When you’re new to real estate, you’ll hear the word “title” almost as soon as you start working on transactions. You’ll communicate with title companies, send them contracts, receive requests for information, and hear about title searches and title insurance.
But what exactly does title in real estate mean?
At its simplest, title refers to the legal ownership of a property and the rights that come with that ownership. Before a property changes hands, the parties involved need to know whether there are any issues that could affect the transfer.
As a new agent, you don’t need to become a title professional. You should, however, understand enough about the process to know what’s happening and where to send your clients when they have questions.
What Does a Title Company Do?
A title company can become involved soon after a property goes under contract.
Depending on the transaction and local practices, the title company may handle the title search, coordinate closing documents, work with lenders and agents, hold escrow funds, and help prepare for the transfer of ownership.
In Florida, the exact closing process can vary, and attorneys may also be involved.
For an agent, the title company becomes one of the main contacts during the time between contract and closing.
What Is a Title Search?
A title search examines public records connected to a property and its ownership history. The purpose is to identify issues that could affect the new owner’s rights to the property.
For example, there may be an outstanding lien, an ownership question, an unreleased mortgage, or another recorded matter that needs attention before closing.
Not every issue means the transaction is in trouble. Some can be resolved as part of the normal closing process.
Your job as the agent isn’t to determine how a title problem should legally be resolved. If something appears in the title search, work with your broker and let the appropriate title or legal professional explain the issue and the available options.
What Are Liens?
A lien is a legal claim against a property related to a debt or obligation.
Mortgages are a common example, but other types of liens may also appear in property records. Depending on the circumstances, they may need to be satisfied or otherwise addressed before ownership can be transferred with the expected title.
If a lien appears during one of your transactions, don’t immediately assume the deal is falling apart.
Find out what the title professional needs and keep your client informed about who is handling the issue.
What Is Title Insurance?
Title insurance can be confusing for first-time buyers because it isn’t the same as homeowners insurance.
Homeowners insurance generally addresses certain future losses involving the property. Title insurance deals with certain covered title problems tied to ownership rights, subject to the specific policy terms, exclusions, and exceptions.
There are also different types of title insurance policies. An owner’s policy protects the owner’s covered interest, while a lender’s policy protects the lender’s covered interest.
Questions about coverage, exclusions, cost, or whether a particular issue is insured should go directly to the title professional or other appropriate professional.
Why Agents Need to Pay Attention to Title
Even though you aren’t performing the title search yourself, title-related matters can affect your transaction.
If additional documents are needed or an issue has to be resolved, it could affect the closing timeline. That’s why requests from the title company shouldn’t sit unanswered in your inbox.
Read the emails you receive, respond when something is needed from you, and make sure your client knows when the title company is requesting something directly from them.
You don’t need to solve the title issue yourself. You do need to pay attention to what’s happening.
Get the Contract to the Right People
Once a contract is executed, make sure it gets where it needs to go according to your brokerage’s procedures.
That may include the title or closing professional, lender, Transaction Coordinator, broker, and others involved in the transaction.
Don’t assume someone else already sent it.
When you’re new, develop a checklist for what happens immediately after a contract is signed. Your broker may already have a process in place, so learn it and use it consistently.
Know Which Questions Aren’t Yours to Answer
A client may ask you a title question because you’re the person they know and trust in the transaction. That doesn’t mean you should guess at the answer.
If they ask whether a title issue affects their legal ownership, what a policy covers, how a lien should be resolved, or another question outside your expertise, connect them with the title professional, attorney, or other appropriate person.
You can still stay involved in the conversation and help your client understand what’s happening without stepping into someone else’s professional role.
Don’t Wait Until Closing Day
Pay attention to title-related communication throughout the transaction, not just during the final week.
If the title company asks for information, follow up. If your client receives something they don’t understand, help them connect with the person who can explain it. If an issue could affect the closing date, make sure your broker knows what’s happening.
A lot can happen between contract and closing, and title is one part of the transaction you don’t want to ignore until the last minute.
Learn the Process at LEAP Real Estate Academy
At LEAP Real Estate Academy in Orlando, students learn about property ownership, contracts, closings, and other topics they’ll encounter when working in Florida real estate.
Once you begin working with actual transactions, those classroom concepts start to make a lot more sense. You’ll see how agents, brokers, lenders, title professionals, inspectors, Transaction Coordinators, and other professionals work together to get a transaction closed.
Understanding title in real estate won’t make you a title professional, and it isn’t supposed to. It will help you recognize what’s happening during the transaction, ask better questions, and know when your client needs to speak with someone who specializes in that area.
