The Title Professionals - "We Close The Deal.", Real Estate Settlement

Why Do I Need a Title Company for My Settlement?

Once you have decided to buy or refinance your property, you will need to select a title company to coordinate the closing and issue title insurance. For closings involving the sale of property, the title company acts as an impartial intermediary and escrow agent between the buyer and seller to make sure that all of the terms of the sales contract are carried out. It ensures that the purchaser delivers the money for the property and that the seller delivers a clear title to the property to the purchasers in the condition promised in the sales contract.

After the purchaser or the purchaser’s agent schedules a closing, the title company conducts a title search on the property, determines whether the seller has good title to the property, and ascertains whether there are unpaid liens, mortgages or unpaid taxes against the property.

The title company contacts the Homeowner / Condominium Association to determine the dues information for the property, including whether there are any delinquencies. In most cases the title company will also order a house location survey. Finally, the title company contacts the seller’s mortgage company(ies) to determine how much is required to payoff any mortgage(s) against the property. If the buyer is financing the purchase through a commercial lender, the title company provides that lender with the information needed to set up the loan, such as the tax data, the survey, the lender’s title insurance binder, and the termite report.

When the loan instructions are received from the mortgage company, the closing agent prepares a final accounting, known as a “HUD-1 Settlement Statement” or “HUD-1". All of the expenses associated with the transaction are tallied to determine the bottom line for both the buyer and the seller. The HUD-1 includes all fees paid to the purchaser’s lender, any proration for property taxes and homeowner/condominium dues, agents’ commissions, closing costs credits, recording fees, and any other expenses associated with the closing.

On the day of the closing, the title company conducts the settlement, during which the settlement officer has all of the documentation from the purchaser’s mortgage company signed and completed. The seller signs the deed and other forms necessary to complete the transfer, including the tax forms and payoff letters.

The title company then updates the title search (to make sure that nothing has happened in the interim), records the deed and the new mortgage(s) in the city or county land records, pays all service providers associated with the transaction, pays off any mortgages on the property, and disburses the proceeds from the sale to the seller(s). The title company also issues the owner’s and lender’s title insurance and returns the loan papers to the purchaser’s new lender. When received, the title company records the releases for the seller’s old mortgages to clear the title for the purchaser.

For refinances, the title company performs many of the same functions listed above. With a refinance, the title company acts as an intermediary between the home owner, the new mortgage company and the old mortgage company. The title company issues lender’s title insurance, ensures that all of the appropriate parties are paid, and that the land records are amended to reflect the change of mortgage companies.