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WHAT IS A REAL ESTATE TITLE?

Most people are familiar with the inspection and appraisal portion of the real estate transaction but what about the title? The title process of the real estate transaction is the process in which all public records are reviewed to ensure you are purchasing a property with a clean bill of legal health. Click the link below to learn more about the title process.

 


  1. The title process begins when the bank orders the title work from a title agent. So what is title work?  Title work is the process in which public records are researched to ensure for the bank that the property will be sold or conveyed with a marketable title. You can shop around for a title agent or you can rely on the recommendation of a real estate professional or your lender. One key thing to know about title work is the title agent typically represents and performs the title work on behalf of the lender, not the buyer or seller. 

  1. A marketable title is just a fancy way of saying that the property you are buying is free from the threat of litigation. Title work will check a property for marketable title by taking a proactive approach to researching the chain of title and property for any current or potential issues. A majority of the title search will be done by researching public records such as previous deeds, mortgages, zoning documents, plats, surveys, and more. The property and boundaries are also researched via a property survey. A property survey can ensure that all the structures on the property are within the property lines and the neighbors do not have any structures on the property you are purchasing. If any of these items are discovered they are corrected as per the purchase agreement.


  1. One of the final steps in the title process is putting together a closing statement for the buyer and seller before the closing. The closing statement is a breakdown of all the costs and numbers involved with the sale. These costs are constructed from the real estate purchase contract and are established at the time of negotiating the purchase agreement. Some of the most common costs at closing are property tax proration, county conveyance fee, real estate commission, and deed preparation. Other fees associated with the title process are a settlement fee, title search, closing protection coverage, lender fees, and title insurance


  1. There are two types of title insurance - a lender's policy and an owner's policy. When you obtain a loan, the lender will require that you purchase a lender's title policy to protect their investment in the property. Owner's title insurance is optional, but it protects the homeowner by paying claims and legal fees should a problem arise. A Lender's Title Policy does not protect the owner, only the lender. A Lender's Policy protects the lender's interest in the property should a problem arise. It does not cover the owner's equity in the property and will not pay the homeowner's legal expenses if there is a problem. Only an Owner's Title Insurance policy will protect the homeowner. The cost of title insurance is a filed rate with the State of Ohio Department of Insurance and should be consistent by all providers. However, the title exam and closing services may vary based on the company you work with. Further advice regarding a title policy should be found via an attorney.


  1. One surprise that many buyers and sellers come across is the Notice of Closing Protection Coverage. By law, the title agent must provide you with a Notice of Closing Protection Coverage. This coverage generally protects you, if you purchase coverage, in the unlikely event the title agent disburses your funds in an inappropriate manner causing a loss to you or to your lender. You will be notified of this coverage prior to cloning during the title period and ask at closing if you want the coverage.


  1. The title process typically runs very smoothly in the background of a transaction. Overall the process of title is a massive research project into the public records of the property being sold. If any issues are discovered the purchase contract will outline the party or parties that are responsible for correcting the issues. Keep in mind your real estate professional will be working with the buyer, the seller, and the title agent to ensure that things are running smoothly and everyone is up to date on the events of the search. Once everything is complete, it is time to prepare for everyone's favorite part, the closing.