Even though real estate agents of both the buyer and seller get most of the credit for a successful transaction, the title company is usually the unsung hero. The closing company works behind the scenes to prepare both parties to close the deal. There are a number of responsibilities that they have during this stage and they start right after the buyer and seller sign the sales contract and do not end until after the sale is closed.
The first responsibility right after the buyer and seller have signed the sale contract is to thoroughly look for any potential financial or legal issues that may stop the property transfer. A title company will look at all available records for competing claims to the property, usually known as encumbrances. Examples include pre-existing mortgages and tax liens. Once a proper examination has been conducted, the company prepares a detailed report for the parties, usually known as an abstract of the title. At this stage, the role of the title company is to identify and handle any encumbrances found.
Another task is to issue title insurance, which basically guarantees that the title doesn’t have any encumbrances. The buyer needs to buy adequate title insurance to protect the lender against any losses as a result of encumbrances on the title. Even though the property buyer can ideally get title insurance for themselves, most just get the required insurance for the lenders.
In most cases, the closing day concludes two transactions, the buyer’s mortgage loan and the property purchase. Each transaction has numerous documents associated with it, like insurance policies, deed, mortgage promissory note, etc. It is the role of the title company to prepare each of the documents and get the required signatures.
Homeowner’s and title insurance and property tax are among the fees that home buyers pay at closing. It is the role of the title company to collect the fees and put them in an escrow account for sending to the right companies and taxing agencies.
Recording The Mortgage and Deed
After the closing is done, it is also the role of the title company to record the deed and mortgage where the property is located. This makes the mortgage and deed part of the public record which acts as evidence of property ownership.
These are the crucial tasks that a title company does at closing. For professional title and closing services in Minnesota, get in touch with us today!