How Does the Title Company in Chicagoland Come in With Your Home Sale?

Title Company in Chicagoland

When it comes to home sales, the title company in Chicagoland plays a crucial role. A title company manages many different tasks throughout the sale of a home.

Let’s dive in and find out just how important a title company in Chicagoland is, shall we?

What Does a Title Company in Chicagoland Do Exactly?

Over 33% of real estate deals involve a title company to manage much of the work. This can involve addressing title issues that span back for decades. Of course, the responsibilities depend on the state’s rules and regulations. Generally speaking, title companies issue insurance in addition to titles. Title companies also hold onto escrow funds as well as manage and coordinate paperwork, in effect acting as closing agents in and of themselves.

Is your head spinning? Yes a title company in Chicagoland wears many hats, they certainly have a lot on their plate.

A Closer Look...

When you’re caught up in the sale of your home, it can be difficult to keep track as to who is responsible for what task. Plus, you have all the terminology and slang to figure out. It’s not easy. I’d like to take this opportunity to break everything up by piecemeal, so we can get a clear idea of what the title company’s role is in the sale of your home.

Let’s scroll down the list, which includes:

  • Search the title for any defects. These defects are also called “clouds.”
  • Title companies must protect the buyer with the title insurance, safeguarding them from fraud and forgeries.
  • Keep money and documents for safekeeping in escrow.
  • When the final phase of the sale is initiated, the title company will oversee the closing and final fund distributions.

A Deeper-Dive Rundown of What a Title Company Does...

Here is a deeper dive into what exactly the title company does when you are selling your house.

1. Perform the title search on your house

Even before you can officially sell your house, you need to have a clean title, also called “clear title.” It may come as a surprise that snags in titles consume over 10% of the closing delays. This makes it all the more important that your title company in Chicagoland ensures that you - as the seller - own all legal rights to sell your real estate property.

It’s imperative that you have a clear title before your sale. Otherwise, without a clear bill of title then your ownership is in question. To ensure that only you and you alone can claim that you have ownership of the property you are listing to sell, this clean title is necessary.

What will the title company do to prove that you are the rightful owner of your property? First off, the title company will perform a title search. A title search process involves researching public records to obtain details about your home’s history. It can involve sourcing documents, liens, and anything else tied to a house. 

If there are any “clouds” a.k.a defects or breaks in title, it will be at this stage that a title’s legitimacy is put in question. Title companies are very thorough when conducting the title search. It isn’t uncommon if during the search, the title company turns up liens from decades ago. If your home has a dark past with previous owners, you can bet that the title company will reveal all the skeletons in the closet, some you may not have been aware of!

Here is a snapshot of the most frequent title issues we’ve seen:

  • Contractor liens: Contractor liens are any monies that are owed to a general contractor or a subcontractor for the home’s renovations, repairs, or any remodeling projects.
  • Divorce decrees: If any liens were placed on your home due to past-due child support or spousal support, the title company will dig this dirt up as well.
  • Personal bankruptcies: As you’d likely assume, any bankruptcy cases that have been put up against the owner of your home will come up as well. These personal bankruptcy cases must be discharged to clear the title.
  • Outstanding taxes: Yep, overdue taxes turn up in the title search as well. All taxes owed to the county, school will be revealed, as well as property taxes. So be sure these are all up to date to avoid any delays in explaining.

If you want a streamlined sale, be sure all of the above is addressed well before a title company in Chicagoland starts their process. Otherwise, you will experience delays and won’t be able to sell the property until this is taken care of.

While it may sound scary, often resolving these issues is only a matter of verifying that a debt has been paid. It’s important to clear up these recording errors - it’s akin to a consumer cleaning up errors on a credit report.

More often than not, it’s a matter of recording the proper documents. Very often the person that held the lien may neglect to file the proper paperwork after it’s all paid up. In certain states, such as North Carolina, a seller must sign a lien waiver that says any debt on the property will be paid at closing.

For example in such a scenario, if there was a $10,000 fee for roofing that wasn’t paid off, you would need to pay it before the buyer could borrow a loan. The bank just wouldn’t allow extending money for an outstanding bill that should have been paid years ago. In so doing, preserving the quality of title protects both the bank and the house buyer. 

You can even accelerate this process by providing a copy of your title insurance policy that you obtained when you first bought the house to the title company. However, if you purchased your home fewer than 15 years ago, the title search may be limited to the duration during which you’ve owned the house. Of course, it’d be best if it was a full, extensive search to when the house was first constructed.

2. Issue title insurance to the buyers of your property

When a title company gets involved, they will issue title insurance to the buyer of your house, in addition to clearing the home of title. In this way, they guarantee that the new owner will be protected against any other claims on the property. 

Because there is always a possibility of document errors or filing errors, as well as forgeries and undisclosed heirs, it’s important to have this insurance in place. However, even if the buyer does have insurance on title, it does not exclude the importance of running a thorough title search. Usually, the home seller will pay for the buyer’s title insurance policy. The buyer, on the other hand, will pay for the lender’s title insurance. 

3. Maintain escrow accounts and act as an escrow officer

In addition to performing the title search and issuing insurance, a title company in Chicagoland will also manage the escrow account for the sale of your home. The responsibility here is to ensure that the escrow money and documents related to the transaction for the parties involved, such as the deed to the house, closing costs, the earnest money deposit, as well as the downpayment that will follow, are all safe and protected. 

When it’s time, the title company will disburse payment and release documentation. This, of course, requires the explicit, written permission of both the buyer and seller.

4. Oversee the final steps of the closing process

In this final phase of the home sale, the details depend on the state in which you live. In some states, these last details are to be managed by a real estate attorney. In others, it’s the escrow officer or title company. It’s important that you find out who will manage your closing processes, depending on where you live. 

In a nutshell, the steps in this process involves:

  • Drafting up final paperwork and documentation
  • Overseeing signatures on all of the closing documents
  • Making sure the property title passes from seller to buyer
  • Overseeing disbursement of funds from escrow, including closing costs and fees

Finally, What is Important When Choosing a Title Company?

When choosing a title company in Chicagoland, it’s important to determine how involved the title company will be. It all depends on what the customs and regulations are in your state. In Illinois, BLANK - what are the rules here?

It’s important that both the buyer and seller are on the same page. People move from state to state, so sometimes all parties may be mixed up on what is required of them in the state that they are in. When working with title companies and escrow companies, both the seller and buyer will be guided on the process, however as always where real estate is concerned, due diligence is recommended.

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