How To Choose Your Title Insurance Company
As a buyer or seller, you choose your real estate agent, lender, moving company, and more - but did you know that you also have the right to choose your title company?
Here are some questions to ask when selecting your title company:
1. Is my money safe?
What you see in the news is true: people do lose money as a result of a title company’s incompetence.
When handling your funds, what kinds of procedures does the title company have in place? How do they balance escrows? Do they have an escrow and accounting department
2. Is my investment protected?
The financial strength of underwriters is an important tool to determine if your investment is protected. The stronger an underwriter’s financial strength is, the better their claims-paying ability.
When researching the financial strength of an underwriter, consider researching independent rating companies, such as Demotech, Inc.
3. Is my title company a neutral third party?
Some title and closing companies are owned by lenders, real estate firms, or builders – which can create a conflict of interest. When considering an affiliated title company, be sure to ask:
Is this affiliated title company providing industry-standard services?
Are their rates competitive?
4. In addition to the premium you quoted me, what are your other fees and charges?
Title companies are required by law to file rates with the Division of Insurance that can’t be discounted. A red flag to look for when title company shopping is if their insurance premium is significantly lower than the market rate.
Notably lower rates could backfire on a buyer or seller because:
This could indicate a lack of experience, flawed financial and accounting processes, poor title searches and examinations, or an insufficient source for property data
The cost difference is often made up in charging extra for electronic delivery fees, overnight courier fees, release tracking fees, wire fees, and other charges
5. Do you conduct thorough title searches and report all exceptions?
Title companies are required to perform a “reasonable examination” on every transaction, and also provide the consumer with the recorded documents for each exception.
Detailed title searches and exception reports are important because:
Real estate professionals keeping their clients’ best interest in mind wouldn’t advise them to accept a title commitment that doesn’t specify documents affecting the property
Some title companies exist solely to sell policies and pocket premiums from the transaction without performing a thorough search and examination of the property – despite the requirement for title insurance providers to follow industry regulations on a national and state level
6. Are you locally owned and operated?
Many nationally owned and operated title companies outsource their title commitment and portions of the closing process overseas, are less informed about local laws and regulations, and have a longer response time.
Consider partnering with a locally owned and operated title company because:
Local title companies have a deeper knowledge and understanding of state laws and customs
Response times are quicker and more accurate
You support the local economy by doing business with a local company
7. Does your company follow the title industry’s best practices?
The American Title companies Association (ALTA) created seven best practices to hold title companies accountable while also protecting lenders and consumers.
Ask if your title company follows ALTA’s seven best practices because:
The best practices cover all aspects of the title industry including settlement services, accounting practices, and data security
While it’s not mandatory, these best practices are designed to ensure lender and consumer transactions are protected and safe, and that a title company’s products and services are delivered properly
Information sourced from www.LTGC.com.
