The purchase of a home – whether it be your first house or your fifth – can be a whirlwind experience. So why should you be thinking about one more thing? Why should you be thinking about your title company?
Title companies are most often chosen by the buyer’s lender. But it is a law in the State of Maine that the buyer has the right to choose their own title company. In this article, I go through exactly what a title company does, and in a future article, I will discuss how to choose the right one for you.
First and foremost, the title company performs a title search, which determines if the person selling a property truly has the right to do so, and that the potential buyer is receiving all of the rights to the property (title) that they are paying for. The reason a title company conducts this search is to ensure the property is conveyed with free and clear title with no liens, outstanding mortgages, and that real estate taxes, water and sewer, are currently paid up.
When the title search is complete, the title company will then issue a ‘commitment’, which states the conditions under which it will insure the title. The title company processors then become the point of contact for the buyer, seller, brokers and lender. It is the processor’s responsibility to plug in all of the monetary figures associated with the transaction. Once all of the figures have been established and the lender has given the clear to close, the processor then contacts all parties to coordinate the closing date, time and location.
At this point, the processor awaits the lender’s documents and puts together the closing package with all of the necessary paperwork – some generated in-house and some from the lender. It is then handed off to the closing attorney who will facilitate the actual closing with the buyers, sellers, brokers and lender.
The title company’s closing attorney will walk you page by page through each of the many documents you will be required to sign, and there are a lot of them! It is very important for the title company to explain everything being signed. Once that is done, the transaction is complete and the new owners may officially move into their new home.
However, work continues behind the scenes! The title company must record certain documents, such as the deed and mortgage, at the Registry of Deeds. They are also responsible for sending the proper paperwork to the lender, and paying off mortgages, home equity loans, water/sewer bills, property taxes and HOA/condo fees, among other possible payments.
Usually within one month from the transaction closing date, the buyer will receive their final correspondence from the title company in the form of a letter which includes their owner’s title insurance policy and their recorded deed.
Title companies are truly a part of the home purchasing process, and I will explain in the next article how to choose the right one for you.