Real Estate Attorney vs Title Company

[Account Closed]

Ok, at the risk of sounding like an idiot, can someone please explain the difference? I am listening to a gentleman talk about his dream team and he is talking about making sure to have a good title company/ real estate attorney like they are one and the same. I thought the attorney helped you structure the contracts and legality issues and the title company was the entity for executing the deals.

Could someone please explain the difference?

Thank you,

Michael

[Bill Gulley]

Hi, a title company is actually an insurance agency and they represent title insurance companies that insure title to buyers and lenders, insuring that the title is free and clear of encumbrances or any cloud on the title that would cause a financila loss. The potential financial loss is what you insure against.

In order to provide such coverage, the settlement transaction (the order inwhich documents are executed and filed for public record) together with the financial accountings of the transaction are also insured in the event any error or ommision is made. For the title insurance company to insure the closing, they require that it be done by an insured closing agent, basically a representative of their company. So, you generally go to a title company to clsoe your deal.

In many areas, especially in smaller communitites where there are no title insurance comapny offices, attorneys can close a real estate transaction. The attroney submits a resume and makes an application to the insurance company to be approved as an insured closing agent.

Some title insurance companies will go ahead and insure a closing with an attorney since they must meet certian financial bond requirements to practice law, so the attorney may not be an insured closing agent, but they usually would go that extra yard as they may also be paid to close the insurance policy requirements for the company.

An attroney may close a real estate transaction regardless of title insurance being obtained in a settlement. A real estate broker may also close a real estate transaction as well as a lender. I have closed transactions as well, but I was never an insured closing agent.

Title companies do not practice law, but they will have an attorney on retainer or in house to take care of legal issues that arise. The title company may provide blank legal forms, contracts and promissory notes for example, but they will not advise. They will assist sometimes in filling in such forms, but at the direction of the parties as applicable.

Your dream team should have a good title company, familiar with investor strategies. The team also needs to include a good real estate attorney, to guide and consult as the need arises. The attorney may be in the title company or on retainer by the title company, but really should not be! The fact is that that attroney will be representing the title company, not you. I'd suggest having an attorney who has no connection with the title company, because if there is ever a conflict in opinion or other matters, that attorney will side with the title company, who they represent. It depends on the nature of the issue as to whether you use the title attorney or a private attorney. If there is a conflict of interest, they will tell you so. Good luck, Bill