If you've ever purchased a home, a title insurance policy is part of the negotiation, but it likely flew under the radar. Today, we will address this key part of the home buying process and shed some light on what the policy really does for you as a new homeowner though hearing from Catherine Daves of Lawyers Title. Catherine brings over a decade of sales and marketing experience to Lawyers Title and forges strong relationships with their clients. Catherine and her team are motivated by serving others, both homebuyers and agents—we benefit daily from their expertise, creativity and enthusiasm. We work with Catherine and her team frequently. Every single homebuyer here in Texas purchases a title policy, so we go through the title policy process on every home that we help a buyer with. Needless to say, we are in and out of their office a lot! We’re so grateful for the work they do and we are excited to share her valuable knowledge today.
What Title Companies Do
Even if you bought a home, title insurance can feel like it's the last piece of the puzzle so it kind of blurs by. Truly though, it's a huge key component. In layman's terms we search your title, we check for defects in your title by examining title records: this includes deeds, mortgages, wills, divorce decrees, tax records, liens, etc. The title search determines who owns the property, what outstanding debts are against it, and what condition the title is in. We want to figure out who really owns the property and if there are any debts tied to that property that we want to resolve. This could even be someone as small as an unpaid water bill or as big as the seller's name not being on the title.
When Title Insurance Starts
The title insurance search basically starts as soon as we get your signed contract. The title company is the third party and they're kind of the neutral little Switzerland between the seller and the buyer—so they hold money in escrow and things like that. This is when the due diligence process starts in the background and they're trying to make sure that they get everything before you close. For example you don’t want to move into your dream home only for the previous seller’s cousin to come knocking at the door, saying they actually own the house!
In the home buying process you’ll receive your Schedule A and Schedule C. Schedule A is called title vesting, and it's to make sure that these people are on title and also that there's a correct legal description. Then Schedule C, called curative, is where we remove the liens and all of those things that we were mentioning earlier. All of these have to be clear to close. So sometimes we title companies have to handle sticky situations, whether it be the IRS, the city, people denying claims, or refusing to pay certain things—all of which can delay closing.
Title Insurance and Why It’s Important
Title insurance protects you if someone were to challenge your property title; the title company ensures the policy. If someone claims an interest in your property, the title company will actually pay for any actual loss, and it's up to the amount of coverage. Once the title company goes through everything, figures out who owns what, they insure that policy and back up that policy one hundred percent. And so there are some facts that are not included in that, and it can be forgery or liens by contractors. For the most part they ensure that property so no one can come to your door and say they own a piece of the property. This is the piece that most people don't don't know or take for granted. Homebuyers are so focused on the inspection and the front end part—but there's a backend unseen portion going on as well. Catherine says that if you don't know anything is happening, that's probably a good sign, because that means that nothing bad is going on.
Which Title Company Should You Choose
You should definitely use reputable professional title companies, seasoned ones that have been in the game for a long time. As far as fees go, it's all pretty much the same across the board. What you really need to look out for is if that company is outsourcing research to a third party. That can become a sticky situation, because say some was missed, the title company may not cover your policy due to it not being ‘their mistake’. Keep in mind they're also making sure that your escrow money has been recorded when it's delivered, that they're getting that policy, and getting the cures as fast as is humanly possible. They're the ones that actually send the wires to fund everything on closing day, so hiring someone with good communication skills is very important. This is probably unseen on the home buyer side, how much we as agents are actually communicating with the title company, with the escrow officers, and making sure that we're on track to where we need to be. All of that is to say that communication and competence is unbelievably important.
Things That Can Go Wrong With Your Title
Catherine shared a story with us where recently she was working on a title where the man selling the house forgot to tell anybody that had separated from his wife 20 years ago, but not been officially divorced. With it being so long ago it hadn’t even crossed his mind! We had to inform him that his wife would have to sign the title since they were still legally married. Unfortunately he had no idea where she was or if she was even in the states still. It was an entire ordeal for her team to track this woman down. Another instance that she runs into a lot is the death of a family member where she has to find a bunch of different people to sign that didn’t even though that they had rights and an investment in that property. She expressed that her team and herself are definitely in the weeds with people's relational and family dynamics; meaning that they have to wear a counselor hat sometimes. Again, this is where a good title company and agent come in, because there are a lot of moving pieces where we have to stay calm and collected.
Other common occurrences are things like roof claims. People that took the money provided by their insurance for a new roof, but then pocketed the money instead of fixing the roof. There are so many possibilities! Catherine said Lawyers Title actually hosts a lot of education for agents, because they want us to also be an expert and have the tools to handle the kind of situations we mentioned above.
Your Title Policy Is There to Protect You
You never know when you may have to use your title policy to prove you own your home! We are so grateful for Catherine's taking the time to help give you a better understanding of title insurance.We hope you have the pleasure of interacting with her and her team on a home purchase sometime soon. Title insurance and their due diligence during the buying process is essential so we hope you learned something new today!
Until Next Time,
Brianna & Keelie