The Title Process is a vital part of the buying and selling of property, as it both establishes who legally owns the property to be sold and conveys the title (and all attendant ownership rights), to the new buyer.
When a sales contract is pending, the title company begins preliminary work. An experienced title agent performs a thorough search of all public records concerning the property. These records consist of all county, municipal and other documents held in a data information storehouse maintained by the title industry known as a “title plant”.
The agent is searching for any issues against the title known as “defects” or “clouds”.
These defects may unpaid taxes or assessments, another mortgage, heirs who claim title, the use of fraudulent documents or something as simple as an incorrect name spelling.
Until these defects are remedied, no clear title can be established and the title process is delayed. After the clouds have been cleared, the title process resumes and a Title Commitment is drawn up.
The Title Commitment
The Title Commitment is a document showing what the title insurance company is willing to insure in regards to the property and what they wish to exclude from coverage. The buyer has a few days to look over the commitment, ask questions, and even argue for inclusions before accepting the Title Commitment.
Once accepted, the title company will issue either an Owner Title Insurance Policy and/or also a Lender Title Insuranc Policy. These policies protect the parties from financial loss from any defects that crop up
from the past history of the title (called the chain of title) that might have been missed in the title search. The title policy also lets the buyer know that the title company will stand with them in court, should there ever be a challenge to the tile anytime in the future. The owner is covered as long as he or she owns the property. A Lender Policy protects the mortgage company from such losses as
Once the closing agent (who can also be your title agent) is satisfied all the paperwork is in order, the closing is scheduled and the time, date and location given to all the parties involved. The checks are exchanged and the title conveyed to the new owner of the property.
Afterwards, the title is recorded at the County Recorder’s Office, giving the public notice that you are the property’s new owner.
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