What is a title?
A title is the foundation of property ownership. It is the owner’s right to possess and use and transfer the property.
Why is transferring title to real estate different from transferring to title to personal property, such as a car?
Real estate is permanent and can have many owners over the years, as well as rights to use the property. In order to transfer clear title to real property, it is first necessary to determine the rights outstanding on the property.
What is a title search?
A title search is a detailed examination of the historical records concerning a property. These records include deeds, mortgages, court records, property and name indexes, taxes and many other documents. The purpose of the search is to verify the property owner’s right to sell or finance the property and to discover any claims or defects to the property.
What kind of problems can a title search reveal?
A title search can reveal several types of defects in title, liens, encumbrances and restrictions. Among these are unpaid taxes, easements, unsatisfied mortgages, judgments against the property owner and restrictions of use or transfer.
What is title insurance?
Title insurance is a policy of protection against loss if any of the problems listed above result in a claim against your ownership.
How does title insurance protect my investment if a claim should arise?
If a claim is made against your property, title insurance, in accordance with the policy, will assure your legal defense, including paying court costs and related fees. If the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
What are the different types of title policies?
There are two types of title policies- a lender’s policy and an owner’s policy. The lender’s policy protects the lender’s interest in the property as security for the outstanding balance under the buyer’s mortgage. The owner’s policy protects the buyer’s investment in the property up to the face amount of the policy.
What is a HUD Settlement Statement (HUD-1)?
This is a summary of the financial portion of the real estate transaction. The HUD will list the purchase price, loan amount, closing costs for both buyer and seller and show all pro-rations and sums to be disbursed by the title company to all parties. Click here to see a more in-depth explanation and copy of a settlement sheet.
What is pro-ration of property taxes?
This is the process of charging either the buyer or seller for their share of real estate taxes owed on the property for their respective time of ownership. Taxes are said to be “pro-rated” back or forward to the due date of the property taxes.
What is pre-paid interest?
This is interest due from the date of a loan closing to the first day of the following month. Most loans require payments to be due on the first day of the month. Each monthly payment reflects the principle and interest due on the loan for the previous month. A loan closing on the 20th day of the month will require interest adjustment through the 1st day of the following month. The first payment will then be due on the 1st day of the month following. Interest adjustment is considered a settlement charge and will be disclosed on the HUD.
What should I bring to settlement?
A valid photo ID, your checkbook for any overages, cashiers check in the amount of your Good Faith Estimate and your paid Homeowner’s Insurance invoice.
Do I need Certified Funds? Who should I make the check payable to?
No, certified funds are not necessary. A cashiers check or bank check is sufficient. You should make the check payable to Residential Title.
How much do I bring to settlement?
You should get a bank check in amount of the Good Faith Estimate provided to you by your lender and bring your checkbook. If your final figure is more than what you’ve brought to the table, you may write a personal check for the difference. If your bottom line is less than the check you’ve brought to the table, we will issue you a check at settlement.