As part of the process of buying a home, the title company will run a title search on the
property and you will need to obtain title insurance.
Title Search
Lenders require a title search to prevent fraudulent sales.
They want to be sure that the seller is indeed the owner of the property.
The title search also attempts to uncover any "encumbrances" on the title.
This includes
liens (legal claims against a property) filed by creditors in an attempt to collect unpaid bills, as well as liens filed by the IRS for nonpayment of taxes.
Any such claims against the property must be paid before, or often at closing.
In most Counties, the seller generally pays for this search.
Title Insurance
As further insurance that the seller is giving the buyer a "marketable
title," the lender will require that title insurance be bought. There are two types of policies, and you should get both:
A lender's policy
An owner's policy
The lender's policy protects the lender in the event a flaw in the title is
detected after the property has been bought. The owner's policy protects you.
The title company acts as the middleman in the transaction. They cannot do
anything
without written instructions. They receive instructions from the seller or
seller's agent,
from the buyer or buyer's agent, from the lender and from any other parties
requesting funds
(i.e. from termite companies or home inspectors and from insurance agents).
If there are any conflicting instructions, they cannot proceed until the
conflict is resolved.
After your loan has been approved, the lender will prepare the documents that
you will need
to sign and they will send them to the title company. The escrow officer upon
receipt of the
papers will prepare them for you to sign. They will call you and set up an
appointment and
let you know exactly how much money you will need to bring in with you. After
you have signed
the papers the escrow officer will return them to the lender for review.
The lender will then "fund" give the money to the title company, who
will in turn record all
of the documents and disburse the funds to the appropriate parties.
