A title company is a real estate closing service that verifies the chain of ownership for a property. It also checks to ensure no liens or judgments could prevent the seller from selling the home.
But, a title company doesn’t provide legal advice or make contracts. Instead, it should be worked with by an attorney.
Ensures a Smooth Closing
In the home-buying process, title companies ensure that a person is buying a property that belongs to them. They search public records to ensure the title is clean and claims-free.
They also help prepare deeds and governmental transfer documents that will be signed at closing and obtain payoff statements and appropriate checks for the balances that each party to the sale owes. Moreover, they will record the deeds and documents in the county recorder’s office.
However, if there is a problem at closing, such as a defect in the title or boundary line dispute, the parties will need legal advice to resolve the issue quickly and fairly. This is where a real estate attorney comes in handy. A title company lawyer can provide guidance and answer any legal questions that may arise, all at little or no additional cost.
Ensures You Get Your Money’s Worth
A title company is a crucial part of any home-buying process. These companies research public records to ensure that a property’s legal claim of ownership is valid and that there are no liens against the property. They are also responsible for transferring ownership rights from one owner to another.
However, they only sometimes have your best interests in mind. They work for themselves and must focus on their business, which is securing your mortgage loan. On the other hand, real estate attorneys have a legal obligation to protect their clients’ interests.
They can help you resolve issues during the title search, such as unpaid taxes or liens from previous owners. In addition, they can provide advice and suggestions on how to settle such claims before closing. Ultimately, working with a lawyer can save you time and money in the long run.
Ensures You’re Protected
A title company researches the chain of ownership for real property and issues a title insurance policy to protect buyers, sellers, and mortgage lenders against hidden title defects. This includes encroachments, unpaid taxes, and liens against the property that might not have been removed.
While title companies must pay legal expenses to defend title claims, they usually choose the law firm they hire for covered matters. On the other hand, attorneys are sworn to uphold a code of ethics and answer to their State Bar for their actions.
A lawyer-owned title company works to keep the best interests of its clients in mind. In addition, they can refuse a referral arrangement that violates RESPA Section 8. Currently, some title companies conspire with real estate agents by requiring the agent to abandon their independent judgment in selecting a company for client referrals. This stifles competition and encourages illegal fee-splitting arrangements, which violate RESPA Section 8.
Ensures You Get the Best Deal
As a part of their job, title agencies ensure that before closing, the seller can legally convey a “clear title” to the buyer. To do this, the agency will search for any blemishes on the property title, such as outstanding mortgages or liens, unpaid taxes or utility fees, and boundary disputes. They also verify that the legal description and measurements of the land match up.
However, since title companies are not attorneys, they cannot advise you or correct any legal issues found during home-buying. This is why hiring a real estate attorney to assist you with the closing and title documentation search and review is the better option. Additionally, an attorney can draft contract addendums and nonstandard legal documents, which a title company is prohibited from doing under the unauthorized practice of law doctrine. This is important as many issues can arise during the closing process and the preparation of title documentation.