Expetitle Blog

6 Steps For Starting a Title Company

The real estate title industry has transformed through modern technology. It has made the once-dreaded step of all real estate transactions — the closing — exceedingly more enjoyable and efficient than it ever was before.

If you are thinking of starting your own title agency, traits like organization, attention to detail, fantastic customer service, and industry knowledge are necessary for success. However, these attributes do not matter if you cannot build your title company based on a business model that is within your budget.

Below, we offer six steps you can take to successfully get your agency off the ground in a mindful, timely and efficient manner.


1. Completing your licensing exam

The state in which you are forming the company may require a course and exam for licensing. The course will go over broad insurance principles and regulation, title insurance concepts and clearing procedures, and transactions in the real estate industry to prepare you for the licensing exam.

2. Obtaining insurance

Typically, title insurance agencies are required to carry errors and omissions insurance. Coverage varies amongst states, however, requirements typically average $250,000. Errors and omissions insurance will cover the agency if a claim of negligence is brought up against it.

3. Carrying bonds

Title companies require a surety bond and/or fidelity bond to be carried. Fidelity bonds provide coverage close to $50,000. 

Surety Bonds promise that your agency can satisfy its requirements to its consumers, and should happen to your company, the consumers will have the chance to reclaim their funds. Surety bonds range in coverage from 10%-20% of the title company’s net worth, and can provide coverage from $200 to $1,000. 

4. Creating the company

The next step is to create your entity. Whether the company you form is a corporation or limited liability company, most states require one and provide you with different tax and legal benefits. This is possible to complete online. 

When registering your company, you must apply for an Employer Identification Number or “EIN” from the IRS. The EIN acts as the business’s Social Security Number and allows you to set up your bank accounts and use them for taxes. This service is free and the turnaround time is quick. Keep in mind varying state’s laws on requirements for naming your company. Finally, you must register your company’s name with the County Clerk or Secretary of State.

5. Choosing an underwriter

An underwriter approves and issues control for its agents to create title insurance policies. The underwriter takes on financial risk and protects the property against insurance defects. A title insurance underwriter is responsible for verifying the ownership rights and title to the property can be promised. Their knowledge and expertise will determine the quality of the policy.

6. Receiving the license

After completing the licensing requirements according to the state’s laws, the next step is to apply for a license. When the company has been finalized, you may begin conducting business through the title company.