Five Surprising Facts About the Title Search Process
The title search process can seem baffling and complex to outsiders, especially if they’re first-time homebuyers. Even with an understanding of the concept of title searches, title insurance coverage, and differences between the lender’s and owner’s policies, there’s still plenty that remains a mystery. The variability of the title search process, the number of roles involved in real estate closings, and the differences between local and regional regulations only add to the confusion.
In this article, we delve into the lesser-known details of the title search process to help homebuyers better understand what their title company does, and how they do it. Here are five facts about the title search process that may surprise you.
1. Title Services Processes Can Vary by Both County and State
Like many aspects of the real estate industry, title services processes are often dictated by location. The differences don’t only vary from state to state, but in some cases even from country to county.
Some states, such as Connecticut, Georgia, New York, and others, are known as “attorney states,” meaning attorneys are required to be involved in specific parts of the process. This can make the closing process more extensive, and can also affect how long it takes to complete a closing.
There’s also a good deal of variation in state and county regulations regarding the storage of records, as well as what’s required in a title abstract. Some states require a full, comprehensive history of the property, while other states may limit how far back an abstract needs to go. There’s also a good deal of variation on how counties store property records. Some counties have moved to a digital format, while others still retain physical files. This can affect how long it takes to retrieve records and compile the information needed for the abstract and the title search.
2. Title Insurance Coverage Can Vary by State
Your title insurance policy details will also vary based on the location of the property. That’s because the kind of coverage required for title insurance is regulated at the state level. For instance, some states require an owner’s policy to cover survey related issues. Not all do. This means that title policies and the coverage they provide, not just the title services process, can vary from state to state.
3. Title Agents and Title Underwriters Have Different Roles
Your title agent and your underwriter work together in the title and closing process. The agent is your local point-of-contact person, responsible for many behind-the-scenes tasks. This includes reviewing public records and looking for claims against the property, such as tax liens or judgments. The agent is responsible for determining whether any claims are still active, and what needs to be done to cure them so your sale can go through.
Title agents also verify whether any real estate taxes, special assessments, or property association dues are outstanding and notifies the responsible parties of any issues prior to closing. An agent is also typically a participant in your real estate closing transaction, making sure all the documents are signed and handled properly, delivered to the correct parties, and filed and recorded with local government offices.
Your title underwriter, on the other hand, is the insurer of your title insurance policy and takes on most of the financial risk and responsibility for title policies. Your title insurance owner’s policy is a contract between you and the underwriter, while a lender’s policy is between your mortgage lender and the underwriter. However, you’ll likely have much more interaction with your title agent, who will prepare and issue your title insurance policy for the underwriter.
4. Your Policy Is Good as Long as You Own Your Home
A lender’s policy will protect the lender’s stake in your mortgage for the life of the loan. Your owner’s policy, however, remains valid for as long as you own the home, even after you’ve made your last mortgage payment.
5. Your Policy Is Still Good If Your Title Company Closes
Since title insurance policies are in effect for such a long time, a question often arises about what happens if the company that insured your policy goes out of business or merges with another business.
Your policy will remain valid even if your title company or underwriter goes out of business or is acquired by another company. On the rare occasion this happens, that company’s “portfolio” of policies is absorbed along with them, similar to how accounts can be picked up by or transferred between companies in other industries.