Protecting Buyers and Sellers: The Importance of Title Companies

The Greater Cincinnati real estate market has seen strong growth despite industry setbacks caused by the COVID-19 pandemic. Real estate professionals attribute this to low interest rates and inventory shortages. While the longevity of the current growth is unpredictable, the need for title companies is constant.

What do Title Companies do?

Through their title agents, title companies research a property’s chain of title—its ownership history, physical description, and encumbrances. Title agents search public records to discover previous owners, prior or outstanding mortgages and liens, or other encumbrances against the property, such as unpaid real estate taxes.

In discovering encumbrances, title companies assist buyers in determining whether they will own the property outright. However, if the title exam reveals an encumbrance, the issue can typically be resolved without delaying closing.

In rare circumstances where encumbrances cannot be resolved, buyers should abandon the purchase. Consider the following example. A grandmother deeds her home to two granddaughters, Eleanor and Isabelle. Eleanor decides to list the property without telling Isabelle. Shortly thereafter, she accepts Harrison’s offer. During the title exam, Excel Title Services discovers Isabelle’s interest in the property. Despite Harrison’s offer, Isabelle refuses to sell. If the sale proceeds, Harrison would own one half of the home and Isabelle would own the other half. If Isabelle refuses to sell, Harrison’s lender will not commit funding because Harrison would not own 100% of the property. Without funding and faced with the prospect of co-owning property with a stranger, Harrison should walk away.

Do Title Companies Provide Other Services?

Title companies also sell title insurance and offer escrow and closing services. Title insurance policies protect property owners by paying the cost of resolving third-party claims against the property that either (a) do not appear on the initial title exam or (b) arise after closing. Even the most thorough title exam may not discover all title encumbrances.

Title companies also facilitate real estate closings and maintain escrow accounts. Title agents collect necessary signatures and monies for the closing, and then hold both in escrow until all parties authorize closing and disbursement. Following authorization to close, the title company ensures that the funds are correctly transferred to the appropriate recipient and all documents are properly recorded.

Why use a Title Company?

Buying and selling property is more complicated and nuanced than one might anticipate. Often, buyers are spending life savings or owners are selling a cherished family home. The right title company understands that this is more than just a transaction. Title companies can relieve some of the associated stress by reassuring buyers of what they are purchasing and ensuring sellers are accurately compensated.

Whether a first-time homebuyer or a seasoned real estate investor, it is best practice to utilize a title company with an experienced and dynamic staff who can meet a client’s diverse needs and exceed expectations. Excel Title Services has a team of title insurance professionals and attorneys who are ready to assist you in your next real estate transaction.