Officially, a title company in Texas is referred to as Title Agent or Title Agency. They are responsible to and answer to a lot of folks – mortgage companies, real estate agents, buyers, sellers, brokers, underwriters, etc.
Most notably, they follow the Texas Department of Insurance rules and regulations meticulously. Regular audits by this department ensure it.
But what do title companies and escrow officers really do?
Their job entails four basic responsibilities. The simplest starts with:
- Search the property title. Disclosure is made to all parties regarding any encumbrances found that could affect ownership rights. The title exam is really for the benefit of the title agency so that they can issue title insurance. Not many title companies would survive if they were foolish enough to issue title insurance without a good title exam to reduce their risk of claims.
- Close the transaction. Title agencies work with mortgage lenders, surveyors, HOA managements and more. They bring the parties together, ensure documents are correctly issued and signed, enforce regulations, etc. Their duties can include filing federal tax forms, cash reporting, etc.
- Handle the money. They ensure all funds are good and are entrusted with securely collecting and distributing those funds. Billions of dollars a year flow through their hands in Texas alone.
And most importantly:
- Serve as a trustworthy, impartial third party. They safeguard the public’s trust with the highest degree of ethics. They don’t represent either side of the transaction and remain neutral and fair in all dealings.
There’s one thing that title companies don’t do that most people assume is a given. Title companies don’t guarantee a clear title. It’s true. We can’t promise you the title to your property is free from all encumbrances.
Now don’t be one of those folks who becomes indignant about paying all that money for title insurance with no guarantees. Realize that title insurance is an indemnity, not a guarantee. It protects against financial loss if a claim arises.
Just like fire insurance doesn’t guarantee you’ll never have a fire. It says it will indemnify you if you have a fire. The same goes for auto insurance. If insurance was a guarantee, then we’d all get life insurance.
Title insurance, like other types of insurance, will protect you against losses covered by that insurance. Some insurance coverages are more comprehensive than others. What is covered or isn’t covered is disclosed in the title commitment prior to the closing.
The job of a title agent is both simple and complicated. To the same extent that a home purchase is both financial and emotional. No two are exactly alike.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
