How to Start a Title Company

Co-authored by wikiHow Staff

Last Updated: January 4, 2023 References Approved

A title company is vital in the home buying process. Your company will help clients by searching public and real estate records for information about a property. You will provide information on who has the right to sell a property, and if there are any judgments or liens attached to it. You will issue title insurance to protect owners in case someone challenges the sale of a property. Before you start your title insurance company, make sure you are informed of your state's requirements.

Part 1

Part 1 of 3:

Getting Informed

1
Evaluate your experience. You will have an easier time starting a title company if you have a law degree and/or many years of experience in real estate. If you are new to the real estate field, you would be better off working for a title company for a few years before starting your own. Working for a related business, such as an escrow company or a lender, may also provide valuable guidance.^{[1]
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2
Learn the requirements in your state. Each state has its own requirements for licensing a title company. Look on your state's department of insurance website. Look as well on the website of your state's land title association. Check the website of ALTA, the American Land Title Association for a comprehensive list of title associations.^{[2]
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- Your state will probably require you to take certain classes before you can take your licensing exam.
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3
Take a class. You may be able to take a pre-licensing course in person, or you may have to take classes online. Consult your state guidelines, which you may find at your state department of insurance website or your state's department of financial services website. Find the list of approved educational entities there, and sign up for your prelicensing class or classes online or in person.
- Your prelicensing course will prepare you for the prelicensing exam. You will study the content of the exam, and take quizzes to prepare you for the exam format.
- If you are an attorney, and you are licensed in your state, you may be able to waive this requirement.
- If you have a title company license in another state, you may be able to waive this requirement.
4
Take the licensing exam. Sign up for a licensing exam through one of your state's testing agencies. You will be tested on insurance regulation, general insurance concepts, title insurance principles, title exceptions, procedures for clearing a title, and real estate transactions. Testing will vary by state, but you are likely to be required to pass with a grade of 70% or higher.^{[3]
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Part 2

Part 2 of 3:

Getting Bonded

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Get professional liability insurance. Most states require you to have professional liability insurance, also known as errors and omissions insurance. Much like malpractice insurance, it will protect you if you are faced with a negligence claim. Even if your state doesn't require this insurance, consider getting it to cover any beginner mistakes you may make in your first few years. Look up different insurance companies and compare rates.^{[4]
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2
Get a a surety bond. This will ensure that your company can fulfill its obligations to its customers, and that the customers will have the opportunity to get funds back if something should happen to the company. The amount for the surety bond is usually 10 to 25 percent of your company's net worth. Contact a surety company that specializes in new companies of your size, or get in touch with a surety broker who can negotiate a bond for you.^{[5]
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3
Get a fidelity bond. A fidelity bond is insurance that protects you from losses that result from any employee misconduct. If any in your company commits fraud or embezzlement, this bond will protect you from resulting losses. Contact your state's bond center and ask about getting bonded.^{[7]
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Part 3

Part 3 of 3:

Launching Your Company

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Consult your lawyer. Consult a lawyer about the formation of your company. Ask advice on your organization: should you be a limited liability company, or a corporation? Ask your lawyer to draft your articles of organization or articles of incorporation. Your lawyer will also help you navigate state laws about naming and registering your company.^{[9]
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- State law varies widely on naming. For instance, some states require your company's name to include the phrase "Title Company," while others prohibit use of the word "company" in a title insurance company's name.
2
Register your company. File your articles of organization or articles of incorporation with the secretary of state. Register your title agency's name with the secretary of state or the county clerk. Register as a corporation or limited liability company.
3
Find office space. Before going to apply for your business license, you should have a business address that can be verified. Look for a professional office space in an office building. Try to find something located near other offices you will work with, such as banks, real estate offices, and mortgage companies.
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Apply for your state business license. Contact your local government agencies that work with insurance companies. Fill out all the necessary paperwork. You will be asked to provide a business Federal ID Number and addresses for your home and business.
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Apply for an EIN. Get your federal business identification, or your Employer Identification Number, at the irs website. Search "EIN irs," fill out the application, and receive your free federal identification instantly.^{[10]
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Internal Revenue Service
U.S. government agency in charge of managing the Federal Tax Code
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6
Hire additional staff. Hire searchers, agents, compliance officers, and office managers. Recruit employees with insurance experience. Other than your administrative staff, your employees will need to have a state insurance license to work for you.
- If you hire an unlicensed employee, they will have a window of a few weeks or months to get insured. This varies by state.
7
Acquire clients. Once you have your business set up, start networking. Talk to colleagues and ask for referrals. Advertise in local real estate periodicals and magazines. Create a company website, and generate traffic with advertisements on websites trafficked by locals.