What Agents Should Know About Title Company Ownership

Real estate agents pay close attention to the client experience: staging, photography, negotiation, communication. Yet one of the most important parts of a transaction, the closing, is usually handled by a company the agent does not own or manage. Some agents look into ownership of a title company as a result. Any such arrangement involves legal and regulatory questions, and it should be reviewed by the agent's own attorney.

Why Agents Look at Ownership

Agents who work on many transactions depend on their title company's service. A delay or an error at closing affects the client, and it can affect the agent's reputation too. Many agents have little say in how a title company is run, so some become curious about what an ownership stake would involve.

Curiosity is not a reason to proceed. It is a reason to learn, and to ask careful questions of professionals who can advise on your specific situation.

What Ownership Can Involve

A Closer Working Relationship

Some agents are interested in a closer working relationship with the title company they use. Whether common ownership changes day-to-day coordination depends on how the business is set up and run, and results vary.

Governance Rights

An owner's rights, such as voting, information and any distributions, are set out in the company's operating agreement. They differ from one company to the next. Read the operating agreement closely, and have an attorney explain it before you sign anything.

Ongoing Responsibilities and Risk

Owning part of a business carries financial risk. It also takes time and attention, and outcomes are not predictable. Rules about licensing, disclosures and title company operations vary by state. Ask your attorney.

Structures Vary

Title companies can be organized in different ways. Ownership structures, management arrangements and the roles of each party are set out in the operating agreement and in the company's formation documents. Ask your attorney how a particular arrangement is organized and what it means for you.

Consumers choose their own settlement providers. Ask your attorney what disclosures, if any, apply to you.

Questions Agents Ask About Title Company Ownership

• Do I need to be involved in daily operations? That depends on the arrangement. Ask who will manage the business, who will perform the title work, and how that is documented. Your attorney can help you review those answers.

• Will my clients feel pressured to use a particular title company? Clients should be free to choose any provider they prefer. Questions about disclosures and consumer choice are legal questions, so ask your attorney what applies.

• How much time and money does this take? Costs vary by state and structure and can include licensing, staffing, technology and working capital. Ask for a written budget and review it with your advisors.

• Is this right for me? Only you and your own advisors can answer that. It is a major decision with legal, financial and time considerations, and it is not right for everyone.

Questions to Ask Before You Decide

Look at Your Current Title Experience

Before exploring ownership, think honestly about the title service your clients receive now. Are closings smooth? Is communication clear? If your current provider serves your clients well, you may have little reason to change anything.

Talk to Professionals

Speak with your own attorney, your accountant and other advisors who know your state and your situation. Ask about the setup process, the ongoing involvement, the risks, and what they would want you to know before committing.

Think About the Long Term

Ownership of a business is a long-term commitment. It takes time to set up and involves ongoing participation. If your plans are likely to change soon, it may not be the right time.

A Decision for You and Your Advisors

Owning part of a title company is not a shortcut or a side project. It is a business decision with legal, regulatory and financial questions that an attorney should help you evaluate. If you want to learn more, you do not need to decide anything today.

Reach out to learn more for general information about the agent-owned title collective model. To read more first, see what an agent-owned title company is and what a title company does.