Buying or selling a home comes with closing costs on both sides. Most commonly, these closing costs are referred to as title fees. While some closing costs will be incurred from a lender, when selling a home, the majority of the fees for a seller will come from the title company. Title companies keep on file all information about a property, its boundaries and any liens or negative information attached to a home or piece of land.
The title policy is issued by the title company to protect the property owner from any previous liens on a property because of unpaid bills, taxes or liens from a contractor. Typically, the title policy issued will cost the seller of the property 1 percent of the total sales price. This policy protects the seller by conveying a clear title or deed to the purchaser of the property and protects the buyer from any debts he did not incur in relation to the property. Title policies are required by a lender in any real estate transaction.
Property appraisals estimate value of a property and are required by a lender and are turned into the title company for review. Title companies are required to act as uninterested third parties to a real estate transaction and are the unofficial mediators of any issues or problems that arise. Once the title company receives the appraisal, it is its responsibility to file it, provide copies to the lender or lenders and verify its accuracy. If there are problems, the title company can halt the transaction until they are resolved.
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Once the purchase of a property is complete, the new deed must be recorded with the county clerk's office. There is a fee with that. The seller will have to pay a fee to transfer the deed to a buyer, and the buyer will have to pay a fee to have the deed recorded in his name. This fee is handled at the title company during closing and is commonly referred to as the title recording fee.
The survey of a property is a map commonly referred to as a plat map or plot plan. These plans show the seller and the buyer where property lines begin and end, any topography to the property and the exact measurements of the property lines. This is a required document the title company must have and record for any property to be transferred. This fee is a very common title fee and will vary based on the size of the property that is being purchased.
The title company will have to provide a statement from the seller that all property taxes have been paid before the property is transferred. It will also have to provide a statement to the buyer that states the amount he owes for any remainder or partial year's taxes. Because of the tedious work involved in researching records and tax information, the title company can charge a fee for this statement. This is also a very common title fee at closing for the buyer and the seller.
As with any official document that requires filing at the courthouse, the title company will charge a small fee to notarize the documents. This states the title company has succeeded in verifying all required parties are in attendance, that they have signed the documents and that it has been witnessed by a representative from the title company that has no personal or vested interest in a transaction.
While title fees are deemed necessary by legislation in regard to the handling of real estate transactions, many individuals do not see the necessity in paying additional fees from a title company and view them as just another expense. While it can be inconvenient to pay the added fees, without independent, third-party verification of real estate transactions, there would be no authority on the handling of sensitive and expensive matters such as these. Buyers and sellers would not be offered the added protection of getting a clear title or deed to a property that could result in thousands of dollars of debt or even higher foreclosure rates because of unpaid liens or property taxes. Title company fees are necessary and worth it for both sides of a real estate transaction.