Questions for a Title Company
When buying a piece of land or a property of any type, there are many different things that you need to keep in mind. You have to consider costs, regulations, and the time that goes into making sure you have all the appropriate rights and licenses. With all of the time that goes into figuring all of this out, it can end up making the whole process seem very difficult. Thanks to the Real Estate Settlement Procedures Act of 1974, people buying property are allowed to choose their own title company when closing out real estate purchases. Since the process of closing on a property can be so confusing for most people, many consumers have no idea how to find the right title company for their needs. To help make things easier, it's smart to keep these questions in mind whenever you're trying to find the right title company.
What is the Company's Financial Rating?
When working with any title company, you want to be sure that you're working with a company that has the assets and finances to cover your investment. You shouldn't feel bad about asking the company for some information regarding its current financial status. In truth, no reputable company will be opposed to telling you about this type of information. If the title company seems like it is unwilling to discuss this information with you, then it is possible that they are not a company that you want to deal with. In general, a rating of A or A+ will mean that the company has an adequate amount of liquidity to cover any major claims filed in the future. The ratings go all the way down to C, which represents a company that either doesn't have a long history of doesn't have a high amount of liquidity.
What Guarantees Exist?
When you're placing a high amount of money with a title company to hold in escrow, you're placing a lot of faith in the solvency and practices of that company. You don't want to make this type of decision based off of a quick look at a website. It's important for you to learn about the procedures that are in place to segregate your money from that of the seller or other accounts. Title companies can manage a number of escrow accounts at any given time, meaning that sloppy record keeping can end up losing you quite a lot of money. Even lower-rated companies can be a great asset if they have strong escrow management procedures in place.
You also want to learn more about the background of the company and learn more about its long-term stability. If the company doesn't have a long history or a strong set of escrow management procedures, then you could end up losing a lot of money when things go wrong. In this business, reputation means absolutely everything. You want to be sure that you're placing your escrow funds with a company that you know will not mix your money around.
Are they Neutral?
One of the most important things to keep in mind while searching for a title company is that you want to find someone who is a neutral third party. It is legal for real estate agents and other firms to also own title companies under certain circumstances. However, it is illegal for them to work with a single client through both sides of their business without disclosing that relationship. For example, if you were to purchase property from a real estate company and use a title company that was not affiliated with the real estate company, then they wouldn't have to disclose their title company to you. However, if you were to select their title company, then they would be obligated by law to disclose that relationship.
If possible, it's smart to get a third party to handle this type of thing for you. This is because there won't be any risk for any type of conflict of interest or any other problems of this nature. You want to take every step possible to ensure that you're protected along every step of the way when you buy any type of property.
Putting it All Together
There are a lot of things that homeowners need to keep in mind when they decide to purchase property. The world of closing costs, escrow and title management can be a very difficult one to manage without the proper guidance. Working with a good title management company is the best way to ensure that you're protecting yourself and your sale. The importance of the expertise and knowledge a great title company can bring to the table is something that shouldn't be overlooked. It can help close on the property faster while saving you money and time.
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