Buying or selling a home is like entering an entirely new world. Not only is there an entirely new vocabulary to learn, but both buyers and sellers are both suddenly thrust into a world that looks a lot more like corporate deal making than many of us are used to. Negotiations, third parties who provide mortgage, inspection, and due diligence services, and endless amounts of paperwork seem to be inevitable in even the simplest home sale.
Because of the complexity of home purchases, many of us never fully understand what each player in a home sale or purchase actually does, which often means we’re not equipped to take advantage of these resources to the fullest. Understanding what services a title company offers, and how you can fully avail yourself of those services, can go a long way to making your home sale or purchase easier.
History Of Title Companies
The modern title company traces its roots back to the function of the “conveyancer” in English and early American law. “Conveyancing” is the legal term for the transfer of legal title to real property from one person to another, or the granting of an encumbrance against real property, such as a mortgage or a lien. Historically, a conveyancer was the individual who was charged with establishing, essentially, that the seller held the title they purported to sell, or “convey,” to the buyer.
The conveyancer would establish the seller’s title by reviewing available public records and abstracts, allowing the sale to be finalized. If, for some reason, it was later established that the seller did not have clear title, the buyer’s only recourse was against the conveyancer, not the seller or any other party. Because of this, buying property could be a risky proposition — a mistake in public records could be costly, and leave a buyer with no way to recover an investment. In fact, in an early American property law case, Watson v. Muirhead, the court held that a conveyancer had, in fact, exercised due care in evaluating a lien, and the purchaser of a property subject to that lien had no valid claim against anyone for the losses associated with his investment. In fact, it was that case that led to the innovation we now know as title insurance.
Title Search and Property Survey
When you buy or sell a home, your title company will ensure that you are, in fact, getting what you bargained for. The title company researches the property’s historical public record of transfers, also known as the chain of title, to ensure that the seller does, in fact, have the right to sell the property in question, free and clear of any questions about the validity of title or any liens against the property that could later force a sale. Among other items, the title search will generate a report that includes:
- The legal description of the property, including the parcel number, to ensure that the seller does, in fact, own all of the property being transferred.
- The chain of title extending back 30 years, to ensure that there are no gaps in ownership during which an unrecorded transfer might have taken place.
- Mortgage information for the current owner
- Judgment liens against the owner that have been levied against the property,
- Mechanic’s liens for work performed where payment has not been made
- Federal or state tax liens against the property
- HOA liens
- Easements, in which another entity or the public has the right to make use of some portion of the property for a limited purpose
The title company may also order a property survey, to ensure that your new neighbors have not encroached onto your property’s boundaries. These surveys can reveal major defects regarding lot lines, and identify any improvements on your neighbors’ properties that may accidentally have crossed over your property lines.
Your title company will also issue both owners’ and lender’s title insurance policies. Owner’s title insurance protects against financial losses that might occur when title is subject to liens, encumbrances, and defects that were unknown to the buyer and seller on the effective date of the title policy. Lender’s title insurance is similar, but protects against claims that might jeopardize the lender’s priority as a creditor in the event of a foreclosure or other forced sale of the property.
Both of these policies provide important legal protections for buyers. Without the existence of owner’s title insurance, a former owner or lienholder could assert a claim against the property at any time. And without lender’s title insurance, banks and other mortgage issuers would be reluctant to fund the purchase of real estate.
Often an overlooked part of the home sale and purchase process, the sale closing is a critical moment where a lot of things can go wrong. Your title company provides vital closing services, including reviewing all the contracts related to the transaction for accuracy, and flagging and correcting any issues. The closing officer also compiles all closing documents for the transaction, arranges and oversees the signing of those documents, and collects the money required for the transaction, such as the escrow deposit, down payment or any fees that must be paid before or at the closing.
The agent also holds any deposits in a separate escrow account, prepares closing statements, and helps ensure that lender’s and owner’s title insurance policies are issued.
Most real estate closings still take place in person, so choosing a title company with convenient locations and a great closing experience is one easy way to make the home sale or purchase experience more painless.
Landtrust Title: Your Partner for Results
When your real estate agent works with Landtrust Title, you get a partner for results. We do things differently than other title companies — whether it’s personalized support, convenient closing times that meet your schedule, or quick and easy payment methods ensuring everyone gets paid right away, our attention to detail will help ensure a smooth transaction. We’re obsessed with making your experience so seamless, you don’t even have to think about it. If you have questions about what to expect when your real estate deal closes, Landtrust Title Services can help. Please contact us today at [email protected] or by phone at 312.528.9210.