Title companies work to protect buyers, lenders

Title companies insure something fundamental to the American dream they insure that property is free of problems that might threaten ownership. They help people know they really own their piece of terra firma.

"Title companies research the title to real estate and determine ownership and if any encumbrances exist on the property," said Linda Royce, assistant manager at Great American Title Company, which has 11 offices in Greene and Christian counties.

"If a policy is purchased, we insure that there is a good marketable title to the property."

Research is the key to providing clean title for buyers and lenders.

"We have a set of public records in our office indexed to allow efficient and simple access to write title insurance policies," said Keith Chaffin, owner and manager of Hogan Land Title Com-pany, which has eight offices in the region. "Our records date back to the 1840s and are posted to the current date. Our records show anything that has ever affected real estate in this area. Information retrieved about liens, restrictions, easements and ownership is compiled to produce a title insurance policy insuring property owners' investments."

Title companies issue two title insurance policies one for the buyer's protection and one for the lender's protection.

"(Title insurance is) good for as long as you own the property," said Bob Clinkenbeard, manager at Fidelity Title Agency, which has three offices. Confusion sometimes arises because of refinancing, he said, because whenever property is refinanced, the owner has to buy a new lender's policy for the bank.

Title companies are key components in real estate transactions.

"Once a Realtor puts a property under contract, they contact us and order a title commitment, which we prepare," Clinkenbeard said. "It shows what's going to be required so that the buyer gets a marketable title when the deal closes. We determine who has to sign to deed the property over to the buyer, what liens need released, and any breaks in the chain of title and how to correct them. Once corrections are made, we contact the lender. The lender tells us how much the loan will be for, then we issue a commitment and a policy to the buyer and the lender," Clinkenbeard said.

"One underwriter said (title insurance) should be called title assurance, not insurance because we are assuring nothing has happened beforehand."

For-sale-by-owner property also can use the services of a title company.

Title companies also are responsible for the escrow closing on a piece of property.

"We take the contract and complete the agreed-to contract. At the escrow closing, we have buyer, seller, real estate agent or broker, and lender or the lender's documents all show up at our office at a scheduled time to complete the real estate purchase contract," Chaffin said.

Changes

Escrow closings are one way title companies have changed over the years.

"Real estate companies used to do closings at their offices. Now we do that for them," Clinkenbeard said. "We try to handle all the problems we can without bothering the Realtor. We want them involved, but we also want them out there putting more properties under contract so they can bring us another one."

Another major change is that abstracts, the "history" books of a property, are no longer issued. The change started in the mid-1980s, said Royce, who also said issuing abstracts is "basically nonexistent locally."

Some title companies also provide construction disbursement service. Anyone building a residential or commercial structure can hire Hogan to oversee paying bills and collecting lien waivers involved. The reason is to provide mechanic lien coverage to the parties who request it, which typically is the lending institution or buyer, Chaffin said.

Clinkenbeard said 1031 exchanges are popular. They are "exchanges done for people to defer their tax burden when selling investment property." The title company holds the money in an account and the seller must use those funds to purchase like-kind property within 180 days.