The title company represents a neutral party in a real estate transaction, but they can make your experience a breeze or a nightmare, depending on how well you can interface with them. The title company plays the role of researching any liens or debts that could cause a "cloud on title", affecting the property's chain of title. Your going to want to make sure as buyer or seller that all documentation concerning the property is in order, to prevent any claims coming up that would affect your future interest in a property that you just invested a large sum of money into, and may be the biggest purchase of your life. It would be a horrible situation to go thru the whole process of purchasing a property, then getting a phone call or email that the property lines are in dispute, or someone else was owed money on the property prior to your purchase. Title companies also provide insurance policies against negligent and/or malicious activities like fraud or honest disputes over ownership. Title companies and escrow companies have separate functions in California, but in most states they operate under one roof, sometimes with a closing attorney.
I've had to hunt down a succession of title companies that had went out of business and sold their files to another larger company, then sue said title company in small claims court. They didn't put up a fight with them being a neutral party to the transaction and me being able to provide all my documentation, but understand it was part of the process. Actually, the title officer was very helpful after seeing my documentation, and walked me through the process of recovering my funds, which would involve having to obtain a court order to release the funds, which would then require me to bring legal action against the title company. On arriving to court, the title officer told the judge that, even though she was standing in the place of the defendant, the company had no claim on the funds, no interest in the outcome, and after doing her own research, had no reason to contest my claim. I was eventually awarded the money, and I thought the judge was being harsh in making me prove my claim over again after the title officer explained they had no claim on the funds and supported my action, but later I would find out that, in that type of case, the judge would still make anyone prove the elements of their claim.
I had one property, a vacant lot up for sale, that as far as anyone knew was "landlocked", meaning no street access according to the owner for as long as anybody remembered. Appearing landlocked significantly lowered the value of the property. For years, the owner thought the property did not have street access, and no one challenged their claim. I took the grant deed, studied it over and over, comparing it to a plat map of the area, went back and forth between the two, then discovered that a plot point had been repeated, so going by plot points only, the property would have then had to be in the shape of a triangle.
Once I noticed the discrepancy, I contacted my broker for direction. If nothing else, we discovered a discrepancy between the plat map and the point description. In order to sort out the problem, the next step was to bring out of surveyor to check the property point and lines, and research. Once the surveyor did their job, he was able to determine the property description was wrong, that it was definitely a rectangle with an easement to the street on its northeast side. In order to make it official, all the documentation was submitted to the title company, where they processed the changes with the County Recorder's office, and all was well.
It's standard to have to provide two forms of identification in most financial transactions, but I've had one go as far as holding up the deal to demand I provide a birth certificate before the check would be released. I've also had one present me with a document to sign stating that I was the same person in full name because at one place I only signed my first and last names without the middle name. I get it, title companies have a duty to verify everything concerning the transaction, but they can also be on the "overzealous" side at times. I now know you must sign and print your name the exact same way throughout the transaction or it messes things up.
I've had a title company dig and find someone with my same name with an outstanding lien in a neighboring county, even though none of our other identifying information was remotely close. I've also been presented with a medical bill for a young lady that I had never heard of, and had no connection to, in a city I didn't know anyone in or had never been to. It actually created a tough situation. When I contacted the medical office, since I attested I didn't know the woman, they couldn't even verify if she had ever been a patient there (HIPAA violations). I provided them with my social security number, and no outstanding accounts came back saying I had ever been a patient of theirs, nor did it appear someone fraudulently attempted to use my identity for services. At that point, I was somewhat stuck; I needed to show the title company something in writing stating this bill was affirmatively not mine, anyone I was connected to or connected to the property, but the dentist' office was unwilling to provide anything being that I had already attested no connection and so did they. I sounded crazy until someone in the office understood that my name came up in connection to a patient at that office via a title company search.
In another situation, securing title insurance to protect a settlement secured by real property. I did not, and long story short, the creditor was able to slip through my hands. To the best of my understanding and research, due diligence would still be the beneficiary's responsibility; title companies are generally not liable if they "overlook" a lien unless you have your own contractual relationship with them. I say that in light of personal experience. You'll want to get in touch with a collections agency, who may need to legally tweak your judgment into an item that can be exercised.
Once, I dealt with a situation where the owner's deceased husband had entered into a contract for sale with a property 30 years prior, and an escrow apparently had been opened and never completed. This left a huge gap in the chain of title, as now we needed to find out what happened to the prospective buyer. We found out apparently the buyer passed away during the transaction. Instead of cancelling the transaction, that left the possibility that any heirs that were aware could come forward and still possibly claim to want to complete the transaction, at the price agreed on 30 years prior. The eventual remedy was to purchase a bond in the event the purchaser's family came forward with a claim to the property in the future.
They are there to protect everyone involved in any transaction, but as always, perform your own due diligence.
*I do not claim to give legal advice, only sharing my personal experiences as they relate to past real estate transactions. The reader should still contact an attorney to clarify any questions or concerns.
