How to Start Your Own Title Company

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A number of educational and financial requirements must be met before you can consider starting your own title company. A law degree or significant experience in the real estate industry is a must and the minimum capital requirements are typically in the $150,000 range. Each state will also require you to obtain a license, usually from the state’s agency responsible for regulating the insurance industry. You will also have to undergo a background check indicating that you are of good character and reputation.

Step 1

Obtain information about your state’s requirements for licensing a title company. This can usually be found on the web site for the state’s department of insurance. Another good source for this information will be from the land title association in your state, which is a voluntary association of title companies concerned with the standards and requirements for the title industry. A web page on the American Land Title Association site contains links to all land title associations in the country.

Step 2

Determine the qualifications for experience and education that is required for a license in your state. You will most likely have to take and pass certain classes before being able to take the licensing examination. States will often approve a specific private company to administer any pre-licensing or testing service required for the title license, such as Maryland.

Step 3

Take educational courses in real estate law and related business law to prepare you for the pre-licensing and examination process. If you already have a law degree or real estate broker’s license, you will have a much easier time meeting the educational requirements.

Step 4

Obtain employment with a title company or any real estate related business (e.g., lender, escrow company, real estate broker) to acquire work experience in the real estate industry.

Step 5

Acquire the necessary capital. You will have to demonstrate financial solvency to the state prior to licensing, which usually means obtaining surety and fidelity bonds in the $150,000 range. The bonding companies will conduct a thorough background check on you and expect your net worth to be in excess of the bond amounts as a prerequisite for issuing any bond.

Warnings

  • If you do not have a ready source of business, either from one large client or several smaller clients, your venture into the title company business will be short. In addition to the basic requirements for starting such a business, you need to have strong contacts with banks and other lenders in order to acquire enough work to operate profitably.

Tips

  • If you already operate a title company in one state, you may be able to more easily obtain a license in another that has a "reciprocity agreement" with the state where you are licensed. There should be simplified procedure that you can follow and the state’s land title association is a good source for this information.

References

About the Author

Joe Stone is a freelance writer in California who has been writing professionally since 2005. His articles have been published on LIVESTRONG.COM, SFgate.com and Chron.com. He also has experience in background investigations and spent almost two decades in legal practice. Stone received his law degree from Southwestern University School of Law and a Bachelor of Arts in philosophy from California State University, Los Angeles.

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