A title company is an organization that identifies any liens and problems with this important document, in order to make a property closing as smooth as possible, while also making sure the purchase is handled properly. Once a buyer has decided on the home he or she wishes to buy, they go to the closing, where a title company is hired to do a title search. Without this step, someone could end up buying a home, only to have the transaction derailed by one of many possible complications. This can all have an adverse affect on the closing, when the time comes.
The purpose of the title search is to make sure the document is "free and clear." This means there aren’t any outstanding debts owned on the property, including back taxes and mechanical liens, as well as second mortgages. This is so important because, once the property is transferred to the new owner, that new owner is responsible for all debts associated with the home. Obviously, doing this type of search after the home has been purchased is not the way to go.
Once everything is checked, the buyer will find him or herself at the closing, where there is an enormous amount of paperwork to be done. Again, having the title company there can be very helpful, especially if the paperwork gets confusing or any questions come up. Most of these companies are accustomed to helping buyers and sellers jump through all of the hoops associated with a transfer of property. It is nearly inconceivable to imagine slogging through all of the paperwork without the guidance that a professional team can offer.
Most title companies recommend title insurance, which protects buyers and lenders as well. Basically, if there is flawed paperwork or the company makes some kind of an error in their assessment, the insurance kicks in to protect everyone involved. Insurance may seem like an unnecessary luxury, or even a modern inconvenience, but when it comes right down to it there’s just no substitute for the peace of mind that comes with knowing you have done everything possible to protect your investment.
Choosing which company to go with is often done the usual way, by referral. Sometimes an agent will recommend the company they have worked with in the past; and sometimes a buyer will search through all of the available companies and choose the one with the highest ratings. In rare cases there will be interviews.
So, in conclusion, the ultimate purpose of a title company is to help everyone involved in the transfer of a home to accomplish their goals as easily as possible. Some people choose to do document searches independently and later regret it, realizing that they should have left it to the experts. The ultimate goal is to get the deal closed on your investment, and to know it’s been done right; there simply is no substitute for this kind of company when it comes to making it all happen masterfully.