By Teri Menard
There are three critical service providers that prospective home buyers must be prepared to hire, as they make the exciting decision to buy a home: a real estate agent, a lender and the title company.
Before selecting any of these important service providers, a prospective home buyer should do their homework to find a service provider that meets their needs. When it comes to choosing a title company, buyers are sometimes unfamiliar with the services that the title company offers.
A title company handles three important aspects of the real estate transaction for its customers: title insurance, escrow and closings.
Before a lender is willing to provide a mortgage to a home buyer, it wants to ensure that the property has a marketable title, meaning that all existing judgments, liens and mortgages can be cleared from the property before passing title to the new home buyer.
The title company conducts a search of all public records and prepares a report for the lender – or for the home buyer if cash is being paid – to let them know what obligations need to be paid at the close of the transaction so that they emerge with clear title to the property.
When all those obligations are met at closing, the title company issues a title insurance policy to the lender and to the home buyer. This title insurance policy offers protection against claims resulting from various defects, as set out in the policy, that may exist in the title, effective on the issue date of the policy. An example of a defect would be a prior claim of ownership from someone other than the person selling the property, for instance an ex-wife or a co-inheritor.
Buying or selling a home involves the transfer of large sums of money. It is imperative the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner – one of the core services a title company provides.
And finally, the title company staff works with the real estate agent, lender, home buyer and seller to gather all of the information and documents together and oversees the signing of the documents, disburses all funds held in escrow, and ensures all pertinent documents are recorded at the county recorders office.
Teri Menard, Escrow Officer, North American Title Company can be contacted at 507.330.7117 or online at nat.com.