Whether you’re buying or selling a home or refinancing an existing mortgage, the Illinois or Wisconsin title company who manages the escrow, closing, and title insurance process matters. From the convenience of your closing to the security of your deposits to the long-term security of your title insurance policy, selecting the wrong title company can have catastrophic consequences well beyond the closing of your home purchase or sale.
But most of us, even those who have bought or sold multiple properties, don’t know much about the title companies we used. In fact, many of us don’t know that buyers have choices when it comes to which title company they use. Learn more about what you need to know when choosing a title company.
Understand What Your Title Company Does
During the home purchase and escrow process, your title company is an essential compliance partner for all parties, ensuring the successful and timely completion of the deal. A title company acts as a neutral third party to hold earnest money deposits in escrow during a pending transaction, ensures that the seller holds clean title to the property and that the buyer is getting what they are paying for, provides the owner’s and lender’s title insurance policies, and manages the closing process, including providing the physical location where the closing takes place.
Understanding each of these functions, and how they can impact your home purchase or sale, is an important part of keeping yourself and your investment protected, both during and after the sale.
How Does A Title Company Work Behind The Scenes?
Most buyers and sellers know that the title or settlement company researches the title history of the property, performing a public records search to document the ownership history of the property. This documentation is known as an abstract of title, and it includes not only the list of past owners, but also other publicly available records, including mortgages and liens that have been attached to the property.
During this process, the title company often works with the seller and other parties to resolve issues that could otherwise hold up the closing of the deal. According to some estimates, upwards of 30% of home titles have some kind of defect that can affect the sale. These defects can include a mechanic’s, tax, or other lien for a prior owner’s unpaid debts, prior bankruptcy issues, unknown easements or encumbrances, missing or rediscovered heirs who did not release previous interests in the property, or issues related to forgery or fraud. During the title search process, the title company works behind the scenes to resolve these issues, often without the buyer’s knowledge or involvement.
Is Your Title Company A Safe Place To Hold Escrow And Closing Deposits?
The title company also serves as a neutral third party, in many cases holding money in escrow for the parties during the pendency of the transaction. Initially, the title company holds the buyer’s earnest money deposit — the deposit the buyer makes at the time the contract for purchase is signed. If the sale is completed, the earnest money is paid to the seller as part of the down payment on the home. If the sale falls through, however, there may be a dispute between the buyer and seller as to whether the earnest money is owed to the seller or should be refunded to the buyer, depending on the terms of the parties’ purchase agreement and the reason for the sale’s failure. The title company ensures that the earnest money is properly transferred to the correct party.
The title company also ensures that each party’s closing costs are properly and timely transferred to the appropriate escrow account and maintained so that the closing can take place at the scheduled time. Because the amounts involved are substantial, it is important to choose a company that has measures in place to avoid wire fraud, an increasingly common phenomenon in which scammers “spoof” a title company’s email address to instruct the parties to wire closing costs into the scammers’ accounts. A title company that has taken proactive steps to avoid wire fraud, including providing wire instructions on a verified site instead of through email, and that is available to answer any questions or confirm instructions over the phone, is an important partner in avoiding potentially catastrophic criminal interference in a real estate deal.
How Title Insurance Makes Your Home Deal Possible
Because title insurance is a one-time cost, buyers and sellers generally don’t think about the owner’s and lender’s title insurance policies that are issued at closing. However, without these policies, no lender would ever be able to issue a mortgage on real estate. The policy of title insurance allows both the purchaser and lender to be sure that their interests and substantial investment will be protected for as long as the loan is in place or the buyer owns the home.
How Closing Services Can Affect Your Home Sale Or Purchase
There’s no question that the day you close on a home is a big deal. Not only is a home a major investment, it’s the place where our lives happen — where individual and family milestones occur, and where we feel most safe and secure. Closing on a home should feel like a big occasion, not a stressful experience. As you’re choosing a title company, choose one that is as excited for your big day as you are, and that puts the customer experience first. From fast, convenient locations for your closing to the little touches that go a long way in making your day feel special, it makes a difference when your title company nails the little details.
Learn More From Your Trusted Title Insurance Company
Protecting your interests and assets during a home purchase with title insurance may be the most important thing you’ll ever do — and you don’t have to navigate the ins and outs of owner’s and lender’s title insurance policies alone.
If you have questions about what title insurance can do to protect you, what it involves, or how to get it, Landtrust Title Services can help. Please contact us today at [email protected] or by phone at 312.528.9210 to get answers to all of your questions.