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The Role of a Title Company

Posted by on May 3, 2016 in Role of a Title Company |

home2The real estate world has many inter-connected areas, and an ordinary real estate transaction will involve a lot of people. All sorts of experts, such as attorneys, home inspectors, appraisers, real estate agents and others, are necessary to complete the process in a satisfying manner. However, there is another important part of this puzzle but it is often forgotten and does not receive enough credit for the work that it performs. This unsung hero is responsible for a lot of things during the process of real estate transfer, and this important cohesive element is called a title company. Title companies have a very valuable role to play in the world of real estate, and duties and responsibilities of this element are often ignored and attributed to other members of the real estate world.

A title company is a neutral element in a real estate transaction, and its main role is to facilitate the transfer of title from the seller to the buyer. This transfer is not a simple process, and there are several checkpoints along this road, which makes the job of a title company harder and the responsibility larger.  Besides the transfer of title, this type of companies has several other duties, such as management of funds in an escrow account, document preparation and recording, and so on. All of these duties are important since they enable the deal to go through and they make our real estate market so fast and efficient, which in the end benefits the overall economy  and everyone who lives in this country.


If we go in a chronological order, the first activity that a title company will do in a real estate transaction case is to perform a title search.  This means that the people who work for this company will go through all files and records that may contain some information about the potential owners of a property. This examination has to be done in a detailed and thorough manner since it is very important that all claims of ownership are recognized and recorded. If there are any other claims, and the seller is not the only titleholder, then we have something that is called an encumbrance, which is basically a small glitch or slight problem in the process.

However, this can easily be fixed and once the seller is free of encumbrance, he or she will receive a written report of the findings, and this document is called a title abstract. Essentially, this paper is a listed history of ownership, but it is valuable since it allows the seller to apply for a title insurance policy. Mortgage lenders usually require that the title search is performed and the sellers are also encouraged to buy the title insurance.

photoBesides these two elements, title company serves as an impartial custodian for all expenses that are necessary during a real estate transaction process,  such as taxes and all sorts of fees. These funds are kept on an escrow account and they are paid after the deal is sealed and signed.

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