Watching the ball drop on New Year’s Eve can be fun and exciting. But watching someone drop the ball on a real estate transaction is no fun at all.
What happens when the title company drops the ball and problems arise with your transaction? Get ready for a jaw-dropping surprise.
In Texas, the title company is not a party to the residential real estate contract. The buyers and sellers are the parties to the contract. While the title company is mentioned in the contract, their actions are made on behalf of the buyer or seller.
Let’s take a look at a few instances where the title company may drop the ball and examine the potential consequences.
The title commitment is not delivered on time.
The Texas contract states that within 20 days of receiving the contract, the seller shall furnish the buyer with a commitment for title insurance along with copies of any restrictive covenants attached to the property. Then the buyer has a specific number of days to object to items on the commitment (and maybe get out of the contract). The number of days is agreed upon by both parties and filled in the blank on Paragraph 6D of the contract. If the buyer doesn’t get these documents within 20 days, the time may be extended up to 15 days.
If the buyer doesn’t get the documents on time, they may terminate the contract and get their earnest money back. Whose responsibility is it to deliver the title commitment? It’s the seller’s. The contract states that the “Seller shall furnish” it. But the seller has to get it from the title company. So if the title company drops the ball, it’s the seller, not the title company, who suffers the consequences. It doesn’t quite sound fair, but that’s how it works.
New survey or HOA documents are not ordered before deadlines.
The duty to supply the HOA documents belongs to the seller. And the contract states that either buyer or seller is responsible for obtaining a new survey if it is necessary. However, many title companies do this as a courtesy to buyer or seller. If documents and surveys are not ordered on time, the fault goes to the buyer or seller, who the contract says must supply it. The title company isn’t to blame.
Liens or judgments against the property are not cleared prior to closing.
Most homebuyers trust the title company to ensure this doesn’t happen. But they typically wouldn’t find out about them until they started getting notices or go to sell the property. This is why you get title insurance. The homeowner would file a claim with the title insurance company to cover any losses due to previous debts that should have been cleared at closing.
Not recording or mis-recording documents.
Deeds and other documents are filed and recorded by regular people, and mistakes can happen. When they do, it is the title company’s responsibility to correct them. Another reason to have title insurance.
These examples are a good basis to ensure you pick a proficient title company. Since all title companies in Texas charge the same for title insurance, the difference in them lies in their service and expertise. And their ability to get the ball smoothly across the finish line.
The opinions expressed are of the individual author for informational purposes only and not for legal advice. Contact an attorney for any particular issue or problem.
