Buying and selling real estate is absolutely not an easy proposition; countless factors have to be considered, exhaustive researches have to be carried out, important legal and financial matters have to be handled efficiently, and endless paperwork has to be done meticulously. In such a complex scenario, the helping hand of the Title Company provides the much-needed assistance and peace of mind.
What is a Title Company?
Before dealing with the definition of the Title Company, it is imperative to understand the term Title. A Title is primarily a document that confirms that a particular company or person is the owner of the property. It differs from Possession, where a person only holds the property, irrespective of whether he has any right to do so or not. Title, on the other hand, authenticates true ownership.
The company that search for such Title Deeds is called a Title Company. In addition to this, the company reviews the title thoroughly to validate its authenticity and also tries to examine all the financial and legal issues related to the property. Furthermore, it aids the smooth closing of the real estate deal.
What exactly do Title Companies do anyway?
The primary duty of a Title Company is to search for the Title Deed to determine whether the seller is the legitimate owner of the property or not. Aside from the ownership details, the title company also search for possession details. False claims can affect the deal adversely; for this reason, Title research is essential.
The next significant responsibility of a Title Company is to find out all the financial and legal upheavals that are bordering the property. Pending Litigations, first and second mortgages, debt, back taxes, mechanical liens, and so forth are matters of grave concern. Though they have to be tackled by the seller, but when the deal finishes, the buyer then becomes the genuine owner of the property and thereby acquires all these hassles. If you wish to acquire a clear and clean title, hire a Title Company without a second doubt.
Another important responsibility of the Title Company is to help in closing the deal correctly. When the deal is about to be sealed, tons of documents have to be read and signed. A good company not only makes the process really easy, but also helps you to understand all the intricate terms and phrases. When your mind is clear of confusion, you can think about and enjoy your newfound landowner status.
Many such companies are operating in Texas. All these title companies have an almost common vision, which is to become popular for putting the benefits and comfort of the customers first. They do this in an aggressive manner focused on facilitating the customers in real estate transactions.
Their shared goal is to provide hassle-free transactions in a way that actually benefits the customers and give them the peace of mind. The title company will do research about the real estate records where the property to be transacted is located. They prepare an abstract that will have the following contents:
- To make sure about who is the actual owner of the property.
- To bring out any hidden mortgages, judgments or caretakers of the property, if any.
- To bring out in open, the cases regarding the non-payment of taxes.
- Every detail regarding the leases or restrictions that may put forth problems in the path of property transactions.
After they complete the research for the abstract, the title company will handle “title opinion letter,” and if there is title insurance, then it will prepare a “Commitment of Title Insurance” to the respective buyer.
There are several types deeds on property rights to buyers, and the typical one used in residential property sale is called the General Warranty Deed. The title company is in charge of the Deed. They also take care of handing out Seller’s affidavit which is a list of questions for the seller. This questionnaire is mainly created to make sure that there is nothing wrong with the information since the company performed its research.
The company may release information regarding your transaction, and this is called privacy statement. They may have to disclose some information under unavoidable points such as declaring the sales price of the property to the county. Do not forget to read this statement.
There are other documents the title company takes care of. The IRS W9 will be reported to the IRS stating the amount received from the transaction. The Pay Off Agreement indicates that the title company is depending upon the payoff statement being accurate and that you agree to hold them not responsible in case something is wrong with the payoff statement.
Texas Title Insurance Fees
In Texas, title companies are controlled by the Texas Department of Insurance, and they define what costs are charged, how funds may be held and dispensed, and other procedures. They all charge the same premiums, and they charge escrow fees for processing transaction, document preparation, and recording.
Closing costs on a $200,000 deal in Texas usually top $5,000, including title insurance. (Prepaid taxes and homeowners’ insurance are extra.) While out-of- pocket expenses can be decreased with a higher interest rate, that slightly shifts the expense.
Beyond the title, most charges can be negotiated between the seller and buyer. On a new home, sellers usually pay some expenses, too.
For many years, Texas has ranked amongst the leaders in title charges. Texas’ high title costs explained some of the past high rankings. Origination fees to sellers and buyers are the biggest costs, followed by fees for closing and document prep.
Such costs are estimated when applying for a loan and even when shopping for mortgage rates online. State rules may be the reason behind higher title costs. The premiums in Texas are higher than anywhere else.
It is important to find a reliable title company. Expect a smooth sailing closing process when you deal with a good title company. So do not rush when deciding whom to choose.