Good afternoon Friends!
Buying /selling /refinancing a home is a stressful situation. There is a tremendous amount of emphasis in the media and blogs put on all the specifics of these items. We read and hear about rates and housing values, but how much do we actually hear or read about the title portion of these transactions? I think sometimes the title process is slightly underrated.
In every single case, it is the final step in an otherwise complicated and lengthy process. If you are buying home then it all begins with finding the right agent. If you are selling a home, the right agent is equally important and how they market your home. The contract and financing are just as important, but it is the closing that is the lubricant which brings it all together and is the final step in bringing resolution to the process.
What most don't know is everything involved in this process and all the things that have to be done to make sure this all important final step is smooth and without stress. My job is to make sure that each individual in the process is communicated with if there is a hiccup or situation that needs resolution.
It all begins with the search and abstract. Because properties are a matter of public record, their legal description, the owner(s) of record, the recorded liens and /or mortgages and all other related historical records of detail are accessible through a physical search at the courthouse in the county /city the property resides. Once all the records are compiled they are put into the form of an abstract.
After this is provided to the title company, a title examiner will conduct an exam of these records to determine their accuracy and if there are any contradictions or errors. Once it is determined that there are none, then all the information from the abstract is organized in the form of a title insurance commitment binder. There are usually 5 parts to the commitment.
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Policy Jacket or cover sheet
The Jacket The cover sheet or jacket of the commitment states the general terms of and exceptions to the commitment. It limits liability to the amount stated in the commitment and in the instance that any of the parties have knowledge of a lien or encumbrance and fail to disclose that information to the insuring company.
Schedule A
This part of the commitment stipulates the basic facts of the transaction, including: the date of certification (the effective date), the purchaser and the lender, the types and amounts of the policies to be issued, the sales price and loan amount, the property being insured, how title to the property is currently vested, the present owner(s) and how they hold title, the legal description and address of subject property, and the estimated title insurance charges, based on preliminary information.
Schedule B Section I
lists the necessary requirements that must be met before a title policy can be issued, including any or all of the following items: releases of deeds of trust, releases of tax liens, releases of judgments, correction deed(s), warranty deed(s), and/or deed(s) of trust, if there are to be any. These requirements could be items necessary to comply with the terms of the real estate contract or lender’s loan package, as well as items necessary to correct defects in the past chain of title (owners, lenders of record ~ usually within the past 2 years).
Schedule B Section II
Lists the necessary exceptions to title—items not being insured over by the title company—including: Standard exceptions, taxes, and further burdens not being insured over by the title company that will affect the subject property after closing, such as covenants, conditions, and restrictions (CC&Rs); easements (for example, utility or access); and/or mineral reservations.
Exhibits
Metes and Bounds survey language and /or Legal description of the property
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Once all of this has been completed and presented to the lender and the loan has been approved to close (sometimes referred to as a Clear To Close), then a Settlement statement (HUD1 statement) is prepared spelling out all the related charges and fees associated with the transaction.
Then a closing is scheduled at a time convenient to the individuals involved in the transaction. A Notary or Attorney (depending on the laws of the state the property is located) is assigned to explain the details of the transaction and witness the signing of all the appropriate documentation and then notarized.
All the documents are copied and either delivered to the buyer and seller or owner or given at the closing. If
a lender was involved, they also receive a copy of the package. The documents are also protected by certain laws and permanently stored with the title company and the lender /servicer.
The title company is then responsible for recording the transaction at the courthouse of record where the whole process began. These records are kept on file until the house either sold or refinanced and then the process begins all over again.
As you can see there is a lot that goes into this process. It takes an experienced and licensed professional individual or agency to navigate, coordinate and organize the title, closing and recording of this process.
Now you Know!
Thanks for stopping by
To your success
Until next time my friends,
LEADING EDGE TITLE SOLUTIONS
Matching experience with technology to give
you the edge to be a mortgage industry leader
Bo Hussung
Vice President of Sales
phone ~ 615-438-7300 fax ~ 678-261-1594
email me ~ bhussung@cogentca.com
web ~ www.cogentca.com
This is not to be construed as legal advice. For additional information seek the advice of a real estate professional or state licensed title agency.
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