What is a Title Officer?
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The most important thing you receive on your mortgage closing day — besides the keys — is a document called a deed, making you the home’s owner of record.
For most aspiring homeowners, making sure you have a clear title to the home is not even on the radar. That’s because much of the work is done behind the scenes by a title officer who researches legal records going back for as long as the property has been in existence, and sometimes even further. A title officer is responsible for finding anything in a property’s history that could affect your ownership rights, so you don’t end up dealing with a mess created by a prior owner.
In this article, we will cover:
- How title insurance works
- Common title problems
- What a title officer does
- Can you choose your own title officer?
How title insurance works
Even if you are buying a newly-constructed home, that property has a history you may not know about without researching the title history. From errors in public records, to illegal transfers of ownership, title insurance provides you with a safeguard against claims on your property that could affect your investment in a home.
The title officer, or title examiner as they may also be referred to, researches legal records from a variety of different databases to ensure that your property meets its title insurance requirements. This gives you the security of taking title to your property with little risk of something, or someone, from the past challenging your ownership interest.
In the unlikely event that a dispute arises after you have closed, title insurance provides coverage for the legal expenses that may be needed to investigate, legally challenge and settle any claim against your ownership in a property.
Common title problems
There may be a number of variations, but the following represent the most common issues that can arise with title, and how a title officer deals with them.
Public records errors, liens and encumbrances
Clerical or filing errors can happen over time. A homeowner may have paid off a mortgage, but a property release notification was not provided to a local recorder’s office, making it appear that the mortgage is still a lien on the property.
If an owner employed a contractor to do work, but decided not to pay them for it, a lien may be recorded that needs to be paid prior to you taking ownership. A title officer will seek out prior owners and lenders to obtain necessary releases, or confirm that illegally recorded deeds or forgeries are not enforceable.
Boundaries, surveys and easements
The lines that make up the legal description of your properties sometimes create disputes down to the inches with an unfriendly neighbor. A survey may be required to confirm the dimensions of the land your house sits on.
Easements are rights of way usually related to utility lines, or in more rural areas, access to the property through a common dirt road. In most cases, there are recorded easements that give the proper access, but from time to time a local government agency may change them, requiring a title officer’s involvement to clarify how the easement affects your property.
The title officer verifies the boundaries, legal description and easement are all properly documented.
Forgeries, impersonations, illegal deeds and missing heirs
A “quitclaim” is a document that transfers ownership in a property from one person to another. A notary must witness the transfer and provide it by mail or email to the appropriate local recorder’s office.
Sometimes, unscrupulous people will forge a quitclaim and take illegal ownership of a property. The same is true of illegal deeds — a party may prepare a deed to try to take ownership from an aging parent or an ailing relative — requiring the title officer to verify the authenticity of the deed, and take appropriate action.
In cases where a parent dies without a will, there may be missing heirs spread out all over the country, requiring the title officer to take extra measures to notify the heirs within the statutes required by the state for transfer of ownership.
The title officer will analyze all of the documents related to potentially fraudulent ownership transfers, and follow applicable state laws to properly notify all heirs of the documents needed to release their interest in your property.
What a title officer does
The title officer is the person who does the deep-dive research into public records related to the ownership history of your property. The results of this research are usually provided in the form of a preliminary title report, that provides you and all the parties to the transaction with information about the status of the title on the property, as well as conditions that need to be met for the title insurance to be provided.
Once the terms and conditions of the preliminary title report are met, then the title insurance is issued. Here’s an overview of the information you’ll receive.
Preliminary title report
The preliminary report provides information found during a title search on the property you are purchasing. If you’re getting a mortgage, the underwriter will review this report to ensure it meets the title requirements for the loan.
You will receive a copy of the report, and there are few things that are worth reviewing.
They way your names appear on the preliminary title report is used to prepare the deed of trust and mortgage note if you are getting home loan financing. How you are taking ownership, called vesting, is also shown on the preliminary title report.
There are number of different ways to hold title, and you’ll want to discuss the protections and limits of each type of ownership gives you. Joint tenancy is very common when more than one person is purchasing a property — it gives each party equal rights to the property, and if one person dies, the remaining interest automatically goes to the surviving party.
This section of the preliminary title report shows the ownership interest of parties other than the seller. This might include a listing of several heirs if the property is part of an estate or trust, or the names of partners, if the owners are part of a partnership or LLC
Your property has a legal description that is based on measurements that are in public records. This information is compared to the appraisal to make sure the descriptions match.
Taxes and liens
The amount of property taxes due, as well as whether they are paid current is referenced here. The seller is generally responsible for any past due property taxes. In states where transfer taxes are payable, the amount due will indicated.
Covenants, conditions and restrictions (CC & Rs)
When a neighborhood is built or subdivided, the original landowner may create restrictions on how the land can be used and how it should be maintained.
In order to have public utilities such as gas, electric and water attached to a home, access must be granted by the property owner. Recorded easements verify that this access has been given.
Deeds, liens, and other claims
The title officer will need to provide instructions for how to deal with any outstanding mortgages, tax liens or judgments on the property in order for the title insurance to be put in place. Releases need to be provided by any party holding a claim on the property, and the title officer works to obtain these releases as part of the title search process.
Chain of title
Title officers research ownership transfers to make sure they were properly recorded and any liens released properly with each ownership change. There should be no gaps between owners, meaning public records should reflect the start and end date of every party who had ownership in the property.
A gap in the title could be an indicator of fraud or forgery, or an overworked recording department. Either way, the title officer works to get the necessary documentation so the title insurance can be issued.
Once all of the conditions of the preliminary title report have been met, the title insurance is issued,and is paid for at closing as part of your closing costs.
Your title officer helps with last minute closing changes
Right before closing there may be changes that need to be made, and the title officer will be the one to jump in and get the job done. Whether it’s a change to the final loan amount, or adding a co-signer because you didn’t quite qualify on your own, the title officer is the one that will need to re-issue the documents.
You may also decide to put your property into the name of a trust, LLC or partnership, which will require the title officer to review the legal documents to confirm they are properly prepared and meet the title insurance guidelines.
Can you choose your own title officer?
The answer is unequivocally yes, if you are refinancing your home. You’re actually choosing the title insurance company, and the title officer provides the research necessary for you to complete the refinance.
With a purchase, it’s a bit of a grey area. According to the Consumer Finance Protection Bureau, you can shop for title insurance. The reality is, your purchase contract will determine which title company is used, and once the contract is signed by you and the seller, it becomes binding.
The seller is able to reject your purchase offer if you don’t agree to use his preferred title company, so you lose your title insurance shopping ability. The good news is that the lender’s title insurance is much cheaper than the owner’s insurance policy, which the seller will usually pay for.
Bottom line: A title officer protects your home ownership status
The only way to truly confirm that you have legal ownership of a property is to make sure there are no defects that might have been caused by prior owners. A title officer has the legal and research expertise to make sure your ownership rights are protected, and title insurance provides you with the legal coverage to fight off any one who tries to challenge those rights for as long as you own your home.