A title is the legal way of saying you own a right to something. For real estate purposes, title refers to ownership of the property, meaning that you have the rights to use that property. The presence of a title proves to a buyer/seller that the property for consideration is legitimate. Title companies do many things involving with a title and its counterparts in preparation for the transaction of properties.
It is the title company’s responsibility to complete any any all title searches for the property in process, ensuring that the property is free and clear of any defects or unforeseen issues. The title company acts as a neutral party apart from the buyers and sellers, providing the information that is required for mortgage companies before a sale/purchase can occur.
Likewise, title companies issue insurance on the title of the property to protect the buyer from any potential fraudulent ownership claims that may arise. Mortgage lenders also require title insurance before funding a home loan.
Title companies also are tasked with maintaining a variety of real estate escrow accounts on behalf of buyers and sellers. The escrow accounts hold money used to complete real estate settlement and are part of standard closing procedures. All parties rely on the title company to ensure that the escrow accounts are present, and funded at closing.
As the impartial party serving both the buyer and seller in a transaction, title companies serve as settlement agents at closing. They confirm all insurances, payments, paperwork, are accounted for. They also serve as a facilitator for any last-minute issues that could potentially arise.
When selecting a title company, your agent or mortgage company may suggest a trusted title partner. Having a title company that you trust, and who has a positive track record among clients/realtors, will greatly increase your chances that the entire title process and closing goes smoothly.