Frequently Asked Questions
What does a title company do?
A title company serves two primary roles in a real estate transaction:
The first role is a title search and examination of the property. A careful search of the public records is made to search documents which may affect the title to the property. These items may include mortgages, liens, unpaid taxes, easements and other restrictions which may encumber the property. Upon completion of the search and examination of the property, a title insurance commitment is prepared which sets forth the requirements for establishing good and marketable title to the purchaser. The title commitment will also reflect any restrictions or other exceptions which may encumber the property.
The second role is known as the "escrow process." The title company, through its escrow officers, oversees the closing of the transaction and insure that all of the terms and conditions of the sales contract have been satisfied. The title company handles all of the disbursements within the closing and make sure that all necessary documents have been executed in order that at the completion of the transaction, the buyer receives good and marketable title to the property. In many instances, a lender is involved in providing funds to assist the buyer with the purchase price and the title company insures that it has followed all the closing instructions provided by the lender.
After the closing, the title company will record all necessary documents, forward all payments to any prior lender, and pay all parties who performed services in connection with the closing.
What is title insurance?
A home is most likely the largest, single investment any of us will ever make. When purchasing a home, you will purchase several types of insurance coverage to protect your home and property. These insurance coverages include casualty insurance against loss from fire, theft or wind damage, flood insurance protecting against flood waters, termite insurance protecting against future termite damage.
Title insurance, while not as well understood as other types of insurance, is just as important. When you purchase a home, you are actually purchasing the title to the property which includes all permanent improvements located upon the property. That title may be affected by rights and claims asserted by others which may limit your enjoyment and use of the property. There also may be other claims to the property which may cause large financial losses. Title insurance protects against these types of title hazards.
Unlike other insurance policies, title insurance premiums are charged one time and the policy is in effect for as long as you own your property. In Garland County, title insurance is generally paid for by the seller and the buyer, if obtaining the mortgage from a lender, provides the lender with a policy of title insurance which protects the lender. Title insurance premiums are generally based upon the amount of coverage required which will be the sales price and/or loan amount of the transaction.