What Does a Title Company Do?


Quick Answer

A title company facilitates real estate transactions. The company ensures the legitimacy of the property’s title and subsequently issues title insurance. This coverage protects the lender against lawsuits regarding the title. In addition to affirming legitimacy and issuing insurance, title companies also review the sales contract for accuracy and completeness.

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Full Answer

Title companies research and affirm associated property titles, which contain an overview of the underlying property and its ownership history. It is the responsibility of the title company to examine the associated title and clear any claims or liens against the property to ensure that the buyer receives a legitimate and clear property.

Once the title is affirmed, the title company must prepare the insurance policy and issue both lender’s and owner’s coverage. Lender’s coverage is required by the underlying mortgage company to protect the lender’s investment, while owner’s coverage may be procured at the settlement for the benefit of the buyer.

Title companies also maintain escrow accounts, which contain the funds required to finalize the purchase. Title companies are responsible for ensuring that the escrow is only utilized for closing costs. At the closing, the title company provides the necessary documents, explains the stipulations to both the buyer and seller, verifies tax payments and distributes any associated funds to the rightful party.

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