You may have heard of “being in escrow” and “closing on a house” but not understand exactly what these processes are or how a title company is involved. The role of a title company is pretty simple, though carrying out all the different functions makes it look more complex than it actually is. A title company comes in when you first make an offer on a home and secure that offer with your earnest money. That money is given to an impartial third party to hold in an escrow account. The impartiality is important, meaning that the holder can’t act for the benefit of the buyer to the detriment of the seller, or for the benefit of the seller to the detriment of the buyer.
One of the most important parts of what a title insurance company does is making sure that the property being transferred is being given to the new owner with a clear title. This is done by conducting a process called a title search, where the title company will search court records and public documents to see if anyone has a prior claim to the property, if there are any liens or judgements attached, if any easements pertain, and if the property taxes are up to date. If there are no defects or clouds on the title, then the title is said to be clear.
After the title search, you are ready to begin the process of closing on your house. This is a process separate from but related to the title search that’s just been done. Closing is the process of signing all the paperwork, exchanging monies, insuring the title, getting the keys, and completing the legal transfer of the property. You and the other parties should receive your documents in advance in order to review them and understand them completely before the final day. You may be asked to transfer funds to the title company’s account before closing to make sure that all expenses are covered. Please send these funds only to the title company after confirming the details and instructions with your title company officer, as hackers have perpetrated many cases of fraud.
You should receive your deed, a survey, tax documents, your mortgage documents, and any keys or garage door openers at closing. You may also be asked to produce proof of a homeowners policy, flood, and windstorm coverage. Before the closing, be sure to request owner’s title insurance to keep your investment safe from any unforeseen claims that might arise. Your lender makes title insurance a condition of issuing the mortgage, but that protects them – not you. It goes without saying that should you not understand the documents you are given, or if the details seem off, or not what you agreed to, you should not sign them. Call and talk to us at First International Title, and we’ll help you through it and into your brand new home.