Thanks to the often hidden but critical work of title companies, real estate transactions are executed with enhanced security, precision, and efficiency, ensuring that every property transfer is handled seamlessly.
Title companies verify titles and potential claims, issue title insurance, ensure wire fraud prevention, and manage the ins and outs of closings. Title professionals help mitigate between $600 and $900 billion in risk to homebuyers and lenders in real estate transactions — but they are often the unsung heroes.
Researching and verifying title ownership
Title professionals are responsible for one of the most important steps in a transaction: researching and verifying title ownership.
A title search involves reviewing public records to ascertain legal ownership of a property. This process typically involves a review of land records, deeds, legal rulings, and tax liens.
A transaction can’t go through if the search reveals a property has a lien. Title searches unearth anything that could prevent the transaction from proceeding, from unpaid property taxes and boundary disputes to errors in public records and identity theft. A thorough search of public records is critical to a successful real estate transaction.
A title company handles this research at the beginning of the transaction to ensure a clear title before closing.
Navigating legal compliance
Maintaining legal compliance is another hidden task that title companies manage. By following local, state, and federal regulations, not to mention American Land Title Association standards, they protect both buyers and sellers.
What does navigating legal compliance throughout real estate transactions entail?
- Accurate and thorough record-keeping.
- Title searches.
- Escrow management.
- Compliance with jurisdiction-dependent requirements.
In many states, for instance, title companies must offer environmental title insurance endorsements to insure against loss in the event of an unrecorded environmental lien. Title companies also have to perform extensive research to seek out potential issues in states with a history of complex land ownership or boundary disputes, particularly in the Southwest.
With thorough title searches and title insurance, title companies protect everyone in a real estate transaction from legal disputes.
Acting as the financial middlemen
Title companies serve as financial middlemen during escrow, securely handling and managing the exchange of sensitive data and large sums of money. This process entails verifying and disbursing funds to appropriate parties on time while ensuring security and wire fraud prevention at every step of a transaction.
These funds are critical to a successful closing, especially given the high stakes. That’s why it’s crucial to remove the exchange of wire instructions out of email, which can be easily compromised by bad actors. In addition to its secure platform, Closinglock is the only company that offers a Good-Funds-compliant payments tool that allows buyers to connect their bank account and conveniently send their deposit or cash-to-close funds via their desktop or mobile device and is covered up to $2.5 million under the industry’s highest insurance policy.
Protecting buyers, sellers, and agents against fraud
Fraud risk is on the rise, so it’s more important than ever for buyers and sellers to work with a title company to identify fake listings, prevent wire fraud, and ensure legal title transfers.
During the closing process, title companies mitigate fraud risk with tools and processes, including:
- Identity verification: Title companies verify identity in person and online.
- Title searches: Comprehensive searches prevent fraud or other issues that can interfere with a smooth transaction.
- Title insurance: This specialized insurance protects both buyers and lenders in the case of a title defect or error.
- Education: Knowledge is the first step in mitigating the risk of fraud. Title companies educate clients on spotting real estate fraud and provide tips and tools to ensure smooth closings.
- Fraud prevention technology: By modernizing the transfer of funds and information, Closinglock fraud prevention software provides a win-win in terms of security and convenience for title companies.
Collaborating with multiple parties
Title companies aren’t just financial middlemen; they also collaborate and ensure open communication with buyers, sellers, agents, lenders, and third-party vendors.
This can look like:
- Communication: Title professionals coordinate with all parties to keep deals on track.
- Timeline management: Title companies resolve last-minute hiccups and manage many details so that transactions move forward.
- Education: Title companies provide information on fraud prevention, escrow management, and scheduling.
- Third-party vendor vetting: Title companies must vet and select third-party vendors to ensure security and streamline workflows.
And that’s just scratching the surface. Collaborations also include verifying that all legal paperwork is in order, calculating closing costs, and scheduling appointments.
Supporting clients during stressful (and exciting!) times
Nearly 62% of couples think that saving and purchasing a home is more stressful than saving and planning for a wedding. Clearly, the homebuying process is a stressful time.
While title work involves documents, numbers, and dates, it also has an emotional component. Part of the role of a title company is to reassure anxious buyers and sellers and provide support throughout the process.
Title companies can add a personal touch to real estate transactions by balancing professionalism and empathy during complex or drawn-out transactions. This could include encouraging a buyer to stick with a deal when a transaction falls through or moving up a closing to support a family expecting a baby.
Evolving with technology
With all the roles a title company plays, technology is essential to streamline processes and enhance efficiency, security, and client experience. Software like Closinglock makes it simple for title companies to verify identities, request e-signatures, securely transfer funds into escrow, exchange documents, and send wire instructions in one secure portal.
Tools like this, plus data and analytics, help title companies simplify the process for clients, prevent fraud, and identify potential issues at each stage of the transaction.
Celebrating the hidden work that makes real estate possible
Title companies contribute to every successful real estate closing with research, financial protection, communication, wire fraud prevention, and client support.
Closinglock is trusted by hundreds of title companies and law firms to power and protect real estate transactions from the escalating threat of fraud while improving workflow efficiency. Its wire fraud prevention software includes identity verification, document exchange, and eSigning to keep transactions secure, all in one platform. Closinglock is the only company that offers a Good Funds compliant payment tool that allows buyers to conveniently send their deposit or cash-to-close funds via their desktop or mobile device and is covered up to $2.5 million under the industry’s highest insurance policy. Request a demo today.