What a Title Company Does During A Real Estate Closing

Title Company

Real estate lawyer - title company

A title company will handle all financial disbursements related to the closing, including sending wires or preparing checks for all of the vendors who will be paid for their services at closing, like a title company professional from a professional firm like Capitol Title Insurance Agency, can explain.

During the closing process, a Title Company will:

Make Sure The Seller Is Legitimate And Has The Right To Sell The Home

The title company does extensive research and verifications to determine that the seller is who they say they are and has the right to sell you the property. Imagine that the title holder died and their son said he wants to sell the property to you. However, you didn’t know that he had two sisters and a brother. Do they need to be involved? What if a corporation owns the property? Does the person selling it to you have the right to do so on behalf of the corporation? These are examples of issues a title company looks into in order to determine that the seller has the right to sell you the property.

Make Sure All IRS Requirements Are Satisfied

A title company makes sure all IRS requirements are met during a real estate closing.

Manages Escrow Accounts

During the real estate transaction, a title company holds vital documents and deposits until the completion of the closing process. The escrow account protects the lender, buyer and seller.

Issue Title Insurance Policies

One of the most important services a title company provides is issuing title insurance policies for the lender and the buyer. The lender’s title insurance policy protects the mortgage company’s investment. The owner’s title insurance policy protects buyers from any hidden risks, unexpected claims or fraud. Both insurance policies provide coverage against financial losses due to title defects and legal costs.

Manages Lender Documentation and Coordinate The Closing

A title company obtains all loan documents from the lender for closing. With the appropriate loan documents, they are able to complete the Closing Disclosure and ALTA Settlement Statement. 

A title company prepares the title deed and documents required to comply with federal and state laws; they then reach out to all parties and coordinate the closing. At closing, the title company provides full explanations of all documents to all parties involved before signing takes place. 

They collect all outstanding fees, premiums and commissions and disburse them appropriately. They pay off any existing mortgages, liens or judgments on the property and send the loan documents back to the lender. 

They also file all documents, such as the mortgage and new title deed with the court. 

When you are selecting a title insurance company to work with, you may want to consider getting recommendations from friends and family, as well as your real estate agent, for a title company/escrow officer to work with. Reach out to one today.