What to expect when working with a title company?

By RealtyCrunch IncApril, 20th 2020
What to expect when working with a title company?

Below you'll find a step by step guide of what to expect when going through the title process:

1. Payment once the contract for purchase and sale has been signed by the buyer and seller – the real estate agent will submits the contract and earnest money check to the title company

2. Title company will issue a receipt and send a copy of the contract and check to each party. It will also issue a guaranty file (GF) number used to identify the file and should be used whenever you communicate with the closer. This is where the “opening title” is set up and the first step in the title company’s work to close the sale and issue a policy.

3. Closer will communicate with both parties to request a survey (if required), request tax statements, and conducts the closing. Closing is the meeting where the transfer and loan documents are signed by each party

4. Title insurance commitment after title company opens title, it will conduct a title search and will issue a title insurance commitment to both buyer and seller. It is very important for the buyer to carefully review the title commitment because it will disclose any defects in the title, such as a lien.

5. Closing documents: consist of settlement statement, the deed, and all loan documents prepared immediately before the closing

6. Settlement statement: review the document to make sure you get all the credits you are entitled to and make sure taxes are properly allocated. Buyers review the deed to make sure the name is correct and property description is correct. Review loan and other closing documents.

7. Disbursement: title company acts as an escrow agent – holding the earnest money and documents in escrow until it is required to disburse the funds according to the contract. It will disbursed at closing, usually as a credit to the buyer.

Earnest money gets disbursed to buyer if:

  1. buyer terminates the contract at any time during the option period
  2. if the contract is subject to lender financing and the buyer can’t get the financing
  3. if contract is dependent on seller making certain repairs and seller fails to do so
  4. if seller otherwise defaults on the contract

Earnest money goes to sellers if:

  1. buyer terminates contract after the option period and the termination isn’t excused by the terms of the contract
  2. buyer otherwise defaults on the contract

8. Earnest Money Prior to Closing: if either party thinks they are entitled to the earnest money prior to closing, they may send a request for release of the earnest money to the other party. If it’s valid, the title insurance company will send the money to the party requesting it.

9. Working out a Compromise: if there’s a dispute around the escrow money, consider working out a compromise.