What a title company actually does
Understand title search, title insurance, settlement, escrow, recording and wire verification—and how roles differ by state and transaction.
What matters before you decide
Depending on the state and transaction, a title company may search public records, issue a title commitment, coordinate curative work, provide owner and lender title insurance, hold funds in escrow, prepare settlement figures, collect signatures and record documents. It does not automatically represent the buyer as legal counsel, guarantee physical condition or eliminate every ownership risk.
- Identify every party’s role and duty in writing.
- Read the title commitment and exceptions before the deadline.
- Distinguish lender and owner title insurance.
- Verify every wire instruction through a trusted channel.
From record search to title commitment
The title search examines relevant public records for the legal description, ownership chain, mortgages, liens, judgments, easements, restrictions and recorded matters that may affect transfer. The resulting commitment or preliminary report states requirements that must be satisfied and exceptions the proposed policy will not cover.
Read the legal description, proposed insured parties, policy amount, requirements and exceptions. Compare surveys, association information and seller documents where relevant. A search can miss matters outside the examined records, so ask what the policy covers, excludes and requires instead of treating “clear title” as a universal guarantee.
Understand the two insurance policies
A lender policy generally protects the mortgage lender’s insured interest up to its terms and amount. It does not substitute for an owner policy. An owner policy protects the buyer’s insured title subject to its conditions, exclusions and listed exceptions. Coverage forms, endorsements, pricing and local customs vary.
Ask which policy is required, which is optional, who pays by contract or custom and whether simultaneous issue or endorsements affect price. Do not assume that insurance fixes a known issue before closing; some requirements must be released, paid, corrected or accepted before a policy can be issued.
Settlement, escrow and recording are separate functions
A settlement or escrow provider may receive funds, reconcile lender and contract figures, collect signatures, pay authorized items and deliver documents for recording when conditions are met. The attorney, title, escrow and recording roles differ across states. Ask who represents whom, who can give legal advice and who is responsible for each deliverable.
Review the Closing Disclosure or settlement statement line by line. Match deposits, credits, prorations, payoff amounts, commissions and title charges to source documents. Confirm how and when the deed, mortgage or deed of trust and other instruments will be recorded, and how the final owner policy will be delivered.
Treat wire instructions as a high-risk control
Real estate transactions are frequent targets for business-email compromise. Obtain the closing provider’s verified telephone number from an independent trusted source early in the process. Before sending funds, call that known number and confirm recipient name, bank, routing details and amount. Do not rely on contact information in a last-minute email.
Be suspicious of urgency, secrecy, changed accounts, look-alike domains and requests to bypass established procedure. If funds may have been misdirected, contact the financial institutions and law enforcement immediately; speed matters. Preserve the messages and do not continue the conversation with the suspected account.
Decision checklist
- Legal description and proposed insured names are correct.
- Requirements and exceptions are understood before the deadline.
- Owner and lender policies are compared separately.
- Settlement figures reconcile with contract and loan documents.
- Roles, representation and document custody are clear.
- Wire instructions are voice-verified through a trusted number.
Frequently asked questions
01Is a title company my lawyer?
Not automatically. Roles vary by state and engagement. Confirm in writing who provides legal representation and who acts as title, settlement or escrow provider.
02Does a lender title policy protect the buyer?
It primarily protects the lender’s insured interest. Ask about a separate owner policy, its exceptions, amount, duration and price.
03What should I do if wire instructions change?
Stop and call the provider using a previously verified number. Never confirm changed instructions through the same email thread that announced the change.
Primary sources and further reading
Always verify the date, scope and local application before using a source for a specific decision.
Independent educational information. Not legal, tax, lending, or investment advice. Verify local rules and consult licensed professionals before making a real estate decision.