As a professional in the real estate industry, you probably work with a list of resources, vendors and partners on a regular basis. Among those resources, one of the most utilized, but least understood, are Real Estate Lawyers and/or Title Companies. You may already know that Title Companies play a key role in many real estate transactions, but not many people truly understand what it is a Title Company actually does, or more importantly, what distinguishes the good ones, from the not-so-good ones. As a neutral party in most transactions, Title Companies can be called upon to act as an agent for the buyer, the seller, the insurance company, or just about any other party in the transaction. To help identify what makes a “Good’ title Company , St. Johns Title has put together this helpful list of the key responsibilities of a Title Company during a real estate transaction what St. Johns Title is responsible for when buying or selling real estate in Jacksonville or St. Johns County, Florida.
1. Perform The Title Search
Performing the Title Search is the primary activity that a title company is responsible for. To protect both parties, homebuyer and home seller, a complete title search and review is necessary.
Our friends and partners at First American Title Insurance Company have prepared this helpful video to explain the process:
By obtaining the most up-to-date court records, and researching those records thoroughly, a title company is able to ensure the that Seller in a transaction is the “properly vested” owner of the property and can actually sell it along with the list of defunct and/or encumbrances that may need to be cleared in order to close a transaction. That list can take the form of a Title Abstract and/or Title Commitment .
2. Preparing Title Abstract and Title Commitment
As mentioned previously, for the purchase or sale of real estate in Jacksonville, a title company has the responsibility for researching property records in order to prepare the title abstract and Title Commitment. Simply put, the abstract is a document that details the history of ownership for a property and a Commitment is a list of requirements needed to clear title in a transaction in order to issue a policy of Title Insurance. The Commitment will also provide a list of exceptions to that policy. The Title Abstract will include information for the chain of ownership along with potential probate issues, and litigation and tax sales that affect a particular property. Simply looking at the abstract can provide a summary of the history of the property.
3. Serving as the Settlement (Closing) Agent
Along with preparing the Commitment, a Jacksonville title company is typically responsible for serving as the settlement agent, or closing agent in the transaction. As a neutral agent for all the parties involved in the transaction, the title company’s duties here can include:
- Balancing the closing statement with the Buyer’s Lender.
- Obtaining, or drafting a buyers’ loan closing package.
- Getting signatures on all of the buyers’ and sellers’ closing documents
- Receiving and distributing “payments related to the conveyance transaction”. Including Realtor Commissions, Loan Payoffs, Taxes, Document Stamps and recording fees.
- Recording “documents that need to be recorded, such as deeds and mortgages” at the appropriate county courthouse
4. Serving as Escrow Officer or Escrow Agent
In most transactions, a Jacksonville Title company is responsible for serving in the role of “Escrow officer” or “Escrow Agent”. This means the title company, may be responsible for holding money (e.g. earnest money deposits, loan proceeds, repair funds) or documents (e.g. Deeds, Affidavits) in Escrow as a part of the transaction and according to the instructions of the parties.
For example, most contracts will require to place an earnest money deposit with the Title Company in order to bind the agreement. In other cases, a buyer, or a buyers lender may place the purchase price money with the the title company to hold. For an example of a document escrow, due to availability issues, a seller may sign the conveyance deed early for delivery upon payment of the purchase funds at a later date. In this case, the title company would, by following the buyer’s and seller’s written instructions, hold the documents until the Seller is paid by the Buyer or until such time as would be required under the agreement.
5. Obtaining and Reviewing Property Survey
In most purchase transactions, and in some refinance transactions, a Survey may be required. When a survey is required, a title company may be responsible for obtaining that survey of the property and reviewing it to identify and disclose the presence of easements or encroachments These may include the presence of an improvement (such as a pool or a fence) which extends into a neighbor’s property or building setback.
6. Issuing the Title Insurance Policies
After the closing is completed and the Deeds and Mortgages have been recorded and funds have been paid to the appropriate parties. A title company in Jacksonville is also responsible for issuing title insurance policies on behalf of the title insurance underwriters that they are approved to do business with. As the Title Agent in the transaction, Title Companies are entrusted by their approved underwriters to clear the conditions set forth on the Commitment. Once those conditions have been cleared, the title company acting as an independent agent of its underwriter issues the Policy and receives a portion of the title premium for the service. Once again, First American has put together a helpful video to explain the process:
There are two basic types of Title insurance Policies that may be issued in a transaction:
LENDER’S TITLE INSURANCE
A Lender’s (or Mortgagee) Policy of Title Insurance is meant to insure the mortgage lender as having a “first lien” or “priority lien” on a Property. This means that the Mortgage given to a buyer purchasing a property will be in “First Lien” position and have priority over almost every other type of lien. In a cash purchase, this policy would not be required. However, if you are planning on obtaining a loan to purchase a property, know that most mortgage companies will require this policy.
OWNER’S TITLE INSURANCE
Just like a Loan Policy protects the lender’s “First lien” status, an Owners Title Insurance Policy protects the buyer of the Jacksonville real estate as being the insured and the “vested” owner of the property. Per its terms and conditions, an Owners’ Policy will provide a buyer with protection against claims of ownership or an open lien that is asserting priority of ownership. Your home is most likely your greatest and most valuable asset, and we want to make sure it is protected against any potential future property disputes.
If this all sounds fairly complicated, well, it is.
In fact, there’s often more than a title company is responsible for when buying or selling real estate in Jacksonville or St. Johns County. Your local real estate agent, though, can help you navigate smoothly through all this. Whether you’re buying or selling real estate in North Florida, give us a call at (904) 222-6422 to schedule a free 15-minute consultation and find out how our experienced agents can assist you..
