Though starting a title company requires industry know-how, persistence, patience, and connections, this endeavor isn’t as daunting as the industry has led you to believe. With the below insight and guidance, you’ll discover just how painless starting a title company can be.
Familiarize Yourself With Your State’s Insurance Requirements
Not all insurance requirements are created equal, which is why it’s essential to check your state’s department of insurance website before starting a title company. Fortunately, the National Association of Insurance Commissioners does the legwork for you. The NAIC provides pertinent information, ranging from title data to title matters. Using your state’s guidelines and responses from regulators, the NAIC collects these details.
In most cases, you’ll be required to meet licensure, insurance, financial stability, and education requirements. You can also anticipate having to provide several registrations, bond documents, and background checks. Depending on where you reside, you may need a settlement or escrow agent to help manage legal affairs and closings. Given the varying prerequisites that each state deems necessary, it’s imperative to acquaint yourself with these stipulations.
Ace Your Licensing Exam
In some states, they ask everyone who’s starting a title company to take a pre-licensing course and exam. If you’re required to do so, be prepared to learn the ins and outs of insurance regulations, title insurance principles, real estate transactions, and general insurance concepts, among other related topics. To ensure that you do well on the exam, acquire the necessary study materials, and eat, sleep, and breathe the subject matter. As a result, you’ll prove that you’re equipped to pursue this undertaking. If you’re a licensed attorney, you might be exempt from this rule, but you’ll want to contact your state’s department of financial services for a definitive answer.
When starting a title company, you typically have to carry a fidelity or surety bond. With these bonds, both you and the consumer are protected. Above all else, it demonstrates that you’re willing and able to meet customer needs and expectations. What’s more, if your company goes belly up, a surety bond guarantees that the customer receives the funds they’re entitled to. In addition to a fidelity or surety bond, professional liability insurance is also warranted. With that said, you’ll need to look into this coverage option so that all your bases are covered.
Determine What Type Of Company Entity You Should Form
With assistance from an attorney, you can decide what business entity is best for starting a title company. Perhaps you want to operate as a corporation. Maybe it makes more sense to function as a limited liability company. You won’t know which avenue to pursue until you weigh all your options. Alongside a lawyer, you’ll learn more about the legal and tax benefits that come with each title.
If you opt not to avail yourself of an attorney, you can obtain this information online. While forming your entity, don’t forget to apply for your EIN. Your EIN serves as your company’s SSN, allowing you to manage your bank accounts, apply for licenses, and file your tax returns. The most important aspect of building your brand is creating a logo. Not only will this make your company more recognizable, but it’ll also help you stand out from the competition.
Select An Underwriter
Having a qualified underwriter at your disposal is a must. Their industry expertise will breathe simplicity into handling title arrangements and ownership rights. They also evaluate your credit history, verify employment details, and develop a realistic timeline for paying back your loan. In essence, an underwriter is responsible for tending to involved proceedings, making it possible for you to focus on more pressing business matters. To speak with national and regional providers, browse the list of contact information below.