What Is a House Title?

A house title is a legal concept that refers to the legal rights of property ownership. More specifically, a title gives a homeowner the following rights:

• Right of possession
• Right of control
• Right of use and enjoyment
• Right to allow others a right to use
• Right of transfer through selling, gifting, or inheritance
• Right of privacy and exclusion of others
• Right of collateral for a mortgage

When buying a home, the seller will transfer these ownership rights to you via a physical document called a deed. The deed is then filed with the county government to maintain a record of the property’s title.

What Is a Title Company?

A title company is a third-party company that works with homebuyers to ensure that the house title is transferred smoothly and legally. They provide a variety of services in a real estate transaction, including a title search, surveys, title insurance, and various closing and escrow services.

Roles of a Title Company

Verify the Title

The company will conduct a title search to establish the property’s complete ownership history, also called the chain of title. This involves searching public records for anything that could impact the buyer’s right to ownership, such as additional owners, outstanding mortgage loans, unpaid property taxes, and more.

Perform a Property Survey

A property survey verifies the property lines and confirms that your and your neighbor’s structures aren’t encroaching on each other’s properties. Depending on where you live, you may or may not be required to complete a survey when buying a home.

Hold Money in Escrow

When entering a contract with a seller, you may be required to provide earnest money. The title company will hold on to this money and, if you go through with the contract, put it toward your down payment and closing costs.

Perform Closing Services

Title companies also typically offer settlement services, including preparing documents, appointing a notary or real estate attorney to review them, and scheduling your closing. Once you’ve completed the closing process, the title company will finalize the title transfer by filing the deed with the necessary county official.

What Is Title Insurance?

While a title search and property survey are usually sufficient to suss out potential issues, they’re not foolproof. Title companies offer two insurance policies, one for the lender to protect its interests and one for you to protect yours. Title insurance is paid for with a one-time premium, which costs between 0.5% and 1% of the purchase price of the home.

How to Choose a Title Company

Your real estate agent may recommend a title company for you to work with, but it can be a good idea to shop around to ensure you get the best service without being overcharged. Here are some steps to finding a good title company:

• Ask for a referral: If you trust your real estate agent, you can save some time by working with their preferred title company. If not, consider asking friends and family members for recommendations.
• Research online: Look for customer reviews to get an idea of what you can expect.
• Ask questions: Contact title companies and ask about their services, title search process, fees, and internal controls to keep your funds safe.
• Verify ownership: Ensure the company is a neutral third party and check if they are a local company or owned by a national firm.

Frequently Asked Questions

Who Picks the Title Company?

Typically, the buyer chooses the title company, but the seller may have a preferred company as well.

Do I Have to Work With a Title Company?

Yes, your lender will typically require you to work with a title company to ensure the title is transferred smoothly and legally.

What Documents Does a Title Company Need?

The title company will need various documents, including the purchase agreement, mortgage documents, and identification.

The Bottom Line

Title companies perform several key roles during the homebuying process, primarily to make sure that the process of transferring the title to the property—and the rights that come with it—goes smoothly. Your lender will typically require you to work with a title company, but you can usually choose which one you work with. Take your time to shop around and compare services, fees, and other factors that are important to you to ensure a good experience.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate the homebuying process with ease and confidence.