If you’ve never purchased a home before, you might not know that—in addition to the seller and buyer—other parties usually have to get involved to transfer ownership. Even among long-standing homeowners, many forget just how vital a title agency is to ensuring that a purchase can go through on time and without error.
In this article, we’ll answer the question, “What does a title agency do?” in order to give you a better idea of why these professionals are so important.
What Does a Title Agency Do?
To understand what a title agency does, it’s best to first take a look at early American history, when property titles were transferred using a conveyancer. These legal professionals would research a property’s history to ensure its title was unencumbered.
Today, title insurance companies have assumed this role to help simplify the buying process and make sure that no steps are missed. They work with you, your lender, and the seller to ensure that there are no underlying issues on the title that could prevent you from valid legal ownership.
A title agency’s role in the transaction includes detailed research of the property’s chain of title (the complete history of the property’s ownership).
Referred to as a “title search,” this process looks for any possible liens or claims on a property to confirm that its title can be transferred “unencumbered.” But it’s not a guarantee, so that’s where title insurance steps in.
What Does Title Insurance Do?
Title insurance protects an owner or lender from financial loss should any claims on the title become an issue. Since the 1880s, title companies have offered insurance policies that protect buyers and lenders should any issues on title arise.
A title agency will help arrange both owners’ and lenders’ title insurance.
In Florida, lenders’ title insurance is often required by your mortgage lender as a condition of your loan. Owners’ title insurance protects the borrower, or purchaser, of the property from previous debts, liens, or encumbrances. And yes, this is important even for newly constructed homes.
What Is a Deed vs. What Is a Title?
Let’s be honest, real estate jargon can be complicated and confusing. If you’re not using it regularly, it’s easy to misconstrue terms, which happens all the time with deeds and titles. If you thought they were the same, you’re not alone.
A deed is a legal document that transfers property ownership from one party to another. A title is a document that says an individual has ownership and the right to use the property how they choose.
Therefore, the best way to understand the difference between the two is to know that a deed is the documentation vehicle used to transfer title. Deeds must be written, notarized, and entered into the public record for the title to be transferred.
What Can a Title Search Uncover?
Think of a title search as a property inspection, but instead of looking for leaky pipes or a faulty roof, it’s looking for legal issues from the past that could impact the validity of your ownership.
What does a title agency do during a title search? They dig into public records of a subject property and review the chain of title. It’s a title agency’s focus to find any possible claims or liens that may end up interfering with the buyer’s legal ownership.
The last thing you want to happen is to purchase a property thinking you have full legal ownership, only to find out there’s a distant relative of a previous owner who also has a claim to it.
Some items that are examined during the title search are:
- Ensuring that the listed seller actually has the right to transfer ownership of the property and that they are not making any fraudulent claims;
- Uncovering outstanding claims against the property, including those that contractors or creditors would have filed;
- Finding out if there are any unpaid dues or taxes on the property.
Protect Your Investment
With a title search, a title agency confirms that a seller does indeed have the right to sell a property and that there are no defects in the title history. Title officers have extensive experience and understanding of the legalities involved in property ownership and the transfer of title.
We are the professionals you want working on your behalf to sort through the legal documents and protect your interest in a property. Otherwise, in a worst-case scenario, you could be making a significant investment in an asset you don’t actually have legal ownership of.
While a title agency does thorough research into the chain of title, that’s not enough to guarantee that there are no unfiled or unforeseen issues with the property’s ownership. Therefore, title insurance can be the savior of both lenders and buyers.
Let Leading Edge Title Take Care of You
Leading Edge Title has been in business since 1998 and has completed more than 15,000 closings. Our extensive experience means we have the expertise to complete your title search, source title insurance policies, help with refinancing, and lead the way to your new home. We can even help make sure a reverse mortgage is done properly.
Call or stop by our Winter Park or Winter Springs locations to find out how we can help you.