The Title Company
It is your right (as the buyer) to pick your own Title company. The Seller may request one (especially in a forecloser). This is usually done because the transfer paperwork was already started. If you are not comfortable with the sellers choice by law they have to abide by your decision.
What does a Title Company do:
It coordinates the interests of all parties to a real estate transaction (including the buyers, sellers, mortgage lender, and the real estate agents). A title company will also make sure all requirements for settlement are fully satisfied. Once a Sales Contract is ratified (both parties have agreed upon and signed off on all terms and received a copy), it is sent to the title company to review for accuracy and completeness and to begin the title process.
The Title Process:
- Research the title to the property through a Title Abstract. The title abstract provides a history of the property and its ownership. It will also identify any liens, defects or encumbrances on title.
- Clear any liens or claims on the property so that the new buyer receives clear and marketable title to their new property.
- The title company (with the buyer’s authorization) will order a survey and review for any potential problems. Should any issues arise on the survey, the real estate agent, lender and the new buyer will be notified immediately. The survey will be given to the buyer at settlement.
- Verify that local or state property taxes have been paid. Similarly, the title company will check with the water company and the Homeowners Association or Condominium to confirm that all payments are current. On the HUD-1 Settlement statement, they will prorate the amounts based on the billing period and the settlement date.
- Prepare the insurance commitment for the lender’s Title Insurance Policy. There are two types of Title Insurance:
- Lenders – which is required by the mortgage company, and protects the lender’s investment in the property.
- Owners – which may be purchased at settlement for the benefit of the new owner. It protects them against any unforeseen claims, hidden risks, or fraud against the property.
- Coordinate with the mortgage lender to receive the Loan Documents for Closing. The title company will review all forms and comply with the lender requirements for closing.
- Complete the HUD-1 Settlement Statement. This settlement statement is one of the most important documents to sign, and will be reviewed it in detail at closing.
- Prepare the Deed and other documents necessary to comply with State and Federal laws.
At Closing all documents will be explained to all parties prior to signing. Settlement will last approximately one hour. Time is taken to make sure everyone is comfortable with the documents prior to signing and any questions that arise will be answered. After closing the money is collected and disbursed accordingly.
And finally, the title company will make sure all documents are properly Recorded in the Courthouse (such as the new Deed, mortgage and release of any existing liens on the property).
You will be give a copy of all the paperwork and handed the keys. You are now the owner of your own home!! We move on to step seven.