We meet with home buyers and sellers every day, and one of the things that many people don’t understand clearly are title companies, title insurance, and how they affect them during the sale/purchase of a property. So, here is a quick primer on Title Companies, what they are, and what they do. If you have any questions or need a recommendation yo a good title company in NYC, feel free to Contact Us anytime 🙂
A title company is responsible for verifying that the title to a property is legitimate and that the seller has the rights to sell said property to a buyer. They do this by making sure that there are no barriers to purchase like liens, prior mortgages, fraudulent transfers, unknown heirs, and more. Once verified, the title company will provide title insurance which can protect the lender and buyer if title issues surface. FYI: Here in NYC about 1 in 4 properties come up with some sort of title issues.
Before issuing title insurance, a title company must do the following:
1. Perform a Title Search
Typically, the first thing a title company will do is perform a title search, tocheck if there are other people who have ownership or rights to the propertyIt can also reveal outstanding mortgages, any other existing liens, unpaidHomeowners Association dues, judgements or unpaid tax liens, restrictions, easements, and leases. In any of these instances, these fees, or restrictions, must be paid off or dealt with before both the seller and buyercan move forward.
2. Conduct a Property Survey
Sometimes, a property survey (drawing of the property) is required. This willreveal any potential infringements on the property or the land the propertyoccupies (such as a neighbor’s addition having been built in our property).A property survey will verify that the home is set within its boundaries
3. Prepare Abstract of Title and Title Opinion
An Abstract of Title is a document that shows the history of ownership of aproperty. This includes when the property was previously sold, and any history of inheritance, court litigation, and tax sales. Once the Title Company has prepared an Abstract of Title, they write an official Title Opinion, this document states that the seller is the valid owner of the property and that the Title Company is willing to insure the title for purchase or refinance.