There are generally two ways to handle title examinations. This abstract is then reviewed by the purchaser's attorney who then will give an opinion as to the status and quality of the title. A second alternative, more commonly use in residential real estate transactions, is title insurance. In this situation, the title insurance company investigates the title and determines whether and to what extent it will insure the title against challenges and claims in the future. This policy is usually issued in the amount of the purchase price and insures the purchaser only.
Most lenders also require a mortgagee's policy which insures the lender.
When these two policies are issued simultaneously, a substantial savings in premiums can be recognized. In the case of multiple purchasers, title can be taken in a variety of ways and the purchase agreement should specify how a purchaser desires to receive title. With other types of ownership, probate is usually necessary to convey clear title. There are also different tax consequences associated with the different forms of ownership. Closings of a residential transaction typically will occur at a title company or the lending institution, although closing may occur at any location including the real estate broker's or attorney's office.