Have you ever wondered, “What role does a title company play in a mortgage?” Title companies play several significant roles in common real estate transactions. Title companies typically act as an impartial combined agent of the insurance company, the buyer, the seller, the mortgage lender, and any other parties related to a real estate transaction. Title companies reviews title, issues insurance policies, coordinate closings, and files and records paperwork with appropriate jurisdictions.
Title companies provide comprehensive real estate title search and review departments that review the public records relating to real estate and inform all interested parties of the status and condition of title to the subject property. Title companies normally provide this information to each of the parties in the form of a preliminary title report, or commitment to issue title insurance. Title companies also provide title research information related to foreclosures and other types of legal action involving the subject real estate.
Title companies issue policies of title insurance on behalf of title insurance companies. In most cases, the title company that issues the policy is not actually the insurance company. Instead, the title company acts as an independent agent of the insurance company and receives a commission for issuing the title policy. The actual premium goes to the insurance company, and the insurance company bears the risk of any loss incurred during the policy. The title company simply facilitates the paperwork for issuing the insurance policy.
Title companies usually act as the closing agents for real estate transactions. This means the title company is an impartial agent of each party to the transaction. In its role as agent, the title company obtains signatures on all the closing documents and receives and distributes payments related to the conveyance transaction. After the parties have signed all the documents, the title company is responsible for recording documents (such as deeds and mortgages) in the local county land records office.
In addition, title companies also often act as escrow officers in connection with some real estate transactions. An escrow officer holds documents or funds as a part of the transaction and according to the instructions of the involved parties. For example, the purchaser of real estate will give the title company the earnest money to hold until the transaction closes. When the transaction closes, the title company handles the transfer of the remaining funds and transfer of the signed deed to the property. The title company, acting as escrow officer, must only release the deed and the money according to the written instructions of both the buyer and seller.
Primary Residential Mortgage has a good relationship with many title companies in your area. If you need a recommendation for a title company feel free to contact us. We’re here for you and always happy to help.
Note: Opinions expressed are solely my own and do not express the views of my employer.