Buying or selling a Lehigh Valley home or investment property is a complex enough process. There are so many details to manage, timelines to adhere to, and professionals involved. With so many fast-approaching deadlines and moving parts, it can be hard to fully understand everything, including everyone’s role in your home sale or purchase. More specifically, are you confident you understand all that a title company does? The title company’s role is important. But if you don’t understand the who, how, and why behind the title work and title insurance process, you might not choose the best title company partner.
As a specialist in title work and services, New Door Property Transfer understands how stressful and complex the home buying or selling journey is. And to help you better understand what it is a title company does for you during this process, we’ve assembled some of the most frequently asked title company questions. Let this be your guide to choosing a title partner for this exciting endeavor you’re about to take.
1. What is a title company, anyway?
Title companies come in all shapes and sizes, from small, family-owned businesses, to larger, online title work service brands. The title company is the business entity that is responsible for issuing title insurance. Before issuing the policy, however, the title company takes on additional duties. These include conducting research about the property in question and making sure it has a clean title and is, in fact, owned by the seller in the transaction. This requires in-depth research, expertise, and cohesive knowledge of real estate transactions past.
But there’s more. A title company can also play a role in maintaining escrow accounts for funds required at closing. The title company can hold those monies in reserves and issue checks at the closing table, overseeing that the correct parties receive their funds.
2. What does title insurance do?
Like other insurance coverage, title insurance serves as a layer of protection. Mortgage lenders and homeowners alike enjoy its benefits whenever there are questions about the property title. Title insurance will only be issued officially after the company has confirmed clear title and ownership. Should there ever be a dispute or claim, those protected have assurances with lawsuits, fees, or issues.
There are two primary or core types of title insurance, one that aims to protect lenders and the other for homeowners. In some cases, the seller might pay for this coverage. But most often, it is the new owner who will pay for title insurance. Lenders may require title insurance, while the homeowner insurance policy is optional. (We strongly advise getting title insurance every time.)
3. What about the role of a closing attorney?
What about a closing attorney? What role does this professional play? Closing attorneys are responsible for legal oversight of the closing process. One who represents the seller, for example, would be responsible for drafting up the sale contract. One who represents the buyer might draft additional provisions into the contract.
The closing attorney will review the title work, the insurance policies, home inspection reports, and home warranty clauses. Having a professional review of all these details on your behalf can help ensure you’re making the best decision to move forward. Closing attorneys are typically hired independently of other real estate transaction professionals and charge hourly for their services. Don’t confuse the closing attorney with the closing agent. The closing agent is a representative of the title company, responsible for chaperoning the final meeting on closing day.
4. What happens during a title search?
The title company will be responsible for conducting a thorough title search of the property in question. This involves a historical look back at previous ownership, as well as current layout and metrics. Once those details have been compiled, the title company will present its findings, highlighting any anomalies or concerns that might point to potential title issues affecting the closing.
5. What issues can arise in title work?
You might receive advice suggesting you don’t need to have title work research or title insurance. It would be a mistake to heed this advice. You’d be surprised at just how many hiccups can show up during a real estate title search. Here are just a few title work-related issues that can arise, hitting pause on your transaction and causing problems when buying or selling property.
- Existing Liens
- Unpaid Property Taxes
- Legal Judgments or Demands
- Home Equity Line of Credit Loans
- Special Assessments
- Undisclosed Heirs or Wills
- Court Proceedings
- Defective or Unproven Deeds
6. How much does the title company charge?
Another title company question often asked is about cost. And you’ll want to understand what goes into the charges and fees before closing. Here is a shortlist roster of title fees to keep in mind.
Title Search Fee: Usually between $75 and $300, the title search fee is usually paid by the current property owner and covers the time and effort required to conduct the public records search and report findings.
Title Settlement Fee: These costs can vary and are often referred to as closing fees. It’s a direct charge from the title company intended to cover administrative costs associated with closing. This might include escrow management, notary fees, and document preparation.
Lender’s Title Insurance: As previously mentioned, this type of insurance protects the lender in a real estate transaction. Unlike your home or car insurance, the lender’s title insurance only requires a one-time payment, usually between 0.5% and 1.0% of the sale price.
Owner’s Title Insurance: Often bundled with the lender’s title insurance, this coverage is intended to protect the property owner. It’s not a requirement but is strongly encouraged.
Abstract and/or Recording Fee: The finalized report of a title company’s research findings is called an abstract. It summarizes and details the search results and involves document preparation and communication. These fees can run anywhere from $200 to $1,000. Filing official documents may also present additional fees. Recording fee averages are about $125.
7. What Is the Title Company Responsible for the Day of Closing?
When the big day comes to exchange keys to the house, the title company plays yet another pivotal role. It’s the title company’s job to assemble all the people and the prepared documents at one table, coordinating escrow and invoices for all parties. The title company will provide a closing agent who will walk everyone through each document and collect the necessary signatures to finalize the sale of the property. With a closing checklist that includes everything from property taxes to homeowner’s insurance, the title company finalizes and records the entire transaction officially.
8. Who picks the title company?
Not all title companies are the same. For example, some only conduct property searches but don’t handle escrow. And while others require title insurance, it’s typically the buyer who makes the official decision. If you’re buying a home, it will be up to you to choose the best title company partner for your journey.
Hopefully, these FAQs about title companies have shed some light on your upcoming real estate transaction. And if you need to choose a title company partner, let New Door Property Transfer handle everything! Contact us!
When you want efficient communication, single point of contact, and full-service title work solutions, you want New Door Property Transfer!