We know that a title company is the place we go to sign documents when we purchase, sell or refinance our property; but what exactly does that title company do?
In fact, title companies serve several purposes that are important to purchase transactions. Firstly, they provide a place to settle as well as to reconcile the transaction. What this means is that in a purchase transaction the title company merges the numbers that are given to them by both buyers and sellers and produces the settlement statement that both sides sign at closing.
This is very important in that the title company is considered an independent third party and offers a type of check-and-balance system that ensures all parties involved in the transaction, including the attorneys, see the numbers submitted by the other side before signing any paperwork.
Secondly, title companies collect monies from both sides and perform the service of paying off previous lenders as well as delivering documents to recording agencies, such as county assessors’ offices.
Thirdly, these companies provide title insurance, and if you are borrowing money against a property, your lender will require this. With title insurance, the company is providing an insurance policy against any type of lien that may have been placed on the property prior to closing. This could include any issues relating to the property, such as work that may have been completed but which has not yet been paid for.
Title companies are there for everyone’s protection. Be glad they are.