Understanding what a title company in Utah does can be very confusing. Here are the answers to the most common questions about title companies.
Title companies facilitate real estate transactions for all parties involved. As a homeowner and full-time discount real estate broker, I recommend working with an experienced Escrow Officer like Tracy Beck at InWest Title.
You will learn what a title company does, the difference between a title and a deed, common defects discovered with a title search, and how the owner's title policy protects the house you and your family call home.
After reading this post, you will understand how much title companies cost, who regulates title companies in Utah, and how they protect your home purchase.
What Does A Utah Title Company Do?
Title companies are in the business of protecting all parties (not just their clients) in real estate transactions.
The title company team aims to protect the buyer, seller, and lender throughout the process. One of the key responsibilities of the title company staff is to verify that the seller is the property's legitimate owner.
Verifying legitimate ownership and discovering liens or encumbrances against the property is undoubtedly a title company's most important service.
What Title Companies Do For Home Buyers?
The title company team is an intermediary committed to protecting the lender the home buyer, and their family.
They are responsible for conducting a title search and providing title insurance for the home the buyer is purchasing. Buyers who hire a title company ensure the property's title is legitimate and free from liens or encumbrances.
What Title Companies Do For Home Sellers?
Title companies are typically seen as protection for the buyer, but they also offer important benefits to sellers.
Title issues can delay the real estate process, causing the homeowner to miss contractual deadlines. Defaulting on the contract could result in the buyer canceling the purchase contract, the seller paying liquidated damage, or both.
A thorough title search is essential to determine if there are any new liens against the property since the owner purchased the home.
Often, homeowners are unaware of liens that the title company will discover. Before selling your house, it's best to be aware of such title defects.
What Is A Title Search?
A title search aims to verify that the title of the property being sold or refinanced is free from past defects or to identify and resolve the issues before the title to the property is transferred.
This requires thoroughly reviewing all the relevant public records about the subject property.
Pro Tip: The Owner's Policy does not cover future Title Defects that occur while you own the property.
What Is A Title Commitment?
The Title Commitment, also known as the Preliminary Title Report, is a proposal to provide title insurance for real estate. Experienced title examiners create a title commitment by examining the recorded real estate records.
Each title commitment will include exemptions to coverage. Exemptions are recorded documents that affect the real estate being bought or sold and the title insurance policy.
It is important for all parties involved in the transaction to review the title commitment promptly upon receipt.
Title commitments are typically provided in a standardized format by the American Land Title Association (ALTA). Schedule B Section II, in the ALTA form, itemizes exemptions to the policy's coverage.
**An exemption indicates an issue not included in the policy's coverage.**
Common Title Commitment Exemptions
- Encroachment
- Easements
- Contractors Liens
- Unpaid Taxes
What Is A House Title?
In Utah, real estate, "Title," represents the legal concept of people owning a piece of property. Essentially, when someone has a Title to a property, they have the legal right to own and use it as they see fit, not a physical document.
**Title to Utah real estate is an intangible idea.**
Title vs. Deed In Utah
Title
Title documents are not tangible objects that can be held or touched. Instead, the title represents an abstract concept of ownership. It's a way of saying you have a right to something - in this case, a piece of real estate.
Deed
Unlike titles, deeds are legal, physical documents that transfer property ownership. Deeds are recorded with the county assessor's office.
What Is Title Insurance?
Title insurance protects clients against financial loss and legal expenses resulting from defects in the title of a property. Unlike homeowner's insurance, there are no monthly payments. The policy is established with a one-time premium paid at closing.
Who Pays For Title Insurance?
The real estate purchase contract, or the REPC, will specify which party or parties are accountable for buying and covering the title insurance costs.
Otherwise, the seller will be responsible for buying the owner's policy, and the buyer will be responsible for buying the lender's policy.
Lender's Title Policy
- The lender's title policy protects the lender, which the buyer pays for at closing. For example, if someone were to sue, claiming a right to the property, the lender's title insurance would provide coverage.
Pro Tip: It's important to note that this policy only covers claims that affect the lender's loan, not your home or equity.
Owner's Title Policy
- The seller pays for the owner's title insurance to protect your property investment.
However, if someone could claim the property they have a right to, that predates your ownership. In these situations, the owner's policy can provide crucial protection.
The most common claims arise from previous owners' failure to pay professional contractors for work or service on the property before you purchased it.
Who Regulates Title Companies In Utah?
The Utah Insurance Department is committed to regulating title companies, which are important in buying and selling real estate.
How Much Do Title Companies In Utah Cost?
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The charges for title services are typically under one percent of the loan amount or sales price. The fees are determined based on the amount of title insurance required and established escrow rates.
- Closing Fee: $380
- Recording: $80
- Document Prep: $40 (included in closing fee)
- Courier Fee: $40 (included in closing fee)
- Closing Protection Letter: $25
- Reconveyance Fee (Mortgage Payoff): $10 (included in closing fee)
- Lender's Title Insurance (Buyer's Cost): varies based on the loan.
- Owner's Title Insurance (Seller's Cost): varies based on sales price.
These fees are estimates only. Please contact InWest Title or your Escrow Officer directly.
Tracy Beck at InWest Title 801-748-0560