us and inquire about the home buying process or call +1 847 318-3770. We won’t charge you for the consultation. Get a complete picture about the home-buying journey.