What is the Function of a Title Company?

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A Title Company coordinates all parties in handling the closing of a transaction the lender and borrower-and prepares all the necessary documents including the settlement statement (HUD-1). The title company disperses all funds involved in the closing.

The title company’s main function is to provide title insurance to the borrower and any lender financing the transaction. Title companies as an insurer differ from other kinds of insurers in that they attempt to research and eliminate all risks of title defects rather than to assume risks. It is a secondary function of the title company to handle the actual closing to assure that the documents necessary to convey clear title have been properly executed and filed, and that all previous interests in the property have been disposed.

The three main functions of a title company are:

  • The search and examination of titles sufficient to prepare a commitment for title insurance.
  • The…

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