Real Estate

Buying a House and Need a Title and Settlement Company? Here’s What to Consider.

Plus, a list of recommended firms.

Rarely does someone begin the homebuying process knowing which title and settlement company they’d like to work with, says Nadia Nejaime, an agent at Compass.

“Think about it: How often do people buy or sell property?” says Nejaime. “It’s only a handful of times, at most, in somebody’s life, so a lot of people haven’t done that level of research, or they don’t fully understand the role of a title company.”

In case you’re one of them, allow Mike Ridgway, the CEO of Community Title Network, to explain. Essentially, title and settlement companies fulfill two roles, he says: “One is making sure that the buyer gets a clear title from the seller and that it doesn’t have any lien or claims on it. The other role is service. We manage all the documents, we coordinate the parties, and we bring everyone together to handle the closing process.”

Still, even with a basic understanding of the practice, figuring out how companies differ can be confusing. “I always tell my clients there’s nothing intuitive about this,” says Nejaime. That’s why buyers usually just ask their agents for recommendations. But even when Nejaime gives her picks, “[clients still] usually come back and say, ‘Well, who do you like the best?’ ”

While agent suggestions can be a great starting point, they’re not the be-all and end-all, says Rob Rothstein, the president of Paragon Title: “Consumers should feel good about trusting their agents, but they should do their own research, too. We are in the era of the informed and empowered consumer, and that’s a great thing. At the end of the day, it’s the buyer who bears the responsibility or takes the consequences, good or bad.”

Planning to buy property soon? Here are some things you might consider when choosing among title companies.

Are They Lawyer-Led?

Some companies will have notaries, rather than attorneys, oversee the closing process. While this is usually fine for straightforward transactions, Nejaime recommends that buyers look for lawyer-led companies. That way, if any issues arise, an attorney is already there to provide legal advice and correct discrepancies.

Plus, Rothstein says, having a lawyer present can help people better understand what they’re signing: “Much of what makes a title company special pertains to how the legal work is explained to the consumer. [It] should be done in a transparent way that makes the home-purchase process approachable and exciting.”

Are They Transparent About Their Fees?

While title-insurance premiums won’t differ much between companies, how much one charges to conduct title research, prepare documents, and handle settlements can vary by up to a thousand dollars, says Rothstein.

Luckily, most title and insurance companies have easy-to-use fee calculators on their websites. Be wary if one can’t or won’t give you its prices upfront, says Nejaime: “That’s a big red flag.”

How Do They Protect Against Fraud?

Fraud, especially wire fraud, is a major issue in real estate right now, with scammers often impersonating sellers to collect a buyer’s deposit. Consequently, buyers may want to inquire about a company’s data protection and fraud prevention, says Ridgway.

For example, he and Rothstein both recommend asking whether the money-­transfer process hinges on verbal communication. “We only email wire instructions when we’ve got our buyer on the phone,” says Rothstein. “That way, when it hits your inbox, we can verify it together. It’s a low-tech solution to a high-tech problem.”

Do They Have Good Reviews?

It’s potentially a no-brainer, but Rothstein, Ridgway, and Nejaime all emphasize checking a company’s online reviews. “I rely heavily on local reputation,” says Nejaime. “It helps you see that their actions are tried-and-true, they’re reliable, and they’re going to do a good job.”

Are They Communicative?

Effectively handling mounds of paperwork is crucial for any title company, but just as important is whether they communicate well with clients, says Ridgway: “It really comes down to service and whether we can be that trusted professional to provide good advice, solve a problem, and proactively communicate the status of a file.”

To research a company’s style, Ridgway and Rothstein recommend an old-fashioned method: talking on the phone. “Call and ask some questions,” says Rothstein. “The reception you get can sometimes be illustrative of what that process looks like thereafter.”

Do They Offer Enhanced Policy Protection?

When purchasing a buyer’s title policy—which protects a homeowner from risks such as outstanding lawsuits or conflicting claims on the property—ask whether the company offers an enhanced title policy. While a regular one will protect buyers from any past issues the title company might miss, says Rothstein, an enhanced policy will also provide “forward-looking protection” against potential future fraud and identity theft. “As land records across our country become digitized, there is a higher rate of claims for fraud and identity theft,” he explains. “And those are risks that the most thorough title search can’t prevent.”


DC-Area Title and Settlement Companies

We asked real-estate agents and mortgage professionals to recommend local options.

This article appears in the September 2023 issue of Washingtonian.

Jessica Ruf
Assistant Editor