What’s a Title Company
The use of a title company in a real estate transaction makes sure that the property being sold is free from anyone’s legal claim to that property. Property is often used as collateral on loans. A mortgage company lends money to someone so they can buy a house. The house is used as collateral for that loan. Sometimes a property is left as an inheritance to the heirs of the owner. In each of these circumstances someone has a financial interest in the property. Or in professional terms they “have a claim to title” on the property. It’s title’s job to see that when the ownership of the property transfers to a new owner the interests of those other parties are compensated. In other words, title makes sure that the people who are supposed to get paid in the sale of the house get paid!
Title will do extensive research to identify and then notify the parties who have a claim to the title of the house. This could be the mortgage lender who made a loan to the owner for the purchase of the house. Or it could be a 3rd party who made a loan to the owner and used the property as collateral. There are a lot of scenarios where someone has a legal claim to the property. It’s so important that all these claims be settled before the property is sold to a new owner that title sells title insurance for each real estate transaction they are hired to research. The insurance guarantees that if anyone comes forward with a legal claim that hasn’t been addressed after the sale of the home the title insurance will pay that party’s claim to the property.
This process is meant to protect every involved in the real estate transaction. From the seller who has financial obligations on the property to the buyer who wants the house free from anyone’s claim to the property when they buy it. So if you decide to sell you house to an investor directly or through a real estate agent you’re going to need to use title to complete the sale.