What Does a Title Company Do When You Buy or Sell a Home in Indiana?

What does a title company do in Indiana?

If you’re buying or selling a home, the title company works behind the scenes on some of the most important parts of the transaction, from researching ownership and liens to handling closing documents, funds and title insurance.

For many buyers and sellers, though, the title company doesn’t really enter the picture until someone says:

“Your closing is scheduled.”

Then suddenly there’s a title commitment, wiring instructions, paperwork to review and a closing appointment on the calendar.

So what has the title company actually been doing all that time?

Quite a lot.

If you’re buying or selling a home in Jasper, Huntingburg, Ferdinand, Dubois County or elsewhere in Southern Indiana, here’s a plain-English look at the title company’s role from contract to closing.

What Is “Title” in Real Estate?

Before getting into the title company itself, it helps to understand what title means.

Title refers to the legal rights associated with owning a piece of real estate.

It isn’t the same thing as the deed.

The deed is a document used to transfer ownership.

Title is the legal concept of ownership and the rights that come with it.

Before real estate changes hands, the title needs to be examined to determine whether there are ownership issues, liens or other recorded matters that could affect the transfer.

That’s where the title company comes in.

What Does a Title Company Do?

In a typical Indiana residential transaction, a title company may handle several different responsibilities.

Those can include:

• Searching public records
• Reviewing the chain of ownership
• Identifying recorded liens and encumbrances
• Preparing a title commitment
• Coordinating title insurance
• Holding certain funds in escrow
• Preparing or coordinating closing documents
• Conducting the closing
• Receiving and distributing transaction funds
• Paying off existing liens or mortgages as directed
• Recording documents after closing

Not every transaction works exactly the same way, but those are some of the major functions buyers and sellers are likely to encounter.

Step 1: The Title Search

Once a purchase agreement is in place, the title company begins researching the property’s recorded history.

A title search may examine public records involving:

• Previous owners
• Deeds
• Mortgages
• Property-tax liens
• Judgments
• Easements
• Restrictions
• Other recorded claims or encumbrances

The goal is to determine whether the seller can transfer good title to the buyer and whether anything needs to be addressed first.

This is much more than confirming the seller’s name.

Real estate can accumulate a surprising paper trail over decades.

What Can a Title Search Find?

Sometimes the title search is straightforward.

Other times, something appears that needs to be resolved before closing.

Examples can include:

• An old mortgage that was paid but never properly released
• Unpaid property taxes
• A judgment lien
• A contractor’s lien
• An ownership interest from an estate
• A discrepancy in a legal description
• An easement
• A deed-recording issue
• Another claim affecting the property

Finding an issue doesn’t necessarily mean the sale is doomed.

Many title problems can be corrected.

What matters is discovering them early enough to deal with them before everyone is sitting at the closing table.

What Is a Title Commitment?

After reviewing the property records, the title company may issue a title commitment.

Think of it as a preview of the title insurance policy and a roadmap of what needs to happen before coverage can be issued.

It commonly identifies:

• The proposed insured parties
• The property being insured
• Requirements that must be satisfied
• Existing liens that need to be released
• Exceptions to coverage
• Recorded easements or restrictions

Buyers shouldn’t automatically assume a title commitment is meaningless paperwork.

If something in it is unclear, ask questions.

What Is Title Insurance?

Title insurance is different from the insurance most people are used to.

Homeowners insurance generally protects against certain future events, such as covered damage after you own the house.

Title insurance is primarily designed to protect against certain ownership problems connected to events that happened before you acquired the property but weren’t discovered before closing.

Potential covered issues can involve things such as:

• Certain undisclosed liens
• Errors in recorded documents
• Forged documents
• Some ownership disputes
• Other covered title defects

The actual coverage depends on the policy, including its exclusions and exceptions.

Are There Different Types of Title Insurance?

Yes.

The two policies buyers commonly hear about are:

Lender’s Title Insurance

A lender’s policy protects the mortgage lender’s financial interest in the property.

If you’re financing the purchase, your lender will typically require lender’s title insurance.

Owner’s Title Insurance

An owner’s policy protects the homeowner’s interest, subject to the policy’s terms, limits, exclusions and exceptions.

Those are not the same protection.

A lender’s policy protects the lender.

