A title agency is a group of investors who provide insurance to guarantee that a home or property is legally eligible to be sold. This conclusion is reached after the title agency carefully examines several factors, and then a percentage of the total sale price is charged as a one time commission to the purchaser. Once title agency insurance is purchased, it protects the homeowner from any hidden tax liens, unforeseeable property damages, or undisclosed problems that occurred before the sale. The property coverage then remains in effect until the home is refinanced or sold.
The main responsibility of a title agency is to inspect every possible aspect of a home from top to bottom. This not only includes common inspections for things like roof damage, termites, or foundation issues, but also every other problem regardless of how serious or minor it is. That is why a title agency lists things like leaky toilets, missing electrical covers, and squeaky floors; if it is not disclosed before the sale, then the title agency is responsible for replacing it.
Title agencies inspect more than the property itself, though, because other legal ramifications could impact the sale of a property. For example, if a lien is in place from a bank or government entity and it is not disclosed before the sale, the title agency would be responsible for covering those expenses. The same goes for problems with the soil, irrigation issues, or government right of ways; each of them has to be independently verified to ensure that they are in compliance with all applicable laws.
When a title agency guarantees a home is free and clear of defects, the purchaser is fully protected from any type of existing liability from that moment onward. That literally means that if it were discovered 100 years later that a purchased home were situated over a sinkhole, the title agency would be liable for restoring the foundation of the home or even moving it. Since there is always a chance for unforeseeable issues to occur, it is highly recommended for any homeowner to acquire title agency insurance before closing on a piece of property.
There are a few exclusions pertaining to title agencies that homeowners should be aware of as well. Whenever a piece of property is refinanced, it essentially voids the insurance since the loan is terminated early. Although it is not mandatory to begin another policy, experts agree that it is usually in the homeowner's best interests to accept the coverage. For the one-time fee at closing, the benefits usually far outweigh the cost.