Should you hire a Title Company or a Real Estate Attorney?

When navigating the complex process of selling a home, one critical decision you’ll face is whether to hire a title company or a real estate attorney. Both professionals play pivotal roles in ensuring a smooth and legally sound transaction, yet their services and expertise differ in key ways. Understanding these differences can help you make an informed choice that best suits your needs, safeguarding your investment and providing peace of mind throughout the process.

What is a Title Company?

A title company is a third party that works for both the lender and the buyer. They help protect you from potential ownership conflicts related to a home or real estate property. They verify that the seller has the legal right to sell the property. Additionally, a title company can issue title insurance, which safeguards homeowners and lenders against disputes, such as title claims, that may arise from the property’s past owners.

What does a TC do during the home buying process?

Research the Chain of Title
Title companies explore the “chain of title,” the full history of the home’s ownership. They check for issues like undisclosed co-owners or existing liens, ensuring there are no surprises after you purchase the home. They also confirm that all property taxes are paid in full.

Perform a Property Survey
They conduct a property survey to ensure the home occupies only the space indicated on the title and to identify any encroachments, like a neighbor’s fence on your property.

Provide Title Insurance
Title companies offer two types of title insurance: one for the buyer and one for the lender. This insurance protects both parties from financial loss due to title defects. You pay for the lender’s policy, while the seller usually pays for yours. Title insurance is a one-time payment made at closing.

Establish Who Holds the Title
The title company ensures the title’s wording correctly reflects who can transfer ownership. This is important for property tax and fee considerations, especially if you’re married or live in a community property state.

Manage the Closing
They handle the closing process, often called “settlement,” by appointing a signing agent or real estate attorney to review documents and finalize the deed and title transfer.

Organize Funding
Title companies may manage escrow accounts to hold and disburse funds for expenses required by your lender. They ensure all parties send and receive funds safely and efficiently throughout the transaction.

A title company cannot offer legal advice to its clients.

Hiring a Real Estate Attorney

The stability of a real estate transaction relies heavily on the expertise of a real estate lawyer. While a title company handles procedural documentation and insurance, it is the real estate lawyer who ensures the transaction’s legal integrity. Despite the title company’s role in providing security, it is the lawyer who ultimately guarantees the transaction’s success.

Below are benefits of involving a real estate attorney in your transactions:

  • Legal Advice: Attorneys are licensed professionals who understand real estate laws and regulations. They can provide legal advice to protect your interests and help you understand closing documents.
  • Contract Review: Attorneys can review complex contracts and legal documents. These include the purchase agreement, title commitment, and loan documents. The attorney identifies any potential issues or hidden clauses that may affect your rights.
  • Representation and Negotiation: Attorneys can represent you during negotiations, resolve disputes, and ensure that the closing terms are in your best interest.
  • Legal Protection: If legal disputes or title issues arise after closing, an attorney can help resolve them, file necessary legal actions, and protect your rights as a property owner.

Deciding between a title settlement company and an attorney for your real estate closing depends on your needs and preferences. For straightforward transactions, a title settlement company may be sufficient. However, if you anticipate complex legal issues or need legal advice, hiring an attorney is wise.

Title companies offer efficiency and cost-effectiveness, while attorneys provide legal expertise and representation. Choose based on the complexity of your transaction and your comfort level with legal matters.