Once you have a fully executed contract for the sale of a house, the next step will be the creation of an escrow account with a title company. A great number of people are confused about what it is that a title company does, and why they should become involved in the home buying and selling process in the first place.
A title company is a very important part of the transaction and is there to protect both parties. So what are we referring to when we discuss protecting the parties? They will actually guarantee the parties that you have what is called a clear title meaning the new owner will get the title on the property free of liens or and other clouds on the title. Unless a title company is able to produce a clean title report, such a cloud over the deal can cause the purchaser to walk away, unless of course the title company is capable of clearing up and guaranteeing the title for the buyer.
The title company will also work on other details of getting the public report or covenants conditions and restrictions for the community and getting them to the buyer for review. They also take care of all of the signatures for both seller and buyer. The bank will shoot over the loan documents to the title company, so that the title company is able to schedule the seller coming in to sign off on the property and to schedule the purchaser to come in to sign the loan documents and the other title documents.
Once all parties have signed and the loan documents go back to the lender for funding then it all comes back to the title company again for them to send it out for actual recording which officiates the transaction and puts the home in the name of the buyer and pays off the current loan and attaches the new loan to the property. Finally, the title company obtains the monies from the purchaser for the closing costs as well as down payments, and then they turn over all of the monies to the seller, after the home has been fully registered and the sale closed out.
A vast number of such title companies have gone out of business or had to reduce the numbers of offices that they maintain in the present housing collapse, and yet consolidation is not uncommon in this type of market. Your best option is to find a title company that has been in business for a fairly long time. If a house is owned by a bank, then the bank typically goes with its own title company which it typically utilizes for all of its home sales, although the buyer usually gets the privilege of selecting the title company of his choice.
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