How to Select a Title Company

Closing the sale of your house or business is easy, if you chose the right title company. Title companies, or any settlement agent who performs a closing - attorneys, escrow agents or title insurance companies - are involved in a multitude of activities involved in a closing. Some states require that an attorney conduct the closing. Some escrow agents, and others a title company or agent. Be sure to find out how it's done in your area.

A settlement agent glues together the process of the sale, working with both the buyer and the seller in the transaction. They research the title, making sure there aren't any liens on the property, pay the seller and the old lender, obtain money from the buyer and new lender, obtain recording fees and taxes for the government, and file the paperwork at the local courthouse. In effect they orchestrate the settlement from start to finish.

So how do you find a competent title professional? ALTA recommends going through someone you are already working with - your real estate agent or lender. If you are obtaining a loan, chances are the lender will recommend you use a title company (or attorney if they are required in your state) they are familiar with. If you are not obtaining a loan, ask your real estate agent for a recommendation of someone they have worked with. Agents and lenders usually have relationships with several title professionals they know are reputable and provide good customer service.

Or ask friends and neighbors if they were happy with their settlement agent and get a referral. You are free to select your own title professional. If you do, here are some things you should look for.

How many transactions does the company do? Find out how many employees the company has. A company that does hundreds of closings will be more informed about how to perform the service than a company that does only a few. Is the company sufficiently staffed for the amount of work they do?

Find out if the company is part of the state title association or the American Land Title Association. If they are members, they are keeping abreast of state and federal level current trends and requirements. You can also contact your state insurance department or the Better Business Bureau to see if they have any information on the company.

It's also vital to determine the company's financial strength. You want to know whatever you'd want to know about any business in terms of financial responsibility. Does the company have errors and omissions insurance? Fidelity bonds?

On the East coast settlements usually involve a meeting of the parties around a settlement table. After the paperwork is signed, the keys are handed over to the new owners. In much of the West coast the deal is called escrow, which does not require a meeting of the parties involved. In these cases the role of the settlement agent is very important. They have to be able to carry out your instructions as to what should happen.

Keep in mind that settlements vary from state to state and even from county to county. Be sure to ask how it's done in your area so you know what to expect.

To find a title professional in your area, click here.