A Title Company Provides Title Insurance and Related Services
A title company verifies ownership of real property, often done in connection with a
real property from buyer to seller. The valid owner is determined through a thorough examination of property records in a Title Search. The company issues a title certificate, based on its examination.
By tradition, in Northern California, escrow and title companies are combined.
In Southern California, there are separate
escrow and title companies
A title company provides title insurance and related services, such as researching a chain of title. Title companies also provide
Old Republic Title Company, Stockton Ca
Preliminary title Report A preliminary commitment to issue a
title insurance policy after payment of a premium, which occurs at closing. After the close of escrow, the title insurance company issues an owner's policy which is
negotiated in the purchase
contract and paid by the buyer,
seller or both and benefits the
new owner. Records are searched by examining the official
county records, where all recorded documents, judgments, liens,
tax assessments, special taxes, and other matters, such as divorce and bankruptcy, are filed. The results of this examination are set forth in a preliminary title report or "commitment" to insure the property. The preliminary title commitment is a means for the title company to inform all parties of all known burdens affecting the property and committing to issue its policy when certain requirements have been met. This assurance of a title commitment by a title company provides a safe procedure for purchasers and lenders to close transactions before the actual title policies have been issued.
Abstract of title
An abstract of title is the condensed history of title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate. In the United States, the abstract of title furnishes the raw data for the preparation of a policy of title insurance for the parcel of land in question.
An abstract of title should be distinguished from an opinion of title. While an abstract states that all of the public record documents concerning the property in question are contained therein, an opinion states the professional judgment of the person giving the opinion as to the vesting of the title and other matters concerning the status of the chain of title. Many jurisdictions define the giving of an opinion of title as the practice of law, thus making it unlawful for a non-attorney to do so. See also: List of real estate topics
is usually required by the
lender to protect the lender against loss resulting from claims by others
against the buyer's new home. In some states,
attorneys offer title insurance as part of their services in examining title and
providing a title opinion. The attorney's fee may include the title insurance premium. In
California, a title insurance
company or title agent directly provides the title insurance.
Owner's Policy. A lender's title insurance policy does not protect
the buyer. Similarly, the prior owner's policy does not
protect the buyer. If a buyer want to protect themselves from claims by others against
their new home, they will need an owner's policy.
When a claim does occur, it can be financially devastating to an owner who is uninsured.
An owner's policy is
usually much less expensive when purchased at the same time and with the same insurer as the lender's policy.
Choice of Title Insurer. Under
RESPA, the seller may not require
a buyer, as a condition of the sale, to purchase title
insurance from any particular title company. Generally, the lender will require title insurance from a company that is
acceptable to it. In most cases you can shop for and choose a company that meets the lenderís standards.
Review Initial Title Report. In many areas, a few days or weeks before the closing of the
escrow, the title insurance
company will issue a "Commitment to Insure" or preliminary report or "binder" containing a summary of
any defects in title which have been identified by the title search, as well as any exceptions from the title insurance
policy's coverage. The commitment is usually sent to the lender for use until the title insurance policy is issued at or
after the settlement. Buyers can arrange to have a copy sent to them (or to
their attorney) so that they can object if there are
matters affecting the title which they did not agree to accept when they signed the agreement of sale.
Coverage & Cost Savings. To save money on title insurance, compare rates among various title insurance companies.
Ask what services and limitations on coverage are provided under each policy so that you can decide whether coverage
purchased at a higher rate may be better for your needs. However, in many states, title insurance premium rates are
established by the state and may not be negotiable. If you are buying a
home which has changed hands within the last several
years, ask your title company about a "reissue rate," which would be cheaper. If you are buying a newly constructed
home, make certain your title insurance covers claims by contractors. These claims are known as "mechanics' liens" in
some parts of the country.
Survey. Lenders or title insurance companies often require a survey to mark the boundaries of the
property. A survey
is a drawing of the property showing the perimeter boundaries and marking the location of the house and other improvements.
You may be able to avoid the cost of a complete survey if you can locate the person who previously surveyed the property and
request an update. Check with your lender or title insurance company on whether an updated survey is acceptable.