A Title Company is the party in a real estate transaction who insures to the buyer and to the lender that the seller has a right to sell (or that the borrower has a right to borrow against) the property, and that the “title,” or ownership (or, in the case of a lender, their lien), pending the completion of the transaction, will be superior to any other interest in the property by any other person or entity. This includes loans, real estate or other taxes, Homeowner’s or Condominium Association dues, water or utilities, and judgments. The term for this part of the title company’s job is determining whether the transaction is insurable. In order to determine that the transaction is insurable, the title company must examine the land records for any recorded instruments, examine the court records for any recorded or pending judgments, order and review tax certificates or lien certificates, review the tax records, and obtain information from any appropriate association or other company claiming any financial or other interest in the property. If there are problems or obstacles to insurability, typically the title company will take appropriate steps, if possible, to fix any problems so that it will be insurable.
Title Company is also the party responsible for moving the transaction forward to settlement, providing the lender with a title report (Commitment), obtaining financial information for the completion of the HUD-1 settlement statement, and obtaining lender instructions and documents for signature. The title company also conducts the closing, notarizing signatures, reviewing and explaining documents, and coordinating all the parties so that the transaction can be finalized in the shortest time possible, and meeting the needs of all parties to the extent possible
In addition to determining insurability, writing a title policy for the owner and lender, coordinating the parties, obtaining financial information for preparation of the HUD-1 settlement statement, and performing the settlement closing, the title company is also the escrow agent in the transaction. That means that all funds in the transaction, identified on the HUD-1 settlement statement, flow into the title company’s escrow account, and the title company disburses all funds to appropriate parties according to the HUD-1 settlement statement.
Finally, the title company is responsible for recording the deed and deed of trust/mortgage among the appropriate Land Records, that there are no intervening liens, judgments, or transfers prior to that recording, and that any paid mortgages/deeds of trust are released of record.