Question 1

What is the role of a title company in a real estate transaction?

Accepted Answer

The title company searches public records to verify the property's ownership history (chain of title), identifies any liens or encumbrances, issues title insurance to protect the buyer and lender, and often serves as the escrow agent that coordinates the closing. The title company hires the signing agent to conduct the document signing.

Question 2

What is escrow and how does it relate to loan signings?

Accepted Answer

Escrow is a neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a transaction are met. In a loan signing, the escrow officer coordinates between buyer, seller, lender, and agents. The signing agent's completed package is returned to the escrow/title company, which then funds and records the transaction.

Question 3

What is title insurance and what are the two types?

Accepted Answer

Title insurance protects against losses from defects in the property's title (such as undisclosed liens, forgeries in the chain of title, or recording errors). There are two types: an Owner's Policy (protects the buyer, one-time premium) and a Lender's Policy (protects the lender, required for most mortgages). Title insurance differs from other insurance because it covers past events, not future risks.

Question 4

What is a lien and why does it matter in a loan signing?

Accepted Answer

A lien is a legal claim against a property for unpaid debts (mortgage, taxes, contractor bills, judgments). Liens must be resolved before a clear title can be transferred. The title search identifies existing liens. At closing, the Closing Disclosure shows how liens are being paid off. The signing agent should be aware that the documents they handle may reference lien payoffs.

Question 5

What is the 'chain of title' and why is it important?

Accepted Answer

The chain of title is the history of all ownership transfers for a property, from the original grant to the present owner. A clear chain of title means there are no gaps, disputes, or competing claims to ownership. The title company researches this to ensure the seller has the legal right to sell and the buyer will receive clear ownership.

NSA Notary Signing Agent — Title & Escrow Basics

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