A title company handles the closing process for your real estate transaction. They perform the title search to make sure the seller actually owns the property, issue title insurance policies, prepare closing documents, collect and distribute funds, and record the deed with the county.
In Texas, the title company typically acts as the closing agent. They are the neutral third party that manages the money and paperwork at the closing table.
The Title Search
The title company searches public records going back 40 to 60 years to verify clear ownership. They check for liens (tax, contractor, judgment), encumbrances, easements, boundary issues, and any defects in the chain of title. Problems must be resolved before closing.
Think of the title search as a deep background check on the property. The examiner looks at deeds, wills, divorce records, tax records, and court judgments to make sure no one other than the seller can claim ownership. If something turns up, say an old mortgage that was never released or a contractor who filed a mechanic's lien, the title company flags it and works with the parties to clear it before the transaction can close.
Escrow Management
The title company holds earnest money in escrow. They receive the buyer's funds and the lender's wire. They pay the seller, the real estate agents, and any other parties at closing. They are the neutral money handler.
Escrow management is one of the most important roles the title company plays. When you write that earnest money check, you are not handing it to the seller directly. You are depositing it with the title company, who holds it in a trust account. At closing, the title company coordinates the flow of funds: the buyer's down payment, the lender's loan proceeds, the seller's proceeds, agent commissions, and third-party fees all pass through the title company's escrow account. They make sure every dollar goes where it is supposed to.
Closing Preparation and Execution
They prepare the closing disclosure, deed of trust, deed, and all required documents. They coordinate the signing appointment. They ensure all conditions are met before funding. After closing, they record the deed and deed of trust with the county clerk.
The closing process involves a mountain of paperwork. The title company prepares the closing disclosure (CD), which is the standardized document that itemizes all costs and terms. They draft the deed transferring ownership from seller to buyer and the deed of trust that secures the lender's interest. They coordinate with the lender to make sure all underwriting conditions are satisfied. They schedule the signing appointment, often at their office, but many now offer mobile notaries who come to you. Once everything is signed, they review the documents for accuracy, send them to the lender for final approval, and then fund the loan. Finally, they record the deed and deed of trust at the county clerk's office, making the sale official in the public record.
Title Insurance Issuance
They issue both the lender's policy and the owner's policy. The owner's policy protects you from title defects. The lender's policy protects the bank.
Title insurance is different from other types of insurance. Instead of protecting against future events, it protects against problems that already exist in the property's history, things the title search might have missed. A forged signature on an old deed, an unknown heir who comes forward claiming ownership, or a survey error could all create problems. The lender's policy is typically required by your mortgage lender. The owner's policy is optional but highly recommended, and in many Texas transactions the seller pays for it as part of the title policy. The cost is a one-time premium paid at closing, and it protects you for as long as you or your heirs own the property.
How to Choose a Title Company
You have the right to choose your title company in Texas. Consider these factors:
- Closing efficiency. How quickly do they process and fund?
- Customer service. Are they responsive and easy to work with?
- Local experience. Do they know Bexar County and surrounding areas?
- Online signing options. Do they offer remote online notarization?
- Mobile closing. Will they send a notary to your home or office?
In Texas, the buyer has the statutory right to choose the title company, though this right is often negotiated in the contract. Many buyers simply go with the title company the listing agent recommends, but you do not have to. Talk to your agent and loan officer about which title companies they have had good experiences with. A well-run title company can make your closing day smooth and stress-free.