It doesn’t automatically provide the buyer with the same ownership protection.

Is Owner’s Title Insurance Required in Indiana?

An owner’s policy generally isn’t the same kind of lender requirement that a loan policy may be.

Whether to purchase owner’s coverage is a decision buyers should understand rather than dismissing it as “just another closing fee.”

Ask the title professional what the policy covers, what it excludes and what the premium will be.

Indiana consumers can also compare title insurance options through the Indiana Department of Insurance.

Who Chooses the Title Company in Indiana?

This can surprise people.

A buyer or seller may receive a recommendation for a title company from an agent, lender or another professional, but Indiana consumers aren’t simply required to use whichever title company someone recommends.

Indiana’s Department of Insurance advises consumers that they can choose among licensed title insurers and agents operating in the state.

That means it’s reasonable to ask about:

• Fees
• Closing services
• Location
• Availability
• Experience
• Title insurance rates
• Communication
• Whether remote or alternative signing options are available

A recommendation can be helpful.

It doesn’t mean you can’t ask questions.

Who Pays for Title Insurance in Indiana?

There isn’t one universal answer that applies to every Indiana transaction.

Who pays various title-related costs may depend on:

• Local custom
• The purchase agreement
• Negotiations between buyer and seller
• The type of policy
• The specific transaction

This is another reason buyers and sellers should review the actual contract rather than relying on something they heard from a friend who bought a house five years ago.

Does the Title Company Hold Earnest Money?

Sometimes.

Indiana’s Department of Insurance notes that title companies may hold earnest money in trust until the transaction is completed.

In other transactions, earnest money may be held by a brokerage or another escrow agent identified in the purchase agreement.

The contract should specify where the earnest money is going.

Check out our detailed guide explaining what earnest money is and how it works in Indiana.

What Happens to Earnest Money at Closing?

If the transaction closes normally, the earnest money is accounted for as part of the buyer’s transaction funds.

It doesn’t simply disappear.

It’s reflected in the final accounting of what the buyer has already paid and what remains due.

If the transaction falls apart instead, who receives the earnest money depends on the purchase agreement and the circumstances.

That’s one reason buyers and sellers should never assume:

“The deal died, so obviously I get the earnest money.”

The contract matters.

What Does the Title Company Do for the Seller?

For sellers, the title company may be involved in several important financial and ownership issues.

Those can include:

• Confirming ownership
• Identifying liens
• Obtaining mortgage payoff information
• Addressing recorded title requirements
• Preparing closing documents
• Accounting for property taxes and other adjustments
• Paying off the existing mortgage at closing
• Disbursing remaining proceeds
• Coordinating recording of the deed

If you still owe money on the property, that’s normal.

We explain the payoff process in What Happens to Your Mortgage When You Sell Your House?.

What Does the Title Company Do for the Buyer?

For buyers, the title company helps make sure the ownership being purchased is properly researched and transferred.

That may include:

• Performing the title search
• Providing the title commitment
• Coordinating title insurance
• Receiving required closing funds
• Preparing or coordinating transaction documents
• Conducting the closing
• Recording ownership documents
• Issuing the applicable title policy after closing

The buyer may barely interact with the title company until the later stages of the transaction, but important work is happening before that closing appointment.

Does the Title Company Perform the Home Inspection?

No.

A title search and a home inspection are completely different things.

A home inspector evaluates the physical condition of accessible parts of the property.

A title company examines ownership and recorded matters affecting the property.

A title company isn’t there to tell you:

• Whether the roof is old
• Whether the furnace works properly
• Whether the basement leaks
• Whether the electrical panel needs attention

Likewise, the home inspector isn’t determining whether an old mortgage lien was properly released.

Both can be important.

They serve very different purposes.

If you want to understand the inspection side, read our guide to what happens during a home inspection.

Does the Title Company Do the Appraisal?

No.

The appraisal is also a separate part of the process.

An appraiser evaluates the property for a different purpose, often related to the lender determining whether the value supports the loan.

The title company isn’t establishing the home’s market value.

You can learn more in our article on the home appraisal process.

So in very simplified terms:

Inspector: What condition is the house in?

Appraiser: What is the property worth for the purposes of the assignment?

Title company: Can ownership be properly transferred, and what recorded matters affect the title?

Different jobs.

All important.

