I’ve been covering the process of buying a home in Lake Tahoe, from the search, financing, negotiations, purchase, rental process and maintenance after close of escrow. This article will cover the role of a Title & Escrow company. When a property seller and a buyer enter into a formal purchase agreement, the title company plays an important role in the transfer of title. Title companies help sellers transfer their titles, and they help buyers take possession of titles. Title companies also conduct title searches for any existing claims on properties, prepare title insurance for sellers, and maintain necessary escrow accounts for sellers and buyers. I have a great working relationship with our Lake Tahoe escrow officers, and that is very beneficial in order to get through escrow in the quickest and most efficient way possible.
Here is some information on what title companies do and why they are so important to the escrow process.
What is a Title Company?
A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property. Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title.
Title companies also maintain escrow accounts, which contain the funds needed to close on a home. They need to make sure the money is used only for settlement and closing costs, and may conduct the formal closing on the home. At the closing, a settlement agent from the title company will bring all the necessary documentation, explain it to the parties, collect closing costs and distribute monies. Finally, the title company will ensure that the new titles, deeds and other documents are filed with the appropriate entities. Since most home buyers (and many home sellers) do not live locally, people don’t go in for formal signings in our Lake Tahoe offices. This step is often conducted digitally over the internet or with the title company’s branch offices.
What is Title Insurance?
Once the title is found to be valid, the title company normally issues a title insurance policy, which protects lenders or owners against claims or legal fees that may arise from disputes over the ownership of the property. There are two main types of title insurance: owner’s title insurance, which protects the property owner from title issues, and lender’s title insurance, which protects the mortgage company. The home buyer will pay for the lender’s title insurance when you close on the house, but it’s also a good idea to make sure you have an owner’s title insurance policy as well (in some areas of the country, sellers pay for these policies; in others, the buyer must purchase it). For example: You buy a home and get both lender’s and buyer’s title insurance, but then someone comes forward claiming they are the rightful owner of the home. If, in fact, the title was wrong and they are the rightful owner of the home, your title insurance policy will likely pay you the value of the home and the lender the amount they lent you to buy the home.
How does a Title Company Determine a Title is Clear?
The title company makes sure a property title is legitimate, so that the buyer may be confident that once he buys a property, he is the rightful owner of the property. To ensure that the title is valid, the title company will do a title search, which is a thorough examination of property records to make sure that the person or company claiming to own the property does, in fact, legally own the property and that no one else could claim full or partial ownership of the property. During the title search, the title company also looks for any outstanding mortgages, liens, judgments or unpaid taxes associated with the property, as well as any restrictions, easements, leases or other issues that might impact ownership. The title company may also require a property survey, which determines the boundaries of the plot of land that a home sits on, whether the home sits within those boundaries, whether there are any encroachments on the property by neighbors and any easements that may impact an ownership claim.
Before a title company issues title insurance, it will prepare an abstract of title, which is a short summary of what it found during the title search (basically, this is the history of the ownership of the property). Then, it will issue a title opinion letter, which is a legal document that speaks to the validity of the title.
How do You Choose a Title Company and What do They Charge?
I will recommend a good title company that is good from my many years of experience but you can choose the title company yourself. Look for a title company that has years of experience doing this (have they done hundreds or even thousands of these kinds of transactions?). Contact the Better Business Bureau to determine whether the company has any complaints against it. You should also shop around for the best premium rates in your area; if you buy an owner’s title insurance policy, make sure you get one with as few exclusions as possible and that it covers the full purchase price of the home.
South Lake Tahoe Title Companies
We have excellent choices of title companies in South Lake Tahoe. I trust their knowledge, expertise and attention to details. When we are working on your home purchase together I will suggest the company that is right for you.
You may meet with or talk to an agent from the title company on multiple occasions. First, you may decide to meet with a few agents from title companies before you buy your home to help you decide which company to go with. If the title company maintains an escrow account for you, the agent may reach out to you to provide details on that account or you may contact him or her with questions. If your title company handles your closing, you will meet with a settlement agent in person then. At this time, the settlement agent will explain all the documents related to the settlement before you sign anything. And, of course, if something goes wrong with regards to the title, you will likely meet with one of their agents then. You should feel free to contact your title company at any time to get answers to your questions on title searches, title abstracts, title insurance, escrow accounts or closings.
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