The title firm is a party you will interact with during the home-buying process. A title company's job is to make sure that the buyer of a home is granted the rightful title to the property. In essence, they ensure that a seller has the authority to transfer ownership of the property to a buyer.
When a title insurance provider completes its verification, it will support that promise with title insurance, which safeguards the lender and/or owner in case a future claimant claims the property.
It's possible that the closing will be handled by the title insurance provider as well. Your closing fees will be kept in escrow accounts up until the day your loan closes, which it will manage. It is possible for the company handling closure to be distinct from the one handling title and title insurance.
This blog post will explain a title company's functions and walk you through the procedure. Let's take a time to define a few important concepts before we continue.
Knowing the difference between a title and a deed is one of the more confusing aspects of the closing day signing procedure. Although you may not fully understand each; you should be aware that you need both.
A deed is a legally binding document that is used to transfer ownership of property. This is signed, witnessed, and then presented to you as the new homeowner when you close on your home. For everyone to understand precisely what is being transferred, it includes a description of the property.
The real legal document proving your ownership of the property is called a title. This ownership certificate is significant because regardless of whether you are on the actual loan if your name is on the title, you will also sign various forms about the mortgage.
You may be required to sign this paperwork in places where you have community property rights because you have specific legal ownership rights to the property as a spouse, whether or not your name is on the title.
If you prefer to keep your property separate during your marriage, you might be allowed to sign paperwork letting go of spousal rights in some states.
After defining a title and a deed, let's discuss the steps a title business takes to ensure that your title is clear and free of any potential ownership claims.
By performing this due diligence, you are also protecting the title business from future liabilities when they insure your title.
A title search, which involves looking for potential barriers to a smooth transfer of ownership, will be the first thing a title business does.
The question of whether other people own the property or have rights to it is frequently the first thing that comes to mind, but a title search also searches for the following things:
The current homeowner will have a mortgage attached to the property unless the previous residence was owned free and clear. This must be settled at closing for you to receive the title.
For example, a loan to pay for solar panels or a home equity line of credit could each hold a lien against the property. Before you may close, these must be paid off or otherwise eliminated.
While the specifics will depend on the HOA contract, associations frequently provide themselves broad powers in these agreements to mortgage your property and even foreclose on it as a result of unpaid HOA dues. Before continuing, it will be necessary to settle any outstanding debts from the previous owner.
If the former owner owes a debt that has not been satisfied, they may be sued in court and the complaining party may get a judgment that is attached to the property until the debt is satisfied. If a contractor wasn't paid for completed work, for example, this can arise in a homeownership situation. In the event of a sale, the Internal Revenue Service (IRS) or another taxing authority that has a lien on the property for unpaid taxes may be able to purchase the proceeds. Before closing, both problems must be resolved.
Anything that prevents a property's ownership from being transferred freely can be problematic. Examples of limits include having to be a certain age or being a member of a particular group to dwell in a neighborhood.
Even though you are the property's owner, easements are contracts that grant another party the right to use your land for a specific purpose. The right to utilize a spot for parking as an easement is an example.
Are there any leases in place for the property that have a set term? You may find this by doing a title search.
An abstract of title is a legal record that describes the previous owners of a specific piece of property. It includes information about not only the sale of the property but also documents about inheritance, legal disputes, and tax sales. You may learn a lot about the property's past by looking at the abstract.
The title firm then drafts a title opinion. This agreement expresses their belief that the seller has a good title to the property and their willingness to insure that title in the event of a purchase or refinance.
The process might be slightly delayed while things are investigated and t's are crossed if problems are discovered during the history of the property study that needs to be resolved before you can obtain title insurance.
To learn more about title services, call us at 317-214-6023 or visit our website.
Caroline Soriano