What Happens if the Title Search Finds an Old Mortgage?

This happens more often than many homeowners expect.

Maybe a mortgage was paid off years ago but the release wasn’t recorded correctly.

That doesn’t necessarily mean the seller still owes the debt.

It may mean documentation is needed to clear the record.

The title company can identify the requirement and work with the appropriate parties to determine what documentation is needed.

This is exactly the kind of issue you’d rather find weeks before closing than the morning everyone is supposed to sign.

What if the Title Search Finds a Lien?

A lien may need to be resolved before the buyer can receive clear title.

Depending on the situation, a lien might be:

• Paid from seller proceeds
• Released because it was already satisfied
• Corrected if it was recorded improperly
• Addressed through another approved process

The exact solution depends on the lien.

If you already know there may be a lien against your property, tell your real estate and title professionals early.

Hiding from it won’t make it disappear.

What About Property Taxes?

Property taxes are another item the closing process has to account for.

Indiana property taxes can involve prorations or credits between buyer and seller depending on the purchase agreement and timing.

The title or closing professionals use the contract and available tax information to reflect the appropriate figures on the settlement documents.

That amount can affect how much money the seller receives and how much the buyer needs at closing.

Why Does the Title Company Need My Mortgage Information?

If you’re selling a house with a mortgage, the existing loan generally needs to be paid off when the property transfers.

That means the closing process needs an accurate payoff amount from the loan servicer.

The payoff isn’t necessarily identical to the principal balance you see online.

It can include interest through the payoff date and other applicable amounts.

Once the transaction closes, funds are distributed according to the closing documents, including the mortgage payoff.

What Happens Before Closing Day?

By the time buyers and sellers sit down to sign, a great deal has already happened.

Depending on the transaction, the title company may have:

1. Received the purchase agreement
2. Opened the title file
3. Researched the property records
4. Identified title requirements
5. Coordinated with lenders
6. Obtained payoff information
7. Reviewed tax information
8. Prepared title documents
9. Coordinated closing figures
10. Prepared for funds to be received and disbursed

Closing day is the visible part.

Much of the work happens beforehand.

What Happens at the Closing?

At closing, buyers and sellers sign the documents necessary to complete the transaction.

The exact documents differ depending on the transaction and whether financing is involved.

Buyers may sign documents related to:

• Their mortgage
• The promissory note
• Closing disclosures
• Title documents
• Ownership
• Other lender requirements

Sellers may sign documents relating to:

• Transfer of ownership
• Mortgage payoff
• Closing disclosures or settlement statements
• Other transaction requirements

The closing professional will guide the parties through the documents.

If you don’t understand something you’re being asked to sign, ask.

Closing isn’t a speed-reading contest.

When Does the Seller Get Paid?

Once all closing requirements have been satisfied and the transaction is ready to fund, the closing agent can distribute the proceeds according to the settlement documents.

That may include payments to:

• The seller’s mortgage servicer
• Other lienholders
• Applicable service providers
• Other parties reflected on the settlement statement

The seller then receives the remaining net proceeds.

The exact timing and method depend on the transaction and closing procedures.

When Does the Buyer Get the Keys?

Key transfer depends on the terms of the purchase agreement.

Many buyers receive possession at closing.

Other transactions may provide for a different possession date.

Don’t assume keys automatically change hands the second the last signature hits the page.

The contract controls possession.

What Happens After Closing?

The title company’s work may continue after everyone leaves.

Documents such as the deed and mortgage may need to be recorded with the appropriate county office.

After recording and completion of the title process, the buyer will generally receive the applicable final title insurance policy.

Keep important closing and title documents somewhere safe.

You may not look at them for years.

That’s exactly when you’ll suddenly need them.

Can You Choose a Different Title Company?

Indiana consumers generally have a choice among licensed title insurance providers, although lenders may have requirements concerning acceptable providers.

If you’re comparing title companies, consider more than just the headline price.

Ask about:

• Title insurance premiums
• Search fees
• Closing fees
• Escrow fees
• Convenience
• Communication
• Experience
• Available discounts
• How and where closing will occur

The Indiana Department of Insurance even provides resources to help consumers compare title insurance costs.

Be Careful With Wiring Instructions

Real estate transactions involve large amounts of money, which makes closing-related wire fraud a serious concern.

