Title Crash Course
What is a title?
A title is legal documentation specifying the ownership of real property and the tangible or intangible interests therein.
What is a title company and what does it do?
A title company checks a property title for validity and legitimacy. The title company is responsible for ensuring that a buyer can be confident that once they take over the title to a property, that they will own that property peacefully and uninterrupted, and there are no liens, claims, disputes, lawsuits or the like relating to the real property. A title company confirms the validity of title by doing a title search. During this search a title specialist will do a thorough examination of property records to confirm that the person or company claiming to own the property legally has full ownership and that no other parties have the right to claim full or partial ownership of the property. During the title search your title specialist will also look for outstanding mortgages, judgments, liens or unpaid taxes on the property as well as identifying any easements, leases, restrictions, HOA violations and restrictions or other factors that could complicate the transfer and future of ownership.
What kind of issues could come up in a title search?
During a title search, the property itself is sometimes surveyed to look for and address any easement, encroachment by neighbors, HOA violations or property line and boundary issues to ensure that these are cleared so that no future dispute of ownership will surface.
Liens, claims judgments, violations, disputes or lawsuits are also researched to give the buyer has peace of mind when taking on ownership of a property and the lender feeling confident about lending the funds to purchase the property.
What is an abstract of title?
An abstract of title is prepared for a buyer/lender giving the full run down and summary of what was discovered about the property and title through the title search. It is a history of the ownership for the property so to speak.
What is a title opinion letter?
A title opinion letter is a legal document, which officially addresses the validity of the title itself.
What is title insurance?
There are two kinds of title insurance. There is title insurance for the lender and title insurance for the owner.
Lenders title insurance protects the mortgage company from any loss that may incur as a result of any liens that could take precedence or be “superior” to their lien. It also provides protection against any boundary disputes that could arise with the purchase of a survey (which is typically required by the Lender).
It is important to also have owner’s title insurance as well so that in the event of a future dispute where the title is found to be wrong and/or invalid, the owner is covered. In the event that there is a dispute, it is the responsibility of the insuring party to clear any defects and make the property “whole”.
What is a settlement agent?
Once the title has been searched, an abstract of title has been provided and a title opinion letter issued, the next step would be closing on the house. The Settlement Agent is also responsible for reviewing the title search to make the determination that there will be a clear policy issued to either the Buyer, Lender or both. At the closing, a settlement agent from the title company will meet with the buyer and explain all of the title documents before the papers are signed.
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Title Crash Course
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