When choosing a title company, investigate whether the
company has multiple options as to underwriters. Some
companies are direct operations of national underwriters,
with just a single set of underwriting guidelines. An alternative
is a title agent, an independent company often with multiple
underwriters behind them. This might make a difference on a
more complicated transaction, because the title agent can
shop among several underwriters to find one with guidelines
that offer workarounds.
Where is the title research handled?
Many large title companies have followed national trends and
sent behind-the-scenes jobs to other states or other countries,
particularly parts of the title research process. On the ground
in your town, this can impact the
ability of local employees to get
timely answers and solutions when
there’s an issue to be cleared up
before closing the transaction.
Find out if the company you’re
considering has a fully staffed title department at their
local headquarters, or at least in your time zone.
Is the company compliant with new federal rules?
The Consumer Financial Protection Bureau has a host of new
regulations that will be effective August 1st, 2015, for any
residential transaction involving a federally insured loan. The
new rules touch on many aspects of title company practices,
from enhanced security measures to new forms and time
frames for processing.
As this deadline approaches, it will be vital for the health
of your transaction that the title company be compliant
with all the new requirements. Most lenders will be
vetting title companies for compliance well in advance
of the official deadline, and your transaction could be
stopped in its tracks if the title company you choose is
If you’re hoping to close your transaction any time after
June 1st, 2015, it’s a good idea to ask the question: “Is your
company ready to comply with new rules from the CFPB?”
You’ll sound super savvy, and if the person you speak with
has no clue what you’re talking about, it would be best to
What value-added service do I get?
Again, title companies in Texas can’t compete on price, and
those that are serious about standing out from the herd offer
a range of resources and services to smooth and enhance the
experience of buying or selling a home.
Look for things like reports and guides that help sellers answer
questions about their property, and explain the closing process
for the lay-person. Some offer both printed and online
resources that help buyers learn about local schools, taxing
authorities, and communities. Some have online calculators to
help in estimating costs, and mobile applications to connect
you with branch locations and other resources.
Are there any relationships I should know about?
This item is a question for your real estate or mortgage
professional, as they help guide your choice of title company.
Because Realtors and mortgage lenders are involved in more
transactions than the majority of consumers, they tend to have
relationships with particular title
companies and escrow officers. This
is a normal and functional aspect
of the way these industries work
However, some real estate brokerages, builders or title companies form business agreements
to steer transactions to a particular provider. If certain legal
requirements are met, this is allowed under existing laws,
although some of these rules are under review by federal
As a savvy consumer, it’s wise to ask whether a title company
has been recommended based solely on their stellar service
and performance. Any side deal or “affiliated business
agreement” is required to be disclosed by law, and you as
the consumer have the final say in what title services provider
handles the transaction.
Except… it’s negotiable in Texas
That is to say, buyers and sellers must ultimately come together and
agree on the choice of title company. In Texas, the agreed upon
title company is indicated on the promulgated sales contract.
There are arguments on both sides of the issue as to whether
sellers or buyers should have their choice. On the one hand,
sellers sometimes need the assistance of a title company to
resolve known issues that would complicate the sale, even
before talking to a potential buyer. And in Texas, typically the
seller pays for the title policy insuring the buyer (although this is
also negotiable). On the other hand, the buyer is ultimately the
insured party, and will have the ongoing business relationship
with the title company.
The important takeaway is that you as the consumer have a
voice and a vote. All title companies are not the same, and a
little research can help you make an informed choice.
“ The important takeaway
is that you have a voice
and a vote.”