Doing a Short Sale, Wholesale Deal, Seller Financing or Buying/Selling a Lease Option or Rental? The most important player on your team should be the Title Company. They can make or break a deal.
What is a Title Company?
The title company is a very important part of the process for any real estate closing. A title company is a neutral party that examines the title, issues a title commitment and acts as escrow agent. They record the documents and insure the title to the property.
What Does a Title Company Do?
It is the job of the title company to coordinate the interests of all parties to a real estate transaction including the buyers, sellers, realtors and mortgage lenders in the transfer of real estate.
They will sit down with the parties and explain the documents as well as disburse all the money collected at settlement and pay all the third parties.
They will also send the money to the mortgage company and work with the mortgage company to make sure that a release is filed in the county records.
Why is a Title Company Important?
Title Companies provide assistance in title matters ranging from simple contractual questions to more complex issues involving trusts, probate, bankruptcy, notes, seller financing, land contracts, short sales and foreclosures.
Often their escrow agents or closing officers, are available to provide the knowledge and legal consultation to ensure every transaction closes properly.
Every Real Estate Investor needs to have a Title Company as part of their “Dream Team”
Every Real Estate Investor needs to have a Title Company as part of their “Dream Team” that can handle complex closings, quick closings, creative financing and deal structures. They are the ones that actually close deals and control the closing process. In the end, they ensure that you get your $$. Simply as that.
What is Escrow?
An escrow is an agreement in which a neutral third party holds legal documents and funds on behalf of both Buyer and Seller and completes the transaction according to their instructions. An escrow agent provides a safe, convenient method for the transfer of real estate.
An Escrow Agent or Closing Officer prepares the instructions from the Buyer and Seller, receives funds from the Buyer and/or the Lender, opens the order for title insurance, pays liens and costs authorized by both parties, and prorates insurance, taxes, rent and interest on liens to be assumed.
What is a Title Commitment/Insurance?
A title commitment is essentially an offer to insure the title to the real property that you are going to purchase. It starts with a Title Search. A search of public land records affecting the real estate being purchased.
The title agent conducts an examination to determine whether the property is insurable. The examination is intended it report any documents in the property's history that don't clearly transfer title. Here are a few:
- Deeds, wills, and trusts that contain improper wording or incorrect names
- Outstanding mortgages and judgments
- Liens against the property because the seller has not paid taxes or utilities
- Pending legal action against the property that could affect the purchaser
The title insurance commitment states the conditions under which it will insure the title and exist simply to reduce your exposure to potential risks or claims to your property in the future.
How to Partner with a Title Company
First we would want to look for Investor friendly or knowledgeable type of companies. Start by:
- Asking other Investors, Banks, Lenders for Referrals
- Contact them & request new client packet
- Run a small test deal through & record results
A bonus for having a great Title Company as your partner is that they stay up-to-date with all of the new laws and will help steer you in the right direction to ensure all of your deals close properly and you get your hard earned money.