Whenever you purchase or sell a house, and you are holding a completely executed contract, the next step involves opening up escrow with a title company. A great number of persons really do not have a clue what it is that a title company actually does, nor why they require a title company to become involved in the transaction.
A title company is a very important part of the transaction and is there to protect both parties. What are we suggesting when we discuss safeguarding the two parties? Allowing you to receive your title on the property without any liens or additional types of challenges to the title, the title company will literally vouch to both parties that there is a clear title available on the property in question. This sort of overshadowing cloud might cause the purchaser to change his mind and withdraw from the deal, unless the title company is able to obtain a clear title report, so they will work tirelessly to find a way to clear it up and promise the purchaser that he has a clear title.
The title company will also work on other details of getting the public report or covenants conditions and restrictions for the community and getting them to the buyer for review. On behalf of both the buyer and the seller, they take care of all signatures involved. For the buyer, this means signing the loan documents that have been forwarded to the title company as well as the title documents and for the seller it means signing over the property with the deed that the title company has drawn up.
After all the required signatures have been gathered on all the documents, the loan documents are sent to the lender for funding; the lender then sends a copy back to the title company, who is now responsible for ensuring that the transaction is properly recorded, the home is now in the buyer’s name, the seller’s old loan is paid off and the buyer’s loan is attached to the property. They will collect the funds from the buyer for closing costs and down payments as well as give the proceeds of the transaction to the seller once the home has officially closed and recorded.
Although consolidation is typical in the kind of market we are in nowadays, it is true that a large number of title companies have closed down some of their offices or gone out of business entirely. Be sure you are working with a title company that has been around. In most home sales, the buyer selects the title company but if you’re buying a house owned by a bank, then the bank will probably require that you use a particular title company.
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