Before someone buys a house, title agents confirm that the seller owns it free and clear. If the seller doesn't have clear rights because there's a lien or a title dispute, then the buyer's rights will be clouded, too. That's a risk that mortgage lenders don't want to accept. Each state sets its own requirements for becoming a licensed title insurance agent.
Title Company Services
Title insurance companies work differently from other insurers. A homeowner's insurance policy protects the buyer against losses from damage because of fire or flood, but it doesn't prevent damage. Title agents work to prevent losses, rather than compensating the owner. The title company services involve researching the history of the property and the real estate title itself. That lets the lender and the buyer know if there's a cloud on the title, before it becomes an issue. Issues with the title could involve any of the following:
- The heir of a former owner claims that they, not the seller, has title to the property.
- The seller's creditors have placed a lien on the house.
- The sale is authorized under the owner's power of attorney, but the power of attorney isn't valid.
- An ex-spouse didn't give up their claim to the property.
- Title documents weren't properly filed with the local registry of deeds.
Title agents research the property's history to spot such problems and, if possible, to resolve them. If the agent misses a problem that leads to someone suing the buyer for the title, then title insurance covers the owner's losses. But agents do everything they can to prevent that situation.
If the buyer hires a closing agent to keep the sale on track, the closing agent can handle the job of hiring the title agent. A title agent at a given agency may be involved in any of several roles:
- Processing the buyer's application and ordering the title search.
- Researching the title history.
- Issuing the final policy.
- Representing the title company as a sales agent.
Title Agent Licensing
Each state sets its own rules for licensing title agents and title companies. You can take it as a given that whichever state you work in, you will need a license, and you'll have to renew it every two or three years. If you work in multiple states, you may need to meet licensing requirements in each state. Some states license title insurance agents; other states license the agents and the company itself.
In Vermont, for example, you must be at least 18 years of age to become a title agent. You must have an established insurer sponsor you; you must pass a written test; and, you must show the state Department of Financial Regulation that you're "competent, trustworthy and financially responsible." Then you have to submit your application, with fees. You don't need to be a Vermont resident, although the state streamlines the application process if you are.
Florida title agents must be state residents, and they can't hold a resident license in any other state. Before taking the licensing exam, they must pass a state-approved, 40-hour insurance classroom course in title insurance. Florida will waive that requirement, if the applicant has put in one year working for a title agent in the past four years. Working for a title agent is generally a good path into the industry. If you already have connections in the industry, it'll be easier to find an agency to sponsor you for licensing.
When you renew your license, your state will want more out of you than an application and fees. States impose a continuing education requirement on title agents, requiring that they take classes before they reapply. Pennsylvania, for example, doesn't require that you take classes before you get your two-year agent's license. By the end of those two years, however, you'll need to complete 24 hours of coursework to get your license renewed.