The question of whether to use a real estate attorney vs. title company is one that is sometimes raised by those seeking to settle real estate transaction, but which is safer? And what are the key differences between using a real estate attorney vs a title company?
The common question asked is ‘who should you use’ for your real estate transaction? After all, you do not have to use a real estate attorney for your property transaction.
The simple answer, if you ask an attorney, is to use an attorney.
Conversely, to ask a title company, the answer will be to avoid attorney fees and go with a good title company.
Lets consider 5 key considerations to weight up when your are looking at whether to go with the Trust Company or the real estate attorney.
But first, let’s consider what a trust company actually is and what it does.
What Does a Title Company Actually Do?
In essence, a title company will check the real estate title to ensure there are no problems with the title, which means it will search the public records and verify ownership of the property and check the ownership interests of the current owners, the presence of any liens and so forth.
The title companies are also known as title insurance companies and title agents, but essentially they perform the same title-checking on real estate transactions and ensure there are no title issues and permit the gathering of the legal documents necessary to complete the transaction.
Mostly their work is procedural in nature and handles the ‘basic’ documentation relating to sale of the property, chain of title, escrow services, loan documentation and the like.
What Is Title Insurance?
Title insurance is something that a title agent or title company will obtain which will mostly cover the sale price of the property or the mortgage amount on the property.
This insurance is to protect the purchaser from any dispute regarding the ownership of the real estate. Title insurance will protect your right as legal owner of the property and will protect you from any claim from a party who may once have had an interest in the property which may be legitimate, but unknown to yourself.
1. Claim of Title Issues
One of the fears many involved in purchasing property have is that there will be a claim on the property title. This is an issue where you will require legal advice and where a good attorney experienced in the real estate closing process, dealing with restrictive covenants and state laws can be a very good idea.
2. Who Chooses The Title Company? You Do.
As with choosing an attorney, the buyer is the one choosing the title company although many will have some pressure from a real estate agent to chose which title company to use. It is the buyer’s decision and they should decide if (a) they want to use a title company or (b) a good real estate attorney.
Either way, the choice is yours.
3. Title Legal Issues and Who Handles Them?
When legal issues like restrictive covenants or claims to title like trust issues and the like arise you will need an attorney and so having an experienced real estate attorney in your corner is a top advantage. Keep in mind that many legal issues can arise after the sale and the ‘better safe than sorry’ adage is appropriate when you have an experienced attorney who is handling the transaction for you.
If there are escrow issues involving holding back funds or any claim that can affect the rights of either party, the need to actually take legal advice is one that only an attorney rather than a title company can provide.
Legal advice on real estate closings is provided by a licensed attorney, rather than a title company.
There may be questions about title such as an exception to a title policy or an exemption to it which only an attorney can provide advice about. The issue relating to legal rights of buyer or seller and the obligations you have regarding the lender are all matters that an attorney is generally better able to assist with. If legal advice is required then they are in fact the only ones who really can assist.
4. Who Does The Title Company Work For?
Keep in mind that the title company actually works for the title insurer rather than yourself. The title agent is not therefore working for you, as purchaser or vendor but rather for the insurer.
A title review company is very often already organized by the title insurer when the real estate transaction is entered and therefore some believe they must go with the flow. However that is not the case and having an attorney can certainly work to the advantage of either (or both) parties in the property transfer.
4. What About Cost in the Attorney vs. Title Company Question?
The issues of cost can become somewhat irrelevant as generally they will be comparable, but with the attorney representing you there will be the added security of knowing that you will not have the added cost of needing attorney advice should matters become complicated.
If you switch from title company to attorney then of course the costs will add up.