What exactly does a title company do?
Posted April 15, 2018 in Real Estate Trends
Few people understand what title companies do. Here’s what you need to know:
Title companies serve two functions. First, we maintain property records so that sales and refinances can take place. If you buy a car, the seller (or their lender) should have in their possession a title certificate issued by the state. For real estate, there’s no state-issued title. Instead, the only way to figure out if a person owns a property is to find the deed when they bought it. But how do you know that the person they bought it from really owned it? You find the deed from that earlier transaction, and then the one before that, and so on. Researching the “chain of title” leads the title company’s title examiner to conclude who the owner is, whether any of those owners took out a mortgage or incurred a lien or judgment that affects the title, and whether the property is affected by restrictions or easements. A title report is produced by that examiner that explains what was discovered in the title search and proposes to insure the sale or refinance transaction that is to take place.
There are two types of title insurance: Owner’s title insurance that insures a buyer that they are buying from the correct party and that there aren’t any loans or liens that they buyer will have to pay after they become the owner, and lender’s title insurance that insures a lender that their borrower owns the property being put up as collateral and that the lender will be able to foreclose if the borrower does not repay the loan. A seller typically pays for the Owner’s title insurance, and a buyer or borrower usually pays for the lender’s title insurance, and the price depends on the sales price and the loan amount.
The second function of title companies is to perform an escrow of the sale or refinance transaction. This avoids the problem of a “standoff.” Imagine the seller saying “Give me the money, then I’ll give you the deed,” while the buyer says “No, you give me the deed and then I’ll give you a check for hundreds of thousands of dollars. I swear my check is good.” Escrow Officers not only do both at the same time, they also draw up the deed, pay the taxes, pay off the seller’s loan, and collect any other fees due Realtors, lenders, or contractors.
When you are buying, selling or getting a mortgage, you have the right to pick the title company. All title companies do the functions I described today, so why pick Clark County Title? We simply do it better! Our local service sets us apart from our mega-corporation competitors. We’ve been voted the number one title company in community voting for five straight years! From the local title and escrow professionals of Clark County Title, thank you!
Clark County Title
1400 Washington St, Ste. 100
3200 SE 164th Avenue, Ste. 219
Vancouver, WA 98683