If you receive wiring instructions by email, don’t assume they’re legitimate simply because the message looks professional.

Confirm instructions using a trusted phone number you independently know to be correct.

Be especially cautious if you receive a last-minute message saying:

• The wiring instructions changed
• The account number changed
• Funds need to go somewhere different
• You must act immediately

A fraudulent wire can be extremely difficult to recover.

When money is involved, taking an extra minute to verify is worth it.

Does the Title Company Work for the Buyer or the Seller?

The title company has specific responsibilities associated with the closing and title insurance process.

That doesn’t mean it serves as either party’s personal legal adviser.

If you have a legal question about:

• Contract interpretation
• Ownership rights
• An estate
• A dispute
• A complicated lien
• Legal consequences of signing something

you may need an attorney.

Your real estate agent, lender, title professional and attorney each have different roles.

Knowing whom to ask is part of navigating the transaction well.

7 Questions You Can Ask the Title Company

You don’t have to become a title expert.

But asking a few questions can help you understand what’s happening.

1. Have any title issues been found?

If so, ask what needs to happen before closing.

2. What title insurance policies are being issued?

Understand the difference between lender and owner coverage.

3. What title and closing fees should I expect?

Ask for clarification if something on the estimate is unfamiliar.

4. Who is holding the earnest money?

Make sure you know where your deposit is being held.

5. How will I receive or send funds?

Understand the procedure before closing day.

6. What documents do I need to bring?

Identification requirements and other needs can vary.

7. When will documents be recorded?

Ask what you should expect after closing and when final title documents will be available.

What Does a Title Company Do in Indiana? The Simple Answer

A title company helps make sure the legal and financial transfer of real estate can happen properly.

In a typical transaction, that includes researching the property’s ownership history, identifying title issues, coordinating title insurance, helping prepare for closing, handling funds and recording documents after the sale.

You may not see most of that work happening.

But without it, getting from an accepted offer to legally owning the property would be a lot more complicated.

Buying or Selling a Home in Southern Indiana?

Whether you’re buying your first home, moving to something larger, downsizing or preparing to sell, knowing what happens between the accepted offer and closing can make the process feel much less mysterious.

Sell4Free helps buyers and sellers throughout Jasper, Huntingburg, Ferdinand, Dubois County and surrounding Southern Indiana communities navigate the process from beginning to end.

Buyers can start with Sell4Free’s Steps to Buying or browse Southern Indiana homes for sale.

Sellers can learn more about how Sell4Free sells your home or request a free home valuation.

You can also meet the Sell4Free team when you’re ready for personal guidance.

Frequently Asked Questions About Title Companies in Indiana

What does a title company do in Indiana?

A title company typically searches property records, identifies title issues, coordinates title insurance, assists with closing, handles certain transaction funds and records documents after closing.

Is a title company the same thing as a real estate agent?

No. A real estate agent helps buyers and sellers navigate the real estate transaction. A title company handles title-related and closing functions. Their roles are different.

Does a title company inspect the house?

No. A home inspection evaluates the physical condition of the property. A title company investigates ownership and recorded matters affecting title.

Does a title company determine what the house is worth?

No. Property valuation for lending purposes is generally handled through an appraisal. The title company’s role concerns ownership, title insurance and closing.

Do I have to use the title company my real estate agent recommends?

Indiana consumers generally have the ability to choose among licensed title insurance providers, although a mortgage lender may have requirements concerning acceptable providers.

What’s the difference between owner’s and lender’s title insurance?

A lender’s policy protects the mortgage lender’s interest. An owner’s policy protects the homeowner against covered title claims according to the terms of the policy.

Can a title company find a lien on my house?

A title search may identify recorded mortgages, tax liens, judgments and other encumbrances affecting the property. Some issues may need to be resolved before closing.

Does the title company hold earnest money?

It can. Depending on the purchase agreement, earnest money may be held by a title company, brokerage or another escrow agent.

What happens after the title company closes the transaction?

The closing agent generally coordinates the recording of the deed and other applicable documents. The buyer will later receive applicable final title insurance documents.

This article is provided for general informational purposes and isn’t legal, insurance or title advice. Real estate transactions and title issues vary. Buyers and sellers should consult their real estate professional, licensed title professional, lender or attorney when appropriate.