Difference between Abstract vs Title Company

[aslan]

This is a confusing concept, sometimes I hear companies call themselves an abstract company, others call themselves a title company, and some companies claim to be both an abstract and a title company.

So what's the difference between an abstract vs title company?

[Benny]

An abstract company does the research on a property and does the title report. The title company is the underwriter and actually provides the insurance. Sometimes these are one and the same, other times they are separate companies.

You'll often see little mom and pop abstract companies because it takes much less capital to run essentially a research shop. Often times big title insurance companies will either own an abstract company subsidiary (like TitleVest) or they will farm out the work. If they farm out the work, they often give underwriting discretion to the abstract company up to a certain limit. For example, they might give an abstract company discretion up to $1 million, meaning transactions under that amount they don't have to check with the title company.