WHAT IS A TITLE COMPANY? A title company is a "title agent," a "closing agent" or both. When acting as a "title agent," a title company performs a title search in order to make sure the title to your real estate is marketable. As a title agent, the title company may also issue title insurance. When acting as a "closing agent," a title company prepares closing documentation, performs the closing, collects funds from the buyer and/or the lender and disburses these funds. While "title agent" and "closing agent" are distinct roles, it's usually the case that the same title company acts in both capacities relative to a particular closing.
WHO PICKS THE TITLE COMPANY? In the State of Maine, the buyer of real estate always has the legal right to choose what title company acts as the "title agent." This is true whether the buyer is a "cash buyer" or is financing the purchase though a lender. A cash buyer also has the right to choose what title company acts as the closing agent. When there's a lender, the lender has the right to choose the closing agent but the right to choose the title agent remains, as always, with the buyer. If you are buying real estate, be sure to pick a title agent to handle the title work on your behalf.
WHAT IS TITLE INSURANCE? Title insurance is a type of insurance that protects the insured party against claims, loss or damage arising from disputes over the ownership of the insured real estate. Unlike homeowner's insurance, the premiums of which are paid on an annual basis, title insurance is a one time premium. There are two types of title insurance - lender's and owner's. Lender's title insurance, which lender's require, protects the lender against title defects. Lender's title insurance does not protect the buyer. Owner's title insurance protects the buyer. If you are buying real estate, make sure you purchase an owner's policy of title insurance.