What Is a Title to Real Property?
Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property.
What Is Title Insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.
What Protections Does Owners Title Insurance Afford Me as a Buyer?
Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy. If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense, in addition to paying all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the amount of your policy.
Are There Different Types of Policies of Title Insurance?
Yes. There are two types of title insurance. One type of policy covers the lender and their lien interest in the property up to the balance of the mortgage. The lender requires that the buyer purchase a Title Insurance Policy on behalf of the lender. The loan policy protects the lender against loss due to unknown title defects. This policy protects only the lender’s interest; it does not protect the buyer. The other policy type covers the owner. The owner’s policy protects against loss due to any of the problems mentioned above. Even a hidden defect can result in a claim against your ownership. There are two levels of coverage for the Owners policy. The Enhanced Owner’s coverage includes coverage for zoning, subdivision, building permit and encroachment issues, as well as the coverage for certain post-policy matters such as theft of identity, forgery, and neighbor encroachment. Owner’s coverage provides legal defense and any liability or loss that may arise. The Enhanced coverage also allows for an increase in coverage as the property value increases, up to 150% of the policy coverage.
How Does Title Insurance Differ From Other Types of Insurance Coverage?
Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title insurance policy insures against events that occurred in the past of the real estate property and the people who owned it, for a one-time premium paid at the close of the escrow.
How Much Does Title Insurance Cost?
Costs for title insurance vary from state to state. Generally, costs are regulated by the state insurance commission. since it is a one time charge at closing for coverage as long as you own the property and not an annual charge, the relative cost is significantly less than you think for the protection it affords a property owner for the length of coverage.
What Are the Differences Between Standard and Limited Owners Coverage?
In most cases, we are able to offer two types of title insurance – Standard and Limited, each of which are priced according to filed rates with the state in which your property is located. Standard title insurance covers everything that the Limited policy covers plus a large number of other potential problems, including errors that could occur after you purchase real estate. Standard coverage provides more financial protection in the event that you need to file a claim by insuring the property for its value as of the time the claim is made up to 150% of its original purchase price.
What Does the Settlement Agent Do as Part of the Settlement Process?
The Settlement agent, /title company has three main responsibilities in the settlement process: 1) ensure the Seller title is clear and the seller can transfer the title to the purchaser, 2) ensure all documents are properly signed and notarized to meet lender requirements and in order to record the Deed and Deed of Trust/Mortgage, and 3) act as escrow agent by collecting all funds required to properly complete the transaction and disburse all funds to all parties transaction who are due payment. In addition, the settlement agent will act as a coordinator of communication among all the parties in the transaction, especially the coordination of the actual settlement.
How Do I Find Out the Date and Time Settlement Will Occur?
We take an active approach in ensuring all parties know as soon as possible the date, the time and the location of settlement. We typically coordinate the settlement through any realtors and lenders involved in the transaction. If a buyer or seller is not working with a realtor, we will coordinate directly with the buyer or seller.
When Do I Find Out the Exact Amount I Owe at Settlement?
Your lender is obligated to provide you with their Closing Disclosure, which includes the loan charges and other settlement costs, at least 3 days prior to closing. However, as the settlement agent, we coordinate the final settlement statement that includes all charges, including any final adjustments between the parties. We will provide you the final settlement statement several days in advance of settlement, provided we have the final settlement figures from the lender timely. Please contact our office if you have not received from us final settlement figures at least 2 days prior to settlement.
How and When Do I Get Monies I Owe to the Title Company?
Industry Standards and State Laws require purchasers to tender good and available funds to the Settlement Company prior to closing. Industry standards now dictate that Wired funds are the only acceptable payment for settlement proceeds. Please note personal checks, Official Checks, Certified Checks, Cashier’s Checks and/or ACH transfer are not considered good funds, despite what your bank representative may tell you.
What Are the Various Ways to Hold Title to Property?
There are several ways to hold title and each depends on certain circumstances of the Buyer(s). Below is a brief summary of how a buyer or buyers can hold title to property. This information is not intended to be legal advice and each circumstance is unique. We can assist you in making your final determination prior to settlement if you have any questions.
- Sole ownership - If you are single, one way to hold title to your home is in your name and own 100% of the property
- Tenants in Common - When two or more co-owners take title to real estate, especially if they are not married to each other, they often become tenants in common. For example, two realty investors might select this method. Each tenant in common owns a specified interest in the property. Each tenant in common can sell or pass his/her interest by will to whomever he or she wishes. The ownership split need not be equal. For example, one owner might own a 50% interest, another could own a 10% interest and a third tenant in common could own a 40% share. The percentage ownership is specified on the deed.
- Joint tenancy with right of survivorship - When title is held in joint tenancy with right of survivorship, all co-owners must take title at the same time; they own equal shares and the surviving co-owner winds up owning the entire property. After a joint tenant dies, the surviving joint tenant(s) receives the deceased's share. The deceased's will has no effect on joint tenancy property.
- Tenants by the Entirety – This tenancy has the same rights and obligations as joint tenancy above, but is only afforded to married couples as defined in various states.
- Trust Ownership- If a buyer has a revocable trust, they may place their property in trust with the Trustee. This type of ownership may avoid tax and probate complications. Please consult your estate planning and tax advisers before determining if you would pursue this type of tenancy. Buyers should check with their lender for terms and conditions set by the lender
Do I Need to Attend Closing?
All Sellers and Buyers who are named in the contract of sale are required to execute documents at settlement. Many of these documents are required to be Notarized as well. While a Buyer or Seller are required to execute documents, they do not need to attend settlement in person. Parties can arrange to sign at times other than when the actuals settlement occurs. However, if a party is not available to execute settlement documents for the settlement, a Power of Attorney can be used authorizing another person to sign for the person unable to attend. If a party needs a Power of Attorney, they should contact the settlement agent as soon as possible to execute a properly drafted Power of Attorney form that is acceptable to the title company.
What if I Cannot Attend Closing?
If a party is not available to execute settlement documents for the settlement, a Power of Attorney can be used authorizing another person to sign for the person unable to attend. If a party needs a Power of Attorney, they should contact the settlement agent as soon as possible to execute a properly drafted Power of Attorney form that is acceptable to the title company.
Protecting your money
I Received a Second Set of Wiring Instructions for Sending Money to the Settlement Agent. What Should I Do?
Title companies will send you their wiring instructions to coordinate your delivery of funds needed for settlement. Phishing fraud and wire fraud are on the rise. If you receive a second set of instructions from anyone, immediately contact the settlement agent to confirm their wire instructions have not changed. Verify the validity of the information sent by calling the originator of the email by using previously known contact information prior to wiring funds for settlement.
How Do I Make Sure My Money for Settlement Was Sent to the Right Account of the Settlement Agent?
Prior to wiring your funds, contact the settlement agent to confirm the account information to ensure you are wiring to the correct company and account. Once you confirm with your bank that the funds for settlement have been wired by your bank to the settlement agent, contact the settlement agent to confirm the funds have been received.