What is a title?

A title is the foundation of property ownership. It is the owner’s right to possess and use the property.

Why is transferring a title to real estate different from transferring title to personal property?

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.

Should I have a home inspection?

After a Purchase & Sales Agreement has been signed, Buyers have the option of having any of the various standard inspections performed, within a 10-day time period.  These tests may include but are not limited to: pest inspections, home inspections, flood inspections and radon tests.  It is strongly recommended that you perform all tests available to you in order to better understand the nature of the investment you are about to make.

What is title insurance?

Title insurance is an insurance that is issued by the title attorneys to their clients in order to protect the client’s interests from any title defects that may have arisen prior to the client’s ownership in the property. There are two types of Title Insurance.

  • Lender’s coverage is required to be issued based on the loan amount and this insurance protects the bank’s interest in the title.
  • Owner’s coverage is an optional insurance, which if elected, is issued to the owners.  This coverage is based on the purchase price of the property; this insurance is a one-time coverage and it will protect the owners for as long as they own the property. The owners’ coverage ensures that in the event of a title defect the title insurance company affords the owner with an attorney to defend any title claims that arise.

Do I need title insurance if I’ve had a title search?

Yes. It is recommended that you have title insurance even if a title search has been performed. A title search is a review of all of the documents recorded in the Registry of Deeds of the respective county where your property is located. A title examiner can only review the documents that have been recorded in the registry thus far. In the event that a document is recorded but mis-indexed by the registry, then thy will have no way of finding this document for review. Other potential title defects such as fraud may never be discovered through normal due diligence; therefore it is strongly recommended that you always buy an Owner’s policy for title insurance at the time of your purchase.

What can make a title defective?

Title insurance protects you against both recorded and hidden title defects. If you do not have title insurance you are not fully covered for these defects. Hidden defects that a title insurance policy can cover include fraud, unknown heirs, forged documents/deeds, unfiled liens, unpaid judgments or false affidavits.

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 is a Purchase & Sales Agreement?

In order to be a valid and enforceable contract, an agreement to purchase real property must be in writing and need only describe the property generally, contain the terms of sale, provide for a specific closing date and be signed by both buyer and seller.

Among the items to be negotiated in a purchase and sale contract, in addition to the price, are the type of mortgage the buyers will need as a condition of purchasing and how long they will have to obtain a commitment from a lender to provide such a mortgage. Other items include date of occupancy, the type and effect of inspections to be done, and the responsibility for loss in the event of catastrophic damage to the property.

What can I expect at the closing?

All parties attend the closing and sign the Settlement Statement or HUD sheet. The sellers will sign the Deed transferring ownership to the new Buyers and hand over the keys to the property. The buyers are responsible for signing all of their loan documents and for bringing the balance of their down payment to the closing in certified funds. All monies due from the Buyers are paid to the Closing Attorney and the Closing Attorney then makes all disbursements to the Seller for the sale of the transaction.

What is a HUD Settlement Statement?

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.

What is the 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 principal 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 is recording?

All title documents are required to be recorded in the Registry of Deeds of the respective counties in order to officially transfer ownership of property and grant mortgage interests.  The title attorney is responsible for ensuring that all necessary documents are recorded in a timely fashion after the closing.  Technically, the transaction is not official until all documents are recorded.

What is an FHA loan?

An FHA loan is offered by the Federal Housing Administration.  FHA loans revolutionized the mortgage industry in 1937 by offering the first 30-year mortgage, making homeownership a possibility for many more Americans. A variety of loan programs are now offered through the FHA. From standard fixed rate loans to adjustable, buydown and energy efficient mortgages, there are now more options to make owning a home possible. For more information, go to the Federal Housing Administration.

How do I select a mortgage lender?

Selecting a mortgage lender should depend on more than just getting the lowest rate. It’s always best to talk to a few lenders to find the best fit. A good lender should help you with the qualification process as well as advise you on way to improve your credit and take advantage of any lending programs you are eligible for.

At QuickSilva Title, we have great relationships with mortgage lenders. If you would like our assistance in selecting a lender, please see our simple form here.