The role of a title company in a real estate transaction is often underestimated despite its crucial role in the process. In fact, it is one of the key players during the closing process, which is the final step before receiving the keys to your new home. The title company’s primary responsibility is to ensure that the title is clear, allowing you to purchase and own your new property. Unfortunately, many people are unaware of the vital roles and duties of a title company in the home-buying process. Therefore, this article aims to help you understand the role of your title company when purchasing a house in Cherokee County.
What Is a Title Company?
Essentially, a title company provides various services related to satisfying buyers’ and lenders’ concerns about having a clear title. These services include performing a title search, preparing documentation for closing, and offering title insurance in case of a property claim. Moreover, the title company may be responsible for conducting and overseeing the closing process.
In essence, a title company serves as a compliance officer for the home-purchase transaction. The company’s task is to ensure that all aspects of the transaction meet legal requirements, and the transfer of ownership is free from issues and errors. Without the involvement of a title company, the home-buying/selling process would be less smooth and encounter more obstacles.
The Title Search
One of the specific services that your title company provides when you’re buying a house in Cherokee County is the title search. This is the primary job of the company during the home-buying process, involving a thorough search of the property’s history. The title search examines all previous transfers, owners, and liens to ensure that the title is clean and capable of being transferred to the new owner.
Some common issues that can come up during a title search include unpaid taxes or liens, leases, and easements. These must be cleared up before the transfer of ownership can be completed. After completing the search, the title company will provide a report of the findings, along with an abstract and an opinion of the title confirming or denying its legality. If any issues are discovered, the title must be cleared before the home sale can be finalized.
- Unpaid taxes or liens – If a seller is behind on taxes, the IRS may place a lien on the home. In that case, the lien must be paid off in order to clear the title so that a transfer can take place. Other common liens include those for unpaid HOA dues, a home equity line of credit, and, of course, the mortgage, and these too must be paid in full before or at closing for the title to be transferred to the new owner.
- Leases – If the property is currently leased to a third party, the title search will bring this to light.
- Easements – With an easement, someone other than the owner/seller has been granted the right (a non-possessory right) to use the property for a specific purpose, the most common being a right-of-way easement. And this must be cleared up before transfer.
Issuance of Title Insurance
The title company will also issue insurance designed to protect both the buyer and seller, with the buyer required to pay for lender’s insurance to insure the value of the mortgage in case of title issues. Optional in most states is the owner’s title insurance, which protects the buyer’s equity in the home if a title issue arises later.
Oversight of Escrow and Closing
Another key responsibility of the title company is overseeing closing and managing escrow. The company manages and protects the required documentation for closing, and both parties usually meet at the title company to sign the relevant documents to complete the transaction. Additionally, the escrow account is held to safeguard the funds required for the final steps of the transaction, including the earnest money, down payment, closing costs, and fees.
Disbursement of Funds
Lastly, the title company disburses the funds involved in the transaction to the appropriate parties before the buyer receives the keys to their new home. Given the complexity of the title business, it is wise to seek guidance from your Cherokee County agent to understand better. For more information, call 770-280-4560.
Where to Turn for Assistance
If all that your title company does seems fairly confusing and legally complex, that’s because it is. And that’s why it’s important for most buyers to lean on their Atlanta agent’s guidance to navigate the process without a hitch. If you’re buying a house in Atlanta and want assistance with what your title company does, contact us today at 770-280-4560.
FAQs
Q: What is the role of a title company in a real estate transaction?
A: A title company plays a key role in a real estate transaction by ensuring that the title is clear, making it possible for you to buy and own your new home. The company also acts as a compliance officer to ensure that all aspects of the transaction meet legal requirements.
Q: What services does a title company provide when buying a house?
A: When buying a house, a title company provides several services, including performing a title search, preparing documentation for closing, offering title insurance, overseeing the closing, managing escrow, and disbursing funds.
Q: What is a title search?
A: A title search is the main job of a title company when you buy a house. It involves a thorough search of the property’s history, examining all previous transfers, owners, and liens to ensure the title is clean and capable of being transferred to the new owner.
Q: What are some common issues that may come up during a title search?
A: Some common issues that may come up during a title search include unpaid taxes or liens, leases, and easements. These issues must be cleared up before the home sale can be finalized.
Q: What is title insurance?
A: Title insurance is insurance designed to protect both the buyer and the seller. As the buyer, you will need to pay for lender’s insurance to insure the value of the mortgage in case issues with the title come up in the future. Optional owner’s title insurance can protect your equity in the home if a title issue comes up later.
Q: What happens at closing?
A: At closing, both parties typically meet at the title company to sign the pertinent documents to complete the transaction. The title company will manage and protect the necessary documentation for closing, as well as oversee the escrow account and disbursement of funds.
Q: Why is it important to have a title company involved in a real estate transaction?
A: Without the involvement of a title company, the home-buying/selling process wouldn’t be as smooth and could encounter more obstacles. A title company ensures that the title is clear, that all legal requirements are met, and that the transfer of ownership is free from issues and errors.