According to Real Estate Settlement Procedures Act you have the right to select your own title company. It’s up to you which title company represents you in the home buying transaction. You can ask your agent for suggestions, but ultimately it is your decision. By choosing your own title company, you can be sure that the person representing you will act in your best interests and not gain anything from the deal.
What is a title company?
Title companies are there to conduct a thorough search of the title and ensure that the property has been legally transferred from seller to buyer. The title is proof that you own the property. They are therefore an important part of your home buying process, and one that you shouldn’t overlook.
What to ask when choosing a title company
• Does my title insurance company represent a neutral party? You should ask a potential title company to identify their client. You should always get the answer “you”. The Real Estate Settlement Procedures Act requires the company to reveal if it is owned by real estate companies, builders, or lenders.
• What is the average time it takes to do a title search? A title check should not take longer than two weeks. When you have a deadline for closing, it’s important that your company is efficient.
• What is your approach to title searches? Some searches are more straightforward than others. You are interested in how the company deals with difficult title searches.
• Will you perform a thorough search of the title and reveal the results? Answering yes should be the default. The title company must conduct a thorough examination of the property and provide documents to support any exceptions it discovers. Unfortunately, some title insurance companies only sell policies and take premiums.
• Am I Safe? Your title company must have internal controls and procedures in place. Make sure that the company has an escrow department and accounting department with full staff.
• Am I protected in my investment? A home purchase will probably be the biggest purchase you ever make. It is perfectly acceptable to inquire about the financial stability and reputation of the title underwriter. It is an independent company which rates title insurers. The company also reports on the ability to pay any claims made against title insurance.
• What is the experience of your attorney? For each title firm you are considering, you will want to know what experience they have. The attorney should have a lot of experience in the real estate settlement service. This person will determine whether you are legally allowed to purchase the property.
• What are your additional fees in addition to title insurance? While you might be tempted to choose a company with lower rates, you could end up not receiving core services such as title and closing. You may also have to pay for electronic delivery, overnight couriers, tracking fees, money wires, and release tracking fees.
• Is your company locally owned and run? A local title firm will be familiar with the laws and market conditions in the state you’re buying in. A non-local title company might outsource portions of the closing and the production of the commitment of title to another country.
• What is the ratio of your company’s title claims to its customers? The industry standard is 5%. You should consider looking at other companies if a company has a claim rate above 5%. If the company is claiming a small number of times, this means that they are thorough in their title searches and can resolve any issues quickly when they arise.
• Do your practices reflect industry best practices? American Land Title Association’s Best Practices include settlement services, accounting and data security. These practices protect title companies and their lenders. These practices are followed by title companies that belong to professional associations such as ALTA.
• How many years has the business been around? A company that is more established will have more experience in dealing with different types of issues and transactions. They will also be less likely to face financial problems, which could lead to them going out of business.
• Does the company respond to your calls or emails? Find out whether your title company is responsive and will answer any questions that you may have.
Have you got questions about choosing a title insurer? We would love to assist you.