Unless you are a person who is really experienced in real estate purchases and sales, you will probably not have had much experience with title companies. The fact is that most people are not really sure what the purpose of a title company is in a real estate transaction.
However, what most people do know is that they do not want any problems with the title or deed to turn up after they have made a real estate purchase. A property title should be free and clear from any and all liens and encumbrances before the deed goes from the seller to the buyer. Once this legal transaction takes place, the seller becomes legally responsible. Therefore, it makes absolutely no sense to buy a property without making sure that the title is free and clear.
Well, that is where a title company comes in, and why it is so handy during a real estate transaction. You can go and spend valuable time and endless hours at the county records office becoming familiar with doing an abstract of title, or you can let the title company handle everything.
You need to let someone who has experience in these matters handle the abstract of title because it is what determines whether any liens or encumbrances exist on the property, and if anything can arise later that might throw a wrench into the claim of ownership.
Among other things, the title company will investigate marriages, divorces, court judgments, CC&Rs, tax records, maps, claims, liens, deeds, mortgages, etc. and try to find anything that will get in the way of your ownership claim.
The title company will conduct the abstract of title and then it will issue the title opinion letter and or the commitment of title insurance. You will find that these documents will list the things that need to be corrected and everything that needs to be completed for the buyer to receive a free and clear title. The commitment of title insurance is very important because it is what will protect you from any future claims. It makes the title company legally responsible if it missed any problems when it did the abstract of title.
You will find that things usually go much more smoothly when there is a title company involved. It will orchestrate everything between all the parties involved and make sure that things get done. The title company will record all the legal forms like the mortgage papers, the deed and the assignments at the county courthouse when closing is done.
In summary, the title company is there so you do not have to waste your time if you are not familiar with the process. It is also there to make sure you do not get burned by a title that is not free and clear. You want to move into your house and begin to make it your home. Unless you are certain that the title is free and clear, the property can never really become your home. Therefore, the title company has a vital role in a real estate transaction.
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