Most real estate deals will likely involve a title company at some point if the deal gets far enough along. The typical practice in a real estate transaction is that the buyer will submit an offer for a property, either on their own or with the help of a real estate agent. The buyer will then retain a title company and they will help deal with a property title search and securing title insurance. Despite the buyer generally being the party to choose the title company, there are situations where the seller is involved in choosing the title company.
Can the Seller Choose the Title Company?
In cases where the seller is paying for the title company, it is generally accepted that they have a hand in choosing which title company to use. In general, the home buyer pays for the title company, which is why they usually choose the title company, but that is not always the case. Sometimes sellers will agree to pay the title costs as part of the real estate transaction. There are also cases where a seller might have strong opinions about using or not using a specific title company, as the title company plays a major role in the closing process.
What Does a Title Company Do?
Purchasing title insurance is one of the most important steps when buying a home. A title insurance policy will protect you and your lender in the event that any issues should arise with the title of the house. Typically a title policy will be ordered right after the purchase agreement is signed. The amount of time it takes for the title to be cleared by your title company will ultimately depend on a few factors, but generally title searches can be wrapped up in just a few days.
Title Insurance Following a Property Title Search
Once a property title is considered legitimate, the title company will then issue title insurance. This insurance protects both property owners and lenders against losing the property due to defects such as liens, encumbrances, or errors as well as covering the costs of defending against future, unforeseen claims on the property.
Buying a home is usually the single largest investment most people make in their lifetime. Protecting that investment from issues of ownership and other hidden title defects is a smart added layer of security for any buyer.
What is a Property Title Search?
A property title search is a process of gathering documents that show who has the legal right to own the property in question and, through that ownership, to sell it. While it may seem simple and obvious that the home seller is the owner, there may be hidden claims or liens on the property by other parties that the seller and buyer may be completely unaware of. To avoid any last-minute surprises and guarantee that the buyer becomes the sole owner of the property, a property title search is critical to ensuring any property transaction goes smoothly for all parties.
Who Pays for the Property Title Search & Title Insurance?
The party that pays for a title search is not necessarily set in stone. The buyer of a home traditionally pays for a search, but if your housing market is in particularly bad shape, you might be able to convince the seller to pay up for a search themselves. Most will be reluctant to do so, but depending on your circumstances, you just might be able to save a few hundred dollars by negotiating a property title search into the sale agreement. In general, your lender will only require that a new title search be conducted on the property, and they will rarely be adamant about who must conduct it.
Just like the property title search, title insurance is generally purchased by the home buyer, and it will protect you from anything that may have been missed in the property title search. Property title searches tend to be thorough in turning up the history of a home, but there are instances where things can slip through the cracks. If you are negotiating for the property title search to be paid for by the seller, you may also be able to have the title insurance included as well. Again, this is all dependent on your bargaining position when looking to purchase a home.
Most companies that offer property title searches also provide title insurance, so you won’t have to deal with multiple companies and they will typically go hand in hand.