The Title Company- It's About More than Insurance Part V

Services for Real Estate Pros with Clerical Advantage

So we've got the title report back from the abstractor, the processor has drawn up the title commitment and sent it off to the Lender. Now what? We wait for a Clear to Close from the Lender? 

Yes and No.

While a Clear to Close is required before scheduling an actual closing date, there is also plenty of work the title processor needs to complete before then as well.  First, they have to make sure that the requirements listed on the title commitment are fulfilled through closing.

This means that they will have to obtain payoffs for any loans, liens or judgments against the property. This involves contacting lenders, attorneys, tax offices and any parties involved in order to determine the amount of money that will be required to pay them off and to be sure that upon payment that a release or discharge will be issued.  Depending upon circumstances, this can at times take a bit of time to obtain.  Any information that sellers can give regarding current encumbrances on their property is extremely useful.  In fact, some parties will require the sellers themselves to be the party that obtains the payoffs, etc.  Listing agents and sellers alike can help move this process along by assisting with any information or assistance that the title processor might request, beginning with a signed release form allowing the title company access to these records and information.

In the case of condominiums and properties with homeowners associations, the processor will also be required to collect any fees due to be paid through closing as well as to be able to determine the 'proration' amount. 

Pro-ration is a term you'll hear at closing as you review the HUD 1 settlement statement.  A pro-ration simply is determining the breakdown of fees, taxes, utility payments and other property expenses between buyer and seller based on the closing date. For example, if the seller has already paid his 2009 property taxes through December 31st and the closing date for the property is August 30th,  the seller should only be responsible for taxes through the closing date.  This means that the dollar amount of taxes from August 30 through December 31st will need to be determined and the at closing the buyers will credit (or pay) the seller with that amount of money via a tax pro-ration. 

At this point in time the Listing Broker and Buyers Broker should be getting some important information to the title processor.  You'll want to be sure that the title company has the correct spelling of the parties names, that the title company knows how the new buyers want to 'take title' and what the real estate brokerage fees and commissions are going to be.  Any special costs like warranty programs and agreed upon repair bills to be paid through closing should also be sent to the processor as soon as possible.

The term 'taking title' simply means the way the Buyer(s) want to take possession of the property.  Is this a husband and wife taking title as joint tenants, is only one of them going to appear on the deed or is this a single person? 

An additional item needed when the property involved is a condominium is the Resale Certificate.  The seller must obtain a certificate from the condominium association showing such information as a current budget, expected special assessments, ongoing litigation and the amount of reserves available for repairs. It includes all the documents the developer handed over to the unit's original owner. The title company will need a copy of this to be included in the closing package.

If there are any outstanding title issues, this is when the processor works on trying to 'cure' them.  If there are outstanding mortgages by prior owners, calls need to be made to determine why a release has not been issued.  If there are encroachment issues, sellers might need to obtain easements from neighbors or move items that are encroaching on others property.  If the survey comes back and shows that the property isn't in compliance with local zoning rules, the seller will need to see if they can get a variance from the locality in order to move forward.  And these are just a few of the dozens of possible title issues the processor might need to deal with.  Some are not difficult to cure, others can actually cause the real estate transaction to fall through.

As you can see, there is plenty of work going on behind the scenes at the title company. In my next post, I'll discuss the Clear to Close, scheduling the closing and preparing the closing package.  I do understand that in some states, it is the responsibility of an attorney's office to prepare and conduct the closing, but there is someone in their office taking these same steps and doing these same tasks.  So if the 'title company' designation doesn't work for you, insert "closing attorney'.

Comments (1)

Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

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Feb 10, 2018 03:28 PM