When do I need a Title Company?

You want to get the title company going immediately.
You will need to get the purchase contract to them and have them pull a title report to see that there is no liens or judgments on the property or you the buyer/assignee, or have any granted easements or imcumberances that could be a problem with resale or rents. If there is any liens or judgments, they need to be paid at closing. If your purchase price isn't enough to pay for all of these, if there is any, you will need to reevaluate your offer.
If you have any judgments or liens, the transaction cannot be closed, as any judgment or lien you, or your assignee may have, can immediately be attached to the property, thereby clouding the title.
If you don't understand how to read the title report, have your escrow officer assist you. I have found that a good title person is worth their weight in gold. Create a good relationship with them and you will be glad you did.

Good luck,
Jim

Jim, thanks so much.

Before initializing the title search, I would recommend making sure that you have met all the contingencies. If you order a title search and then do the inspection only to find items that will end the deal, you will still need to pay the title company for their work done. Since the main contingencies are usually met within a week, waiting until they are completed will save unnecessary expense.

You should do the inspection prior to the title company being paid for their job. Otherwise you may jsut be wasting and out the money.

FYI: I always buy title insurance. It only cost a couple of hundred dollars and could save you thousands.

I've heard some title companies will make you pay for the title report if the deal falls through, but I've never had it happen in twenty years in the business. And I've had many deals die after pulling the report.
I guess if you constantly ordered title reports and didn't close the transactions, that might make them want to start charging you, but if the majority of the time you completed your purchases, I don't think it would be a problem if you had one fall apart occasionally. The title companies know deals fall apart.
I would recommend talking to a few title companies and ask what their policies are.
Jim

depending on your 'exit' strategy. Are you buy/hold, wholesaling or fix/flip, etc?

when you a have a contract that has been agreed/signed and all is happy,EM check,etc., take all paper wk to title co unless attorney closing

Title co is also used for searching the title for liens, back taxes and any other attachments that need to be paid.

Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is principally a product developed and sold in the United States as a result of an alleged comparative deficiency of the U.S. land records laws. It is meant to protect an owner's or a lender's financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. The first title insurance company, the Law Property Assurance and Trust Society, was formed in Pennsylvania in 1853.[1] The vast majority of title insurance policies are written on land within the United States.

Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate.

There are two types of policies - owner and lender. Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance [a loan policy] to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance. Buyers purchasing properties for cash or with a mortgage lender often want title insurance [an owner policy] as well. A loan policy provides no coverage or benefit for the buyer/owner and so the decision to purchase an owner policy is independent of the lender's decision to require a loan policy.

Title insurance is available in many other countries, such as Canada, Australia, the United Kingdom, Mexico, New Zealand, Japan, China, Korea and throughout Europe. However, while a substantial number of properties located in these countries are insured by U.S. title insurers, they do not constitute a significant share of the real estate transactions in those countries. They also do not constitute a large share of U.S. title insurers' revenues. In many cases these are properties to be used for commercial purposes by U.S. companies doing business abroad, or properties financed by U.S lenders. The U.S. companies involved buy title insurance to obtain the security of a U.S. insurer backing up the evidence of title that they receive from the other country's land registration system, and payment of legal defense costs if the title is challenged..
WIXS

I thought it might be helpful to clarify the different terms related to title insurance. There are typically four steps involved in a standard transaction:
1) Title Search--The process of searching records to find mortgages, liens, ownership transfers, easements, and other clouds on title that can impede clear transfer of title from seller to buyer. In some states a preliminary title search is free, in other cases there is a charge for this service.
2) Title Report/Preliminary Title report--The report that is generated as a result of the title search, and includes any concerns mentioned in number 1 above.
3) Title Commitment Letter--A letter in response to the Title Report indicating that a title insurance company will commit to insuring title against any defects.
4) Title Insurance Policy--The actual policy which insures title against defects or issues regarding clear ownership of the property. As mentioned in above posts, title insurance policies can be issued for the benefit of a lender or for the benefit of a buyer.

If I'm buying from a wholesaler is it possible for me to sign an assignment of contract before he/she goes to a title company? Also, if there is an assignment of contract, is there still a possibility that the wholesaler, if he/she has a judgement, could still cloud the title on the property?

If you do a double close the judgment could be attached. So it would be unlikely the title company would close it. They couldn't guarantee clear title. However, if you are only going to own it for five minutes, you may be able to work something out with the title company. You would have to ask them. I still doubt they would close it. They would be liable if one of the liens/judgments clouded the title.

If you are never actually taking title, I don't believe it would be a problem. Only the person/entity that is taking title can be held responsible for liens and judgments following them to the new property.

Good luck,
Jim

Mista,

Let's keep this simple. When you get a contract signed by both you and the seller, get the contract to the title company. When you get your buyer to sign an assignment contract or a new purchase contract (for a double close) get it to the title company. Any thing else that may come up regarding the transaction, get it to the title company.

They handle and close the transaction. Get them everything. If you do this you can't go wrong.

Stacy,
I built a relationship with my Title rep as one of my first power team members. As I was making calls and building my power team one of the earlist conversations was with a title rep and we have done business ever since. She gave me access to thier on-line data base so I could do a great deal myself for farming and when I have had title questions she has always be able to get a prelim done for me so I would know if I would have any potential headaches.

I know you were asking about this specific deal, but I would suggest you build the relationship and next team you can ask you power team member and have an answer right away.

Good Luck
Jim

I appreciate the answers gentlemen I'll build a better relationship with my title company and I'll make sure everything is sent to them. Thanks again!

Pitbull2012, one of the best suggestions we can make is find ways to streamline your processes. Having a title company that you work with, and know their procedures, and can use them for some of the things that Jim suggested is a part of that streamlining.
Also, since you are the one who is making the offer, you have the first opportunity to designate who the closing agent will be. A lot of investors in the program create a standard addendum that is used with all offers that indicates the closing period, the closing agent, includes their backout clause (inspection clause), assignability, and any other details that you use on a regular basis in your offers. Property inspections are only done on accepted offers, your addendum is on file with all your agents, title company knows you, so making offers on a daily basis can literally only require an hour or less of your time to make several offers. For everyone involved in the program, if you want to grow and make this a full-time business, streamlining is essential. Examine every aspect of your business for more efficient ways to improve your results. Oh, and don't forget, any offer that is not accepted, put a teaser in your calendar for 2 weeks, check back, and if the property is still available, resubmit another offer. Keep resubmitting until the property actually sells. Resubmits can increase your closing percentage by 25% or more.