An Explainer: Title Company

A title company assures the owner that the property’s title is legal and for ownership. Beyond this, it gives you an insurance for this property protecting the owner from any claim or lawsuits that may arise out of the ownership over the piece of property.

Title companies also maintain an account which keeps a fund that the owner may require to close on the home, such as settlements. This is typically an escrow account – meaning, the owner cannot divert this fund for any other purpose. At this stage, usually, an agent from the title company will approach the owner with the required documentation and explanations.

To provide the owner with an insurance, the title company has to do a lot of research. Thorough examination of property records is done to make sure nobody, besides the buyer who is going to own the property, at any point of time can claim full or partial ownership of the said property. This will include checking on outstanding debts, litigation, taxes and dues, leases or other agreements, encroachments, easements, original owner’s right to sell as also a property survey.

Title insurances may also vary. These could either be owner’s title insurance or lender’s title insurance depending on whose interests the insurance needs to protect.

A prospective owner should also do a thorough check of the authenticity of the title company they are going for. The owner may also want to check their track record before dealing with these companies.

While title companies are common in the United States as also Europe, in India, the concept of title companies is catching up. The Real Estate Regulatory Authority (RERA) necessitated the passage of such insurances to ascertain that the Indian real estate market is transparent to the core. Today, in India, you have a handful of title companies that help you get over the costs of defects, out-of-court settlements, defence costs, fraud etc.