What does a Title Company have to do with buying a home?

Good Question! Title companies are a very important aspect of a property transfer. A title company does property record research to mitigate potential title discrepancies for a new buyer. Just like your car has a title, homes do too, we just don't normally transfer them by hand from one to another like we might when selling a used car.

A title company will look for any clouds on a title and try to resolve them prior to closing. They look for items such as improper execution of documents, forgeries, missing heirs that have rights to the property, unpaid taxes or assessments, judgements and leans, fraudulent actions and mistakes in recordings. The title company does these searches to verify the title to the home you are purchasing is clear of any issues which could become a legal issue for you later on.

Once the title company has researched and corrected any outstanding items, they issue "Title Insurance" on behalf of the seller, which is an insurance policy that protects the buyer. It gives a buyer evidence that the seller is the true owner of the property and that the property is free of issues or "defects". The tittle insurance is a guarantee that the seller is selling a property with a clear title.

An Owner's Title Policy is designed to protect you from defects that existed prior to the date of issue. If you do end up being notified of a title issue that is within the terms of the policy you can file a claim on your Owner's Policy. This will cover financial losses up to the amount of your policy.