Over the past year, I’ve had the opportunity to work with Matt Chance with Community Title Services, Inc., a great deal and in that time I’ve come to trust his advice on a variety of real estate related topics. As the Managing Attorney of a successful title company, Matt has offered these great tips on how to make an educated decision on how to choose who will handle your settlement. Read on and allow Matt to remove the mystery surrounding this important decision.
Selecting a Title and Settlement can be one of the most difficult decisions you face during the home buying process. Generally, it is also one of the areas consumers know the least about. This short article is about what your settlement company does and how you can compare companies.
What Does My Settlement Company Do?
Settlement and Escrow companies serve as an intermediary for Real Estate transactions. The mortgage lender, the real estate agents, the seller, and you, the buyer, all communicate with us during the process of buying or selling your home. They also hold funds associated with the transaction in an escrow account to be paid at settlement.
Settlement Companies do the work behind transferring legal title to real property from one party to the other. The transfer entails making sure the property has been transferred correctly in every previous transaction involving the property in question. During this process we check to make sure the Buyer knows about all the easements and encumbrances that affect the property. Easements and encumbrances can affect how you can use the property and it is essential to know about them. In addition we ensure all taxes are paid, all fees associated with a transaction are paid properly, and that title will be held in the manner in which you desire. Title can be held in a number of different ways, each with its own advantages and disadvantages. After title has been searched and a title binder has been written we send the information to the mortgage company for your file. During that time we begin the process of procuring title insurance from one of our underwriters. Title insurance covers issues with the title of the property from your closing date back in time. It is a unique insurance that covers past problems, not future ones. Title insurance is essential to your protection because many issues cannot be seen easily. Unrecorded easements and encumbrances, improperly filed documents, and a litany of other issues can arise after closing, title insurance will help pay to have these issues fixed. Once insurance has been procured and the mortgage has been approved, the mortgage company sends the closing documents to the title company and a settlement directed by the title and settlement company occurs. Our work doesn’t stop there though. After settlement, the title and settlement company records the Deed and other documents requiring recordation. We pay the local, county, and state taxes, the final water bill, and any other fees associated with the transaction. We provide the mortgage company with the signed documents and each party receives copies of the documents they signed.
How Do I Choose a Settlement Company?
As you can see the settlement company is an extremely important part of your transaction. There are several questions that should be asked of any company before agreeing to use their services.
What fees do they charge? There is a large difference in the fees being charged by different companies, some are more than double than others. The fee should be fair for the work provided, the cheapest is not always the best option, but don’t be afraid to ask what you are getting that justifies the fee. Also be sure to ask if the fees they have listed in their offer constitutes all of the fees or if there will be more that come up later in the process. Title insurance should be properly explained to you, and the settlement company should provide you with a quote on standard policies and enhanced policies, and explain the difference in coverage to you.
Does the company understand the different ways to hold title? Having a company that can properly explain the differences in ways to hold title is extremely important. There are very small differences in the ways to hold title that can have dramatic effects in passing the house to heirs and spouses.
Settlement Companies are not required to be licensed to practice law. Does your settlement company have an attorney? Is that attorney knowledgeable in title related fields? Are they available to talk to you at all points during the transaction? All of these questions are extremely important to ask before the transaction starts.
Finally, does your lender have a relationship with a company? All other factors being equal, it is extremely important that your lender has a good working relationship with the settlement company. The lender is constantly in contact with the settlement company and picking company they work well with can make the transaction much smoother.
Know where your lead sources come from, why is a company recommending a settlement company to you? Is it because that settlement company does a terrific job and has reasonable fees, or is there another reason? It’s a question that should be asked every time. Your settlement company is far more involved in the transaction than you realize. They should be available to you at all times, and be able to answer your questions right away.
Matthew Chance, Esq., Community Title Services, Inc.
President of Sales and Marketing
3527 Urbana Pike, Frederick MD 21704
(O) 240-415-6290
www.communitytitlemd.com
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