Behind the scenes of each purchase and refinance transaction are the unsung heroes of our real estate market, all of the hard working employees of the three title companies in Santa Cruz County, Stewart Title (formerly Santa Cruz Title and before that, Penniman Title), First American Title and Old Republic Title.
The title company is the neutral third party in the transaction between the buyer and seller in a purchase. To put it in its simplest form, the buyer gives his money to the title company to hold and the seller signs over the deed to his property and entrusts it with the title company. The title company is then responsible for handing the money to the seller (after paying off the seller's loans) and then providing the new deed to the buyer.
A home buyer or borrower probably will only have contact with his or her escrow officer for an hour while they are signing all of the miscellaneous loan and property transfer papers, a procedure that is affectionately called "the signoff," but that is only the tip of the iceberg.
An escrow is "opened" by the real estate agent as soon as there is a finalized purchase contract between the buyers and sellers or opened by the mortgage consultant when a refinance transaction has begun. In California, the buyer has the legal right to select the title company.
The title company will research the title to the property to determine who the legal owner is, if there are any outstanding loans, who the lenders are that must be paid off before the property can change hands, and to uncover any other easements, "clouds" or encumbrances on the title.
The buyer wants to obtain clear title and the lender wants to be secure in knowing that if the property has to be taken back that it will be in position to recover all or most of its losses in a foreclosure procedure.
After this research is done, a preliminary title report (often referred to as the "prelim") is issued on the property for the buyers and the new lender to review. It is called a "preliminary" report because it is produced for review before title insurance can be issued and before the final transfer of ownership.
As a result of this research there are two title insurance policies issued by the title company: one is for the protection of the buyer, the CLTA (California Land Title Association) and other is for the protection of the lender, the ALTA (American Land Title Association).
Lenders in California will require the issuance of both of these policies; however, if the buyer is paying cash, neither is required by law. In these cases, it is still advisable for the buyer to secure the CLTA to protect himself.
Typically, the real estate agent or the lender will select a specific escrow officer, who will be in charge of coordinating the escrow events that will culminate at the close of escrow, the date that the property officially changes hands at the Santa Cruz County Courthouse.
Needless to say, there is a lot of paper pushing and research involved in this escrow process. If you were to stop in sometime at the office of any of these title companies you would find dozens of employees toiling away at mountains of paperwork stacked on their desks.
The employees of the title companies put in their time behind the scenes to meet the demands of the buyers, sellers, owners, agents and lenders in our local real estate market and, for the most part, their efforts go unnoticed. Those of us who work in the real estate industry salute the men and women of the title companies and thank them for all of their hard work.
Local mortgage consultant Peter Boutell has been writing a weekly column for the Sentinel since 1995. Send questions to 'Lending a Hand,' 1535 Seabright Ave., Santa Cruz, CA 95062, fax them to 425-1044 or email them to firstname.lastname@example.org. Archived columns are available at www.peterboutell.com.