Whenever you purchase or sell a house, and you are holding a completely executed contract, the next step involves opening up escrow with a title company. A great number of persons really do not have a clue what it is that a title company actually does, nor why they require a title company to become involved in the transaction.
In the middle of the transaction in order to safeguard both buyer and seller, a title company remains an essential part of this arrangement. What are we suggesting when we discuss safeguarding the two parties? Allowing you to receive your title on the property without any liens or additional types of challenges to the title, the title company will literally vouch to both parties that there is a clear title available on the property in question. Unless a title company is able to produce a clean title report, such a cloud over the deal can cause the purchaser to walk away, unless of course the title company is capable of clearing up and guaranteeing the title for the buyer.
Another function that title company’s provide is to gather all public information on any existing covenants, conditions or restrictions either for the property or the community at large and provide these to the potential buyer. Title companies also ensure that all documents are properly signed and witnessed on the day of closing. For the buyer, this means signing the loan documents that have been forwarded to the title company as well as the title documents and for the seller it means signing over the property with the deed that the title company has drawn up.
After all the required signatures have been gathered on all the documents, the loan documents are sent to the lender for funding; the lender then sends a copy back to the title company, who is now responsible for ensuring that the transaction is properly recorded, the home is now in the buyer’s name, the seller’s old loan is paid off and the buyer’s loan is attached to the property. Finally, the title companies will collect any closing costs and down payments that the buyer agreed to pay and will provide the seller with any remaining proceeds once the loans and costs have been paid and the sale officially recorded.
Although consolidation is typical in the kind of market we are in nowadays, it is true that a large number of title companies have closed down some of their offices or gone out of business entirely. You should make certain that you are dealing with a title company that has existed for a good while. If a house is owned by a bank, then the bank typically goes with its own title company which it typically utilizes for all of its home sales, although the buyer usually gets the privilege of selecting the title company of his choice.
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Nice, thorough explanation of what title does in an escrow. Without them, a buyer never knows what liens might be on the property.