Understanding the Role of the Title Company

The importance of protecting an investment such as a home – the purchase of which is often the largest single financial investment an individual will ever make – cannot be overestimated. Title companies play a major role in ownership protection, and are involved in the real estate transaction through (and beyond) closing. Understanding just what the title company does is important in any real estate transaction.

Title insurance is the application of the principles of insurance to risks. These risks are comprised of human errors, and hidden hazards that can’t be detected in the examination of title. The latter may include forgery, incompetence of grantor or mortgagor, unknown heirs, fraud and impersonation.

What the title company does

A title company searches and examines public records to investigate information about title to the property. The information is then used to create a “Preliminary Report” that the lender or purchaser receives before closing. The report contains the following information.

  • The legal owner of the property
  • Confirmation that the estate or degree of ownership being sold is currently and accurately vested in the seller
  • Property tax status
  • Additional public or private assessments
  • Presence of any unsatisfied mortgages, judgments or liens that must be satisfied before conveyance of clear title
  • Existing easements, restrictions, rights of way, or other rights granted to others

Lender’s and owner’s policies

Unlike other kinds of insurance, title insurance protects against future losses that may arise from events that have taken place in the past. Also unlike other kinds of insurance, there are no annual premiums. Instead, the homeowner pays one premium, based on the amount of the sale or mortgage, when the policy is issued. It is good for the life of the policy.

A lender’s policy, which insures the lender, remains in effect until the loan is paid off. An owner’s policy, which insures the buyer, remains in effect as long as the owner (or heirs) owns the property.

About The Author

Jonathan Brooks
Jonathan Brooks, President of First Probate Loans Jonathan maintains highly specialized expertise in California real property, finance/lending, and trust and estate laws. He has completed nearly 10,000 financial transactions to estates and trusts in more than 25 years of probate loan management work. Jonathan is a trusted source for attorneys throughout California, as well as for mediation and arbitration judges. A recognized industry expert, he serves as a single source for estate mortgage borrowing needs. California Bureau of Real Estate Broker # 01881423 Nationwide Mortgage Licensing System and Registry NMLS # 307111 Paralegal


  • Danie Matthews on September 26, 2017

    Could you tell me what an angel investment is?

  • Charly Neel on September 26, 2017

    Great info to know!

  • Christine on September 27, 2017

    It is a relief to know that a title insurance for a house protects from future losses due to unfortunate events gives many people peace of mind!

  • Shi on September 27, 2017

    Really informed information to know that there is no annual premiums to pay and good to know its a life policy to the property!

  • Daniella Gordon on September 28, 2017

    Is title insurance required, or optional?

  • Riley Ellis on September 29, 2017

    I had no idea title insurance protected future losses caused by past events. Great information!

  • Mabel Smith on October 14, 2017

    After you pay off your lender’s policy would you recommend buying an owner’s policy?

    • Jonathan Brooks on November 20, 2017

      It is unnecessary to obtain an owner’s title insurance policy after paying off your loan.

    • Jonathan Brooks on November 20, 2017

      It is unnecessary to obtain an owner’s title insurance policy after paying off your loan.

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