Whether you’re buying a house or selling a house, there are enough moving parts in a real estate transaction to make your head spin. You’re probably starting with looking at the Alachua County or Marion County real estate market, working with a realtor to find your dream home. Then you’re making an offer, having it accepted, and starting to pack your moving boxes ahead of closing day.
In the middle of all of that, there’s a team of people working to make sure that the whole process runs smoothly. One of the most important roles in this is the work of the title company. Even if you’ve bought property before, you may still be unaware of what exactly the title company does and why they’re so important. We’re here to tell you everything you need to know to make your next move as easy as possible.
What is a Title Company?
To put it simply, the title company researches a home’s title and the chain of ownership of that property. They can work on behalf of both the seller or the buyer, and also the lender.
The title company plays a crucial role in the real estate transaction process. They protect both the buyer and lender from any liabilities that might come up during the purchase and ensure that the houses for sale in Alachua County and Marion County can legally be purchased by the new homeowners.
What is a House Title?
The house title that the title company researches is a record of every person who has owned the house in the past. This will include information on any current owners, along with the historic records of previous owners.
The title will also show if there are any liens on the house, like mortgages. If you’ve just purchased the home, your mortgage will be listed on the title.
It’s important to understand that a house title is different from a deed. The house deed is a legal document that’s used to transfer the property from one owner to another. At closing, this document is signed and witnessed to acknowledge that you are the new homeowner. The deed also has a description of the house so that there can be no dispute over what is actually being transferred on closing day.
A house title, on the other hand, is documentation that says that you own the property, but also lists any other “owners” or obligations that the property has, like liens or mortgages. Much like a title for a car, once your loan on the property has been paid off, the title will simply list you as the outright owner.
When Does the Title Company Come Into the Real Estate Transaction?
Once an offer has been made on Marion or Alachua County real estate, the title company will complete their research and make sure that there’s no problems with the ownership. This is the main role the title company plays in a real estate transaction. The title search takes place ahead of closing day.
All real estate transactions must have a clear title in order to proceed to closing and the sale go through. In most cases, the buyer is instructed to purchase title insurance to cover any liabilities.
What is Title Insurance?
Title insurance is a type of indemnity that protects both buyers and lenders from any losses that might arise due to defects in a property title. While the title company are doing their research, there are a number of hazards that title insurance covers, including:
- Ownership by someone else
- Incorrect, forged, or fraudulent signatures on documents
- Flawed or incorrect records
- Restrictive covenants that can reduce the value or enjoyment of the property, like unrecorded easements
- Any judgements against the property like outstanding liens or lawsuits
Title insurance, unlike other insurance, protects buyers against claims made on past occurrences, rather than something that may happen in the future. All lenders require buyers to purchase this insurance (the cost is usually wrapped into your closing fees) to protect their loan against any problems. Owner’s title insurance, to protect the buyer against defects to the title, is optional.
Once the title policy is issued, this means that the research is complete and the transaction can go ahead.
What Happens During a Title Search?
The search starts with the Chain of Title, which is essentially the ownership story of the home from when it was first built. This doesn’t only apply to houses for sale in Marion County or Alachua County though. Land for sale also has its own Chain of Title that needs to be researched.
The goal is to look for any obstacles that could prevent the sale from going through or anything that shows additional owners who have a claim on the property. The title company will look for:
- Any outstanding mortgages
- Judgements or unpaid taxes
- Unpaid homeowner’s association due
- Any other existing liens on the property
- Restrictions and easements
From there, the title company will conduct a property survey to make sure that the home occupies only the space that’s listed on the title. Once this is complete, a title abstract will be prepared and an opinion of the title.
Hopefully everything comes back clean and the seller has a valid title. If there are any issues, the title company will bring this up to the lender, buyer and seller with guidance on correcting these ahead of title insurance being issued.
How Does the Title Company Assist With Closing?
The title company usually manages the closing process, otherwise known as settlement. They’ll go through all of your closing documents prior to the settlement date and also help you to manage your escrow on the property. This is part of the due diligence of buying a home.
With the help of an escrow agent, they’ll set up a third party account where money can be held securely. This is typically done at closing for the transfer of funds from the sale and purchase of the property, along with being a place to keep tax and insurance funds that you can pay through your mortgage.
Is Working With a Title Company a Requirement for Real Estate Transactions?
In Florida, an owner’s policy isn’t required when completing a real estate transaction. A seller’s or lender’s policy, on the other hand, is required in the case of a loan policy.
Outside of Florida, even if there are no state requirements, you may still be required to have lender’s title insurance and to work with a title company for this. Even if you are paying for a house in cash and there are no legal requirements to do so, it’s still best to work with a title company for assurances and peace of mind about your new home.
Who Pays for Title Insurance?
Who has to pay for title insurance varies from state to state. In Florida, this can even change from county to county. In most cases, the seller will pay the title insurance, except in Broward, Sarasota, Miami-Dade and Collier Counties.
Looking For Help In Finding Your Next Home?
If you have questions about selling your property or buying a house in Marion or Alachua Counties, the team of realtors at Showcase Properties is here to help. Work with our experienced team to find your dream home. Contact us today to start your real estate search!