Not all title companies are the same: What you need to take into account when choosing a title company.
The good news for buyers and sellers of real estate is the title business in Texas is heavily regulated. All title companies must conform to strict standards and rules of compliance, making it hard to run into a terrible or unscrupulous title company as they likely wouldn't last long in this type of regulatory environment. Texas title companies all charge the exact same rate for general title insurance policies, though fees (such as attorney's fees or fees associated with the preparation of documents) charged will differ to some extent. There are only a couple of dozen title companies in the D/FW real estate marketplace; a knowledgeable agent should know them and have the ability to easily communicate with them.
The amount of work involved in running a title search and offering a title commitment is grand in scope; inevitably mistakes can and will be made by any title company over the course of deals. I've found it's how the corrections are handled which defines the mistake. If a mistake is made, I want them to honestly own up to it, I want to be notified right away and for the problem to be resolved as soon as possible. There are other aspects of a deal, such as documents buyers and sellers are required to sign at closing. This is an affidavit stating they will come back to the title company and rectify any mistakes made, such as signing documents where a signature is missing. I've seen the pro-rated taxes incorrectly calculated, where the seller had to settle up with the title company for the difference, after closing. If the seller has already paid the taxes for the entire year, the buyer should be required to reimburse the seller for his or her prorated share. If none of the taxes have been paid, the seller should be charged his or her prorated share with the amount placed in escrow. This is, in fact, how real estate tax payments are usually arranged when you buy or sell a home. The home sale contract should clearly set forth these requirements--requiring each party to pay his or her pro rata share of the tax. When the buyer files his or her taxes for the year, he or she will be able to deduct the real estate taxes he or she paid as an itemized deduction. Indeed, for tax purposes, the IRS automatically treats the seller as having paid the property taxes up to the date of sale, and the buyer having paid the taxes due after the date of sale.
Example: Bill purchases a home from Sandra with a September 1 closing date. The real estate tax year in the area was the calendar year. The real estate tax due for the year was $900 and was paid by Sandra on August 1. The sales contract Bill and Sandra sign should pro-rate payment of these taxes based on the number of days each own the house during the year of sale. Bill will own the property for 122 days, which amounts to 33% of the year (366 days in a year ÷ 122 days = .3333). Bill should reimburse Sandra for 33% of the $900 property tax she paid--that is, Bill should pay $300.
Homeowners may deduct as an itemized personal deduction state and local real estate taxes they pay on their main home and vacation homes. Thus, both Bill and Sandra from the above example can deduct their real estate taxes as an itemized deduction the real estate taxes paid. Now, here's the strange part. Even if the buyer or seller doesn't actually pay his or her pro rata share of the real estate taxes, he or she is still treated as having done so by the IRS. This means that the buyer gets a deduction for the prorated amount of real estate tax due after closing, and the seller gets the same deduction for the taxes due before closing--even if one or the other didn’t actually pay them.
Example 1: Assume that the contract Bill and Sandra made didn't require Bill to reimburse Sandra for his $300 share of the $900 real estate taxes she paid, and Bill in fact does not do so. Bill may still deduct $300, and Sandra only $600.
Example 2: Assume that Sandra hadn't paid any real estate taxes when the sale closed and Bill pays them all after the closing. Bill still may only deduct his $300 pro rata share of the taxes and Sandra still gets a $900 deduction even though she did actually pay the taxes.
Either of these unfair outcomes can easily be avoided by making sure that the sales contract properly pro-rates the real estate taxes between the buyer and seller and requires both to pay their share. [RS-2]
In the title business, the 'closer' is the person taking the lead on the home sale and working with buyers and sellers at closing. Many closers have assistants, who will also be a resource for all parties including the buyer, seller, listing and selling agents. Many closers, as you might expect, are busy during the day with back-to-back closings through-out the day. Many times it is the assistant to the closer whom agents work most with. The assistant takes on the role of coordinator or liaison between the buyer, seller and real estate agents. A responsive, communicative closer's assistant helps make sure the transaction proceeds to closing in as smooth a manner as possible. It's important for a good agent and his client to be sure to include the assistant and closer on all communications, to make sure everyone is in the loop.
Aside from a closer's assistant, there is also always a business development person in the title company who can also act as a liaison of sorts. As an agent, many times I've relied on business development coordinators in the title company to get an urgent message across to the closer in instances I'm unable to get in touch with them. Business development personnel can also be used to help make it easy for the agent and their client, by picking up and delivering checks or other items such as documents during the process during the sale of the home.
I'm of the opinion that the best value for my clients is to have an actual title attorney be the closer on their deals. First of all this has the potential to speed up the title commitment process, as the same person that starts the file, finished the file. There is no 'waiting for an opinion from the attorney' - since the attorney is doing the title work. Your title commitment — which may also be referred to as your title work or title binder — is a long document that will guarantee you title rights to your new property when all is said and done. What this means can vary from state to state. But in all states, a title commitment indicates that a property title is free and clear of defects and that title insurance can be obtained for it. In short, a title commitment is a promise from the title company to issue a title insurance policy for your new home after closing. A title commitment is broken down further into two subsections. Schedule A is what has been submitted to the title company by the escrow officer, containing the commitment date, buyer and seller information, property price, and loan amount. You’ll find the exceptions in Schedule B, including the Covenants, Conditions, and Restrictions (CC&Rs) that we’ll explain more about below. Schedule B is the part of the title commitment that you’ll really want to read. However, make sure to take a look at the exceptions. Yes, even with a title guarantee, there are always exceptions to the rule; rights of parties in possession, boundary issues, encroachments, easements not shown in public records, and more. You can cover your bases and remove some “standard exceptions” by purchasing Owner’s Extended Coverage (OEC) along with your policy. Tacher says buyers will normally see exceptions to the policy listed as easements from utility companies, as well as rights of use. Make sure that when you check for numbers you take a closer look at the fine print. Title insurance is intended to cover the home buyer and is paid for by the seller. So, most costs listed in the title commitment should be charged to the seller, with the exception of the additional American Plan Title Association (ALTA) policy that the buyer is responsible for purchasing. You can expect to pay $100 to $200 for the ALTA policy. Plus the price of any endorsements added to the title insurance. Lastly, always get it all in writing.
From an agent's standpoint, there are several added benefits of working with an accommodative title company. There will be times when the property is in a living will, or a member of the family has died - issues such as the property being held in probate. All of these waters are easier to navigate with a title attorney on the matter at all times.
There are times when documents will need to be couriered across town, other times when documents need to be sent over night - having a reliable, punctual title company can make the difference between closing on time instead of not closing at all.
There are two types of general title policies, the main policy and the supplemental policy. It is customary for the seller to pay the title policy in the state of Texas, but everything is negotiable - including who pays for the title policy. Which title company and closer chosen is also negotiable in the One to Four Family Residential Contract (Resale).