The completion and accuracy of this form is very important. This will indicate to the Escrow Officer or Title Officer how title will be held to the property. ‘How you hold title to your property can have serious tax consequences. It is strongly recommended that you seek tax and / or legal counsel when completing this form’. The Escrow Officer or Title Officer will not be able to advise you on the completion of this document.
Once you’ve opened escrow on a property, you will receive a preliminary report. This is an offer to issue a title insurance policy and it will describe the terms under which a policy will be issued.
The preliminary report will include items such as the owner’s name, property legal description, and any exceptions to the title policy. While every property will have some exceptions, certain exceptions must be removed before a title policy can be issued. One example is a deed of trust securing a loan. The loan must be paid in full in order to secure a release and issue a title policy. It is important to review your preliminary report and understand any exceptions or exclusions from title policy.
Your title representative or escrow officer can help you with any questions about your preliminary report.
Your closing costs might include two types of title insurance policies, but do you know how these policies differ?
Your lender requires title insurance when you secure a mortgage. A loan or lender’s policy protects the bank or lending institution for as long as they maintain an interest in your property—typically until your mortgage is paid off. If you refinance your loan, you’ll need to purchase a new policy to cover the new loan.
An owner’s policy of title insurance helps protect your rights as the homeowner for as long as you or your heirs own the property. In some areas, it’s standard for the seller to purchase the owner’s policy for the buyer, whereas in other areas the owner’s policy is a recommended buyer purchase.
Why you need title insurance. Title problems can surface after you close on your home and affect your homeownership rights. Some of the more common title problems include:
- Errors in public records, like a filing mistake or inaccuracy on a former deed
- Unknown liens resulting from unpaid debts of former owners
- Missing heirs who come forward years after the owner passes away and you’ve purchased the home
- Forgeries, like forged or falsified documents
- Survey or boundary issues that may affect your ownership and cause disputes
Title professionals are skilled at identifying—and curing, if possible—these types of problems and countless others before you take ownership. Your title policy then serves to help protect you from those issues that may still remain undiscovered.
Other potential Title problems: 70+ Ways to Lose Your Property
So what exactly is “title insurance?” Well, when a property is financed, bought or sold, a record of that transaction is generally filed in public archives. Likewise, records of other events that may affect the ownership of a property, like liens or levies, are also archived.
When you buy title insurance for your property, a title company searches these records to find – and remedy, if possible – several types of ownership issues. First, the title company searches public records to determine the property’s ownership status. After this search, the underwriter will determine the insurability of the title.
Even the most skilled title professionals may not find all problems associated with a property, though. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, are difficult to identify. So after the title company finishes its searching, it also provides a title insurance policy that will help protect you from a variety of issues that might be uncovered later.
There are agents, and then there are agents. Yes, it sounds confusing. That’s because the term “agent” is often used in a casual manner, referring to any real estate practitioner. But agent also refers to someone with whom you’ve established a formal agency relationship—someone who represents your best interests in a real estate transaction and owes you fiduciary responsibilities. Agency relationships are usually established in writing with buyer agency agreements, and require:
- Reasonable care and diligence
The buying and selling of a home is an event that requires the services of a number of professionals. Here are the key players involved in the process:
Listing Agent/Realtor – This person, hired by the seller to market and guide the sale of their property, helps the seller to get the highest possible price and best terms in the sale of their existing property. The seller pays the listing agent who splits that fee with the agent representing the buyer.
Buyer’s Agent/ Realtor – The buyer’s agent helps someone looking to purchase a new property to find potential homes, engage the listing agent for showings, and obtain the best possible price and terms for the new property.
Loan Officer/ Mortgage Broker – Representing the lender, the loan officer works directly with the buyer/borrower to prequalify them, complete the loan application, and put together the documents required for loan approval.
Loan Underwriter – The underwriter, who works for the lender, assesses the borrower’s ability to repay the loan by reviewing all assets and past credit history, as well as the property details, appraisal, and title search reports. Then, they will generate detailed reports of their findings before making final loan approval.
Title Company/Title Insurance – When you buy title insurance for your property, a title company searches public records and archives to find any title ownership irregularities – and remedy, if possible – several types of ownership issues. After this search, the underwriter will determine the insurability of the title.
Escrow/Closing Officer – An escrow or closing officer, usually employed by your real estate agent or title company, works with all participants to facilitate a successful closing of a real estate transaction. At closing, they will collect the purchase money funds from the buyer and lender as well as the settlement costs from each party, then disburse the funds in accordance with the HUD-1 settlement statement and record the necessary documents to transfer ownership of the property.
Appraiser – An appraiser works on behalf of a lender and provides a market analysis and valuation of the subject property. An appraiser’s finding is subjective and combined with market findings of sold properties within the surrounding neighborhood.
Termite Inspector – This visual inspection is conducted by a state-licensed professional hired to look for signs of infestation or damage to a structure by wood-destroying pests, standing water, earth-to-wood contact and plumbing leaks.
Home Inspector – A home inspector objectively and independently provides a comprehensive analysis of a home’s major systems and components and is normally hired by the buyer.
Insurance Agent – An insurance agent helps a home buyer determine the homeowner’s protection coverage needed and assists in locating the right insurance policy to fit those needs.