What Does “Title” Mean In Real Estate?
When you purchase a home, one of the documents that you will receive and be required to sign is for a title. A title gives the person the right to or ownership of a certain piece of real estate property.
Once you have found a piece of property that you are interested in purchasing and you reach an offer that is acceptable to both the seller and the buyer, you will receive a preliminary title report. This will take about a week to receive. The title company will complete the preliminary title report. The title company is selected by either the buyer or the seller — or by the lender who is going to finance the purchase.
The title report shows ownership of a specific piece of land/property as well as any liens on that property. This report will also show any title defects that might not be known about otherwise. If there is anything on the title that needs to be cleared up before the new buyer takes possession, it can be done after this report is received. A title report is required in the home purchase transaction.
The next thing that often confuses homebuyers is why they need to purchase title insurance. This is something that should be purchased whether you are obtaining a mortgage loan or paying cash for your home. Title insurance will help the homeowner deal with any issues that were not discovered when the preliminary title report was completed. This could be anything from liens to claims on the property that were not yet recorded. Title insurance is not required if you are paying cash, but it is usually required when receiving a mortgage loan.
During the closing process, the buyers will receive a final copy of the title policy. This title will show their names as the new legal owners and will be recorded with the appropriate government agencies. Other information recorded on the title is the principal loan amount and who holds the mortgage loan. Once this information is recorded, it becomes public record for the county.
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