Before purchasing a property, it is important to ascertain whether the property in question has any defects of title that could adversely impact your ownership interest, as well as secure title insurance to protect those interests.
Because they manage the complex research and professional coordination that real estate transactions entail, title agents are an indispensable member of the real estate closing team.
What Does a Title Agent Do?
Title agents have a variety of responsibilities as it relates to a real estate transaction. These responsibilities include verifying ownership of a property, facilitating property record searches to check for potential defects of title, and working with other real estate professionals, including real estate agents, certified lenders, attorneys, and other individuals involved in a transaction, to ensure that title commitments and lender requirements have been met. They also issue title policies, prepare closing documents, facilitate closing and distribution of funds.
Record Search:
Before a property is transferred, a title search of public records is completed to determine whether there are any potential issues related to a property’s title. Title agents take the research results and consolidate the information into a letter, informing parties involved in a transaction whether or not the property can legally be transferred. This is important because a property may have unpaid taxes, liens, easements, leases, or mortgages against it that prevent it from being transferred. Consequently, title agents help fix any problems and verify that any compromise is acceptable to buyers and sellers.
Insurance:
Title insurance protects new owners and their lenders against certain defects of title that become known after a sale is complete. Title insurance costs are factored into the closing costs for a property, and most lenders require title insurance as a condition of closing. In these situations, title agents act as insurance agents and ensure that all requirements of the title insurance company are met in order for the policy to be issued.
In limited circumstances, such as in a transaction that does not include any financing, title insurance may not be a requirement of closing, but it offers important protection to owners against defects of title and should be obtained.
Title insurance rates are set by the Pennsylvania Insurance Department, which means that the title insurance premium charged to a buyer will not vary based upon the title agency. There are, however, other costs that may be added at closing and when shopping for title insurance, it is prudent to ask what fees the title agency charges in addition to title insurance premium. For example, a title agency may charge a closing, document preparation fee, and/or a notary fee.
Closing and Escrow:
At closing, title agents provide notary services, ensure safe handling and proper distribution of proceeds from the transaction, and maintain essential documents until all required conditions are met. They retrieve signatures on the closing documents, collect and hold transaction payments, and appropriately distribute payments. After closing, title agents are responsible for recording with the county, the deed to the property and any mortgages.
Pennsylvania Requirements for Becoming a Title Agent
In Pennsylvania, all title agents are required to be licensed by the State. The Pennsylvania Insurance Department sets the requirements, issues the licenses, and monitors the activities of licensees.
Title agent applicants must pass an exam, undergo a fingerprint background check, and pay a surety bond. An individual title agent applicant must also apply to the Insurance Department, detailing personal and demographic information, employment history, background information, certification, and attestation. Licensed agents may, but are not required to, be licensed attorneys.
Do You Have to Use a Title Agent?
Having a title agent is not required by law, but most mortgage lenders require a title insurance as a condition of issuing a loan, and, therefore, a title agent is required.
What are the Benefits of Hiring a Title Agent?
Working with the right title agent can help identify a transaction that appears fine on the surface but poses the potential for enormous problems later. It also provides benefits beyond having a smoother transaction, as they offer peace of mind. Investing in real estate is one of the most significant, if not the most significant investment, most people will make over the course of their lives. The protections and peace of mind that title agents and title insurance provide, transcends the closing date.
If you are purchasing or selling real estate, KingSpry’s Real Estate attorneys and title agents are here to assist you.
