Choosing the Right Title Company

Buying a house is one of the largest and most important purchases for a consumer. Therefore, it is important that the right title company is chosen to handle the transaction. This is equally important when someone is selling or obtaining a mortgage on their home. It is crucial that a consumer choose the right title company to handle his/her closing, in order to provide the most professional, error-free and expedient closing possible.

How to Evaluate a Title Company

Merely because a company has a sign on the door stating that they are a title company, doesn’t mean they are a good choice. What should a consumer look for in a title company?

  • Reputation and Longevity. Ask your realtor or lender questions about the company—does it have a reputation of professionalism and competency and how long has it been in business? Visit the company’s website and do a search of the company online. Call the Better Business Bureau to see if there have been any filed complaints against the company.
  • Convenience of location and ability to accommodate the customer. Are the buyer and seller in different locations or needs to close at 6:00pm? You want to ensure that your title company will work with you to schedule your closing at a mutually convenient time and location and, if a closing must be done via mail, that it will accommodate that.
  • Price is always a factor—but it is only one factor. Merely because a company may offer lower title insurance rates and closing fees does not mean it is the best choice. Title insurance rates are regulated in the State of Michigan and underwriters must file their rates with the State. Therefore, as a general matter, most title insurance rates are competitive with one another. And, if a title company is willing to forego its closing fee to win the transaction, remember this—you get what you pay for! Do not make price the ultimate factor in your decision.
  • Professionalism and Competency. When you enter the office, is it harried? Are the employees dressed and do they act professionally? Is the workplace organized? How much experience does the company’s title examiners and closing agents have? Are they abreast of the latest products and changes in the title industry?
  • Customer-oriented. Did they make you feel welcome when you entered the establishment and take the time to answer all of your questions? You deserve to be treated as their #1 customer, not just a number.
  • Legal support. Many established title companies have in-house attorneys which are a great benefit to the title company. They can quickly address any title and closing issues, draft documentation necessary to eliminate a title or closing issue, including easements, rights of first refusal, deeds, waivers and escrow agreements and they keep current on all legal developments affecting real estate matters.
  • Multifaceted and professional membership. Can the company handle not only your title and closing issues, but handle a 1031 exchange, e-mail closing documents, issue a title policy at the closing table, handle construction disbursements? Is the company technologically advanced? Is it a member of state and national title organizations, such as the Michigan Land Title Association (MLTA) and American Land Title Association (ALTA), which provides continuing education for title professionals?
  • Do they comply with the ALTA Best Practices?

What type of title insurance am I asking for and what does it really do?

Nationwide, 36% of all titles contain some type of title defect, which makes title insurance very important to obtain. There are two types of title insurance: the Owner’s Policy (insuring a buyer’s interest) and a Loan Policy (insuring a lender’s interest). If you are purchasing a house, your seller will generally be responsible for the cost of the Owner’s Policy and the buyer for the Loan Policy, but the purchase agreement should dictate who pays these fees. There are special rates which may apply when someone is purchasing and obtaining a mortgage, has a prior Owner’s Policy or if the property is being refinanced.

When you purchase real estate, the only way to determine the correct owner of the property and what restrictions, liens and encumbrances affect the use of the property, is through a title examination and the issuance of the title insurance policy.

The Owner’s Policy is issued in the amount of the real estate purchase price. It is a one-time fee that is charged and the policy coverage lasts for as long as you or your heirs have an interest in the property or the property is transferred to your trust. An Owner’s Policy protects a buyer should a covered title problem arise with the title that was not found during the title search. An expanded Coverage Owner’s Policy will provide additional coverage for items that arise after the date of the closing, but can only be issued on 1-4 family improved residential properties.

If a title problem arises after the closing of a purchase or mortgage and such problem is covered by the Owner’s or Loan Policy, the title company should and must stand behind you to correct the problem, provide defense, if necessary, or compensate the insured for its/their loss up to the amount of the policy. Choosing the right title company can reduce the chance of having a title problem arise, but having a title insurance policy can give you assurance in the event there is an issue that arises after closing.  And again, look to longevity and reputation of a company to ensure that it will be around if any problems do arise.