Title Agents & How They Protect Property Rights

What do title agents do and why would you need to work with one? Well, if a seller doesn’t have clear rights to sell a house, then the buyer doesn’t have clear rights to own the house. Not having a clear title can also keep the buyer’s lender from approving the mortgage. There are many reasons someone might not be “in the clear” to sell a property. Title agents search for these issues with the title and help resolve them so there is a clear right to ownership. Let’s look at the qualifications of title agents and how they help protect a buyer’s rights to their new property.

The Qualifications of Title Agents

All title agents need a high school diploma or GED to get started. A business or finance degree is beneficial and often preferred by larger companies but is not required. Aspiring agents must take prep courses, receive classroom training, and gain on-the-job experience before finding a sponsor and passing their state’s exam. Continuing education and license renewal is necessary every two to three years, depending on the state they’re practicing in. Some states require more or less coursework and training, and some (including Texas) don’t even require an exam.

What Do Title Agents Do?

Title agents ensure a title to real property is “free and clear.” This means the seller has the right to sell the property to the buyer and there are no conflicting legal claims to it. They search real estate records for title clouds, sell title insurance, function as escrow agents, and assist at closing to complete all paperwork. They also record the sale and transfer of title by filing the documents with the county recorder’s office. Let’s take a closer look at the title search and the protections covered by the title insurance policy.

Title Search

During the title search, title agents look for potential “clouds’ on the title, which are claims that invalidate ownership of the property. They may also order a property survey to confirm the property’s boundaries and if there are easements or other encumbrances. Their findings will be outlined in a title report with suggestions to resolve any title issues and the protections covered by title insurance. Here are some examples of clouds that could be found in a title search:

• Claim by an heir to a former owner
• Unpaid property taxes
• Presence of a lien by a creditor
• An invalid power of attorney
• Legal restrictions on the deed
• Unresolved spousal claims
• Improperly filed title documents

Title Insurance

Title insurance protects the lender and/or the buyer from losses due to title defects. The lender’s policy covers them up to the loan amount and is required with a home loan. Owner’s title insurance covers the buyer against losses from common risks (with some exceptions), such as those listed above. The title agent will likely uncover and help resolve these risks during the title search, but the insurance policy is there to catch what falls through the cracks. The title company will then represent the buyer in court if a covered title issue arises.

Title agents work closely with real estate agents and lenders (and sometimes attorneys) to confirm the legal transfer of title to a property and protect the buyer’s future interest. They help provide peace of mind to the buyer that they have a “free and clear” title to their new property. It’s unlikely a competing claim would come up later, and if it did, the buyer would be covered against most financial losses by their title insurance policy. Even if the closing costs are adding up, you don’t want to skip the title search or title insurance!