Everything you need to know about Title Insurance
What is Title Insurance?
Title insurance is the process of reviewing and checking for each title on a property. It is required by lenders for each type of transaction so that they are protected against any potential hazards that the property may have. When reviewing each title, a search is performed to check if there are any liens, claims, or bankruptcies on the property. This is done by examining public records and reviewing previous legal ownership. Based on the findings of these searches, the title company can flag any issues to the lender about the property, such as if there are building code violations, forgery, fraud, etc. Where homeowners insurance protects the borrower against future events/hazards on the home, title insurance protects the lender from past events that may have occurred under previous ownership.
Who is the Title Company?
The title company prepares a series of searches and documents related to the subject property. Check out this list of documents that we submit to the lender once the searches are complete. In certain cases, the title company can also act as the “closing” or “settlement” agent, in which case they would also be responsible for wiring funds. For a deeper dive on Title and what it is, check out our Title Deep Dive article.
What do we need?
In order for us to start the title process for your loan, we’ll need contact information for either your real-estate attorney, your title attorney or title company! Depending on what state you’re in, we will be working with your attorney with title, with a title attorney you select, or your title company. Check out this list to see which contact information we need by state.
The contact information should be a phone number, email, name of the title company, address, and name of the contact. If you only have one of these pieces of information, an email address is preferred!
Why do we need your title company’s information?
In order to get your title work approved by the lender, we need to add a few details to the documents your title company is working on, such as your loan number and the lender’s mortgagee clause.
Title can sometimes take up to 4 weeks to get back, especially during the busy seasons of home-buying. We want to make sure that you close on your home on time and as quickly as possible. The earlier we can reach out to the title company, the more likely we are to close on time. Each title company will vary in turnaround time and responsiveness, so getting us their information as soon as possible will help us meet your closing expectations!
Where can you find a title company?
As the borrower, you are able to select the title company that will work on your transaction. If you are having trouble finding one, we would recommend asking your realtor or attorney, if you have one. Feel free to email us at firstname.lastname@example.org, if you still need a recommendation!
If we aren’t able to contact the title company in time, it can potentially delay your closing. Obtaining all requested title documents early is vital in making sure you close on time. Please note that if you switch title companies, this may cause a delay in your closing. We try to get all title documents back from the title company a few weeks before closing, but depending on their responsiveness, we may run into a delay if they can’t send them to us on time, or make the revisions that are needed.
Here are some common issues that can occur during or after processing the title work include:
- Title search turn times can slow down the overall processing of title work. Searches can take a few weeks in certain states, so depending on when the order is placed and when your closing date is, it could cause a delay. The speed at which this gets done can also be up to the title company you select.
- Title companies occasionally do not realize that we sent the order, or the order has been sent to a spam inbox. In these cases, we try to get you involved so the title company knows that they should be looking out for the order from us.
- With new construction, tax certificates are sometimes inaccurate due to the certificate only showing the value of the lot and not the entire home. Some title companies will not estimate the taxes due on the home, which can cause problems with the lender when requesting final approval.
- Title companies usually work in order of closing date, so they may choose not to process one of our files because there are other transactions ahead of ours.
- Exceptions on title that affect the lender's lien position creating difficult conditions to clear.
- Title documents can contain errors or typos, that if not corrected before submitting to the lender, can cause a delay.
If you know of any judgments, bankruptcies, or liens on the property, buyer, or seller, let us and your title company know immediately so that we can get ahead of any potential issues the lender may raise once title work has been submitted to them.