In a real estate transaction, there are two major concerns for buyers:

Whether the title is clear and saleable, and whether the transaction funds are secure.

The solution - property insurance companies

In response to these concerns, the U.S. real estate market has seen the emergence of a new industry of property insurance companies, which are lawyers who handle real estate transactions.

They provide services such as investigation, property insurance, fund supervision, and closing registration for home buyers to ensure that property rights are safe and secure and can be legally traded.

They protect the rights of home buyers like personal guards, and even if they do get into trouble, the worst outcome is to get their money back, thus protecting the rights of users to the greatest extent.

You may be wondering here, will it be safe to send all the money to the title company? It has so much money, what should it do to run away with the money?

In the United States, the third party fund custodian, or escrow holder, is usually an escrow company, title company, or bank, etc.

And a real estate broker or agent can help clients choose the right fund custodian.

First of all, the title company is under the jurisdiction of the national or state government department and has its issued capital supervision license, and its fund flow is strictly supervised by the government; in addition, the title company is required to pay a certain deposit, similar to bank reserve, to compensate the client under special circumstances.

Therefore, it is absolutely safe for the funds to be supervised by the title company.

What if the title company goes bankrupt?

Title companies are under the jurisdiction of the state insurance department. When a title company faces bankruptcy and dissolution, it must comply with state law to close and liquidate.

Typically, a title company facing bankruptcy will be sold or merged before closing operations. All policies will also be taken over by the new owner and the regulatory and trust accounts will be re-liquidated.

How does a property insurance company secure a property transaction?

The insurance here is not ordinary homeowner's insurance, but special property insurance.

It is because of such title insurance in the United States that the market, rather than a governmental function, will regulate and complete all closing procedures.

One of the more important aspects of the process is the provision of a third party account number and the title closing process. Throughout the property transaction, provided the investor purchases property insurance, the cost is $200-$300, paid in a lump sum at the time of purchase.

The property insurance company will be involved in the entire process as a third party and will be responsible for the following matters and procedures:

Title Verification:

Investigate the title records of the seller's home, i.e. the history of title transfer, and also investigate any outstanding debts on the home's title, such as property taxes, property management, tickets issued by the city, etc. If there are problems, they must be resolved before the title can be transferred.

If the seller is not willing to resolve the problems found, then the buyer can break the contract and return the deposit to the buyer.

Property Insurance :

If there are no problems with the title, the title company will provide title insurance for the property and will be responsible for the title transfer and closing procedures for both the buyer and the seller. Its nature is that of an independent insurance company outside of the buyer and seller.

However, if there is a problem with the title of the property and an accident occurs, the title company will assume the risk and pay for it.

Provide third party accounts :

In most U.S. states, the government often prohibits the deposit from being at the disposal of the buyer's real estate agent or the seller's agent in order to maintain the fairness of the real estate transaction. Otherwise, once the buyer requests a refund of the deposit, the seller's agent will often find various reasons to refuse the refund.

If the deposit is in the hands of the buyer's agent, once the buyer defaults and the seller withholds the deposit, the buyer's agent will also find various reasons to refuse to hand over the deposit. So the deposit is placed in the hands of a neutral third party - the title company - so that in the event of a dispute, the deposit can be quickly returned to the buyer or deducted by the seller.

Title transfer process:

All formalities for the transfer of title are handled by a neutral third party, the title company. When the buyer and seller sign the required documents for the closing, the buyer pays the title company, not the seller, or the third party supervisor, the amount paid for the property in the form of a cashier's check from the bank.

In the case of a mortgage, the bank will wire the loan amount to the title company's account, and then the real estate transaction is actually completed. According to the relevant provisions of the real estate purchase and sale contract, the title company will deduct some fees, such as commissions, title insurance, and other miscellaneous fees for closing, from the house payment and pay the seller immediately, so many sellers get their house payment within a few hours after the closing.

This essentially eliminates the opportunity for the real estate agent to intervene and control the payment of the home.

Property Insurance Company Fees

A typical title search costs $200-$300, while the premium for title insurance is 0.3-0.5% of the total value of the home, and the amount of coverage is usually the total price of the home.

A solution is provided by the establishment of a broker pay reserve system in each state in the United States. The system was developed by each state government, so there are similarities, but also differences. Generally, the maximum payout for a single accident can be up to $50,000.