Definition of Title Company

A Title Company is an entity that ensures a property title is legitimate, so it can be freely transferred from the seller to the buyer.

They perform a title search, manage the escrow account during a transaction, issue title insurance, and facilitate a smooth closing process.

A Title Company in real estate is an organization that plays a key role in the closing process of a property sale. They conduct a title search to ensure the seller has a valid claim to the property and can legally transfer ownership rights to the buyer. The title company checks for any existing mortgages, liens, judgments, or unpaid taxes associated with the property that could affect the title’s transfer.

After the search, the title company usually issues a title insurance policy that protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title. They also manage the escrow account associated with the transaction and carry out the formal closing process, such as handling paperwork, verifying identification, and coordinating the payment of closing costs.

They act as a neutral third party to ensure all conditions of the sale are met by both buyer and seller, thus ensuring the transaction is conducted fairly and lawfully.

Related Real Estate Terminology

1. Title: A legal document that establishes ownership of a property.
2. Escrow: A financial arrangement where a third party holds and regulates the payment of funds required for two parties involved in a transaction.
3. Title Insurance: An insurance policy that protects the holder from financial loss resulting from defects in the title.
4. Title Search: An examination of public records to confirm a property’s legal ownership and find any claims or liens on the property.
5. Lien: A legal claim on assets which allows the holder to obtain access to the property if debts are not paid.
6. Closing: The final step in a real estate transaction where the title is transferred from the seller to the buyer.
7. Deed: A legal document that transfers title from one person to another.