What exactly does a title company do that I can't do myself?

Question

It seems like a scam. I can search the property appraiser to see when the title was transferred. I can all the tax collector to see if taxes are current. I can get a copy of a warranty deed from the courthouse for next to nothing.

What exactly are they claiming to be doing for me?

Chris K. · Answer

I'm pretty sure you're capable of doing anything you put your mind to. The realtor isn't doing anything you can't do, the loan originator isn't doing anything you can't do, the underwriter isn't doing anything you can't do, the lawyers aren't doing anything you can't do, the insurance broker isn't doing anything you can't do, the surveyor isn't doing anything you can't do, the home inspector isn't doing anything you can't do, the plumber or electrician isn't doing anything you can't do.

The real question is "Is it worth it for you to do it yourself?". We would burn ourselves out if we tried to do everything ourselves. Title is one of those major things that I want no part of and I will gladly pay to have that  liability/responsibility fall in someone elses lap.

Crystal Smith · Answer

I'm not an attorney so I can't quote case law, but I can imagine there are a few cases where someone or entity believes they have sufficient notarized documentation that either wasn't recorded, or wasn't recorded correctly.   But the documentation is strong enough that they are willing to hire a legal begal to file a claim against the property.  Bottom line- we live in a litigious society.  W/ title insurance if that person wins the case your Title Insurance pays off.  If that person looses the case your title insurance still pays off because the cost to defend is borne by the Title Insurance company, not you.

Crystal Smith · Answer

Title companies don't exist to provide you with a warranty deed or just to research taxes or current liens.....  They exist to provide you w/ protection against future claims against the title.  Claims that may arise because of recorded defects or a claim against the property that's not recorded anywhere.  You can't bring a "third party" in to protect you against such claims after the fact.  After the fact meaning- After you close.  Key words here are "third party" & "after the fact."   You can naturally defend yourself against any claims, but w/ Title Insurance the Title Company becomes your "third party" defender.  Title companies won't provide insurance w/o doing the due diligence research themselves.

What you need to watch out for w/ Title companies are "junk fees".  We've challenged junk fees in the past.

Bill Hamilton · Answer

John, if you are a cash buyer you can do most of what they do. If you need any sort of financing, then it is not worth arguing about. No lending institution including every HM or private lender I have ever worked with will require it. From your own standpoint if you are willing to lose a property to an unexpected claim or lien against the title then go for it. Title insurance is no different than buying life or health insurance. You are not required to get it but rather you are gambling that you won't need it. If you purchase title insurance and an unrecorded lien etc. shows up then the title company will fight it and if they don't win they will pay out the policy. They also know how to solve title issues that most of us don't know about until it smacks us in the face. I used to work the wholesale side of mortgages and I can tell you I had more deals fall apart due to clouded title issues than from any other single thing.

Jerry W. · Answer

@John Farmer, its this simple, you will not be able to do real estate as a business without title insurance.  You will not get loans from banks without it, you will not be able to sale property without it.  There was a time folks used abstracts.  You had a book of all the past deeds in your chain of title to prove that your chain of title to you was in good shape.  I am unaware of any states that still use those.  Title insurance is PROOF of good title.  Its like driving a car, its illegal in all states to not have insurance.  If you waste your time arguing over this you will not get to the next step.

Travis Lloyd · Answer

a) They don't cost that much, so its at least in part due to the benefit of the price vs. the time to do the search

b) The insurance that should something ever arise about the saleability of the property, or ownership, etc... they will take care of it. As with everything else in this world, its the insurance companies that rule the roost.

It can be frustrating, understandably, but just accept it as a cost of doing business. I don't know how you fund your deals, but all mortgage companies require it and even most HML that I know require it. Its not just your a$$ that insurance is covering.

Mary B. · Answer

Account Closed

If you think that all title companies are scammers that's your perogative. However before you jump to such a harsh conclusion you might want to learn all that entails in doing abstract of title and the breakdown of that position. It's your homework not mine.

Kudos,

Mary

Account Closed · Answer

Who might have a claim against the property that's not recorded anywhere.

Account Closed · Answer

Actually, a loan originator is doing something I can't do. Otherwise, I wouldn't need one in the first place. Insurance broker is too. I don't have a license to insure, nor do I want one.

Account Closed · Answer

Yes I know lenders require it.

What exactly does a title company do that I can't do myself?

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