Real Estate Transaction FAQs

What is a Title?

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

What is a Title Search?

A Title Search determines that the person who is selling the property has the right to sell it and that the buyer is getting all the rights to the property that they are paying for. Before you purchase a property, Alvarez Law Group does a thorough search to determine the history of ownership and ensure it is clear of defects, liens, easements, encroachments, or other restrictions on the property. The records searched include deeds, court records, property and name indexes, and many other documents. If any issues were discovered during the title search, a title company works to clear the title of those issues. Once the title is clear, it can be covered by Title Insurance.

What is a Lien Search?

Like title searches, lien searches ensure the property is transferred to the new owner unencumbered. Lien searches include a review of municipal liens, utility accounts, code enforcement violations, open and/or expired permits, zoning violations, property taxes, and more. Matters arising out of lien searches do not necessarily affect title at the moment, but may in the future, and the closing attorney will work to resolve or close out any and all lien search issues.

What is Title Insurance?

Title Insurance is your policy of protection against loss if any of these problems - even a "hidden hazard" - results in a claim against your ownership. There are two types of policies; an owner's policy and a lender's policy. If a problem is discovered with the title of the property, this insurance protects the parties involved from financial loss.

Are there different types of Insurance Policies?

Yes. Basically, there are two different types of policies - a Loan policy and an Owner's policy. The Loan policy protects the lender's interest in the property as security for the outstanding balance under the buyer's investment or equity in the property up to the face amount of the policy. (Title insurers in many states offer increased policy coverage through inflation endorsements to cover increases in value due to inflation.)

What is the Difference between an Owner's policy and a Lender's policy?

An Owner's policy is one that protects the individual purchasing the property, who is going to become the owner. In the event that there is an issue with the title or an issue that affects the value of the property, the purchaser is covered under this type of policy. The Lender's policy protects the financial institution providing the mortgage in the event that an issue occurs with the title of the property. Each type of policies protect against the same issue, but for different parties involved. It's advisable that both an Owner's policy and a Lender are obtained during the purchasing process.

What kinds of problems can a Title Search reveal?

A title search can reveal a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller, and restrictions limiting the use of the land.

Are there any problems a title search cannot reveal?

Yes. There are "hidden hazards" that even the most diligent title searches may never reveal. For instance, the previous owner could have incorrectly stated his/her marital status, resulting in a possible claim by a legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and can jeopardize your right to ownership.

What are the responsibilities of the Closing Agent?

The Closing Agent is responsible for managing the closing, disburses all funds, ensuring that all documents are properly prepared, and coordinating the signing of all documents relating to the transaction. The Closing Agent is a neutral party, working not for the buyer, seller, real estate agent, or lender directly. They are liable for handling the activities for each person involved in the transaction equally and without bias.

What is a Closing Disclosure (CD)?

A Closing Disclosure is a five-page form that provides final details about the mortgage loan selected. It includes the loan terms, the projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing cost).

What is the role of a Title Company?

A Title Company reviews the Title to a piece of property, to ensure that it is legitimate and then issues Title Insurance on the property.

What is the difference between Title Insurance and Homeowner Insurance?

Title Insurance covers defects in the title due to forgery, undue influence, fraud, duress or incompetency. It also protects from a defect in the title caused by undisclosed prior mortgage or other liens. As well as a defect caused by improper execution of documents. Homeowner's Insurance covers damage to the contents of the home or theft of personal property in the home. It also covers damages caused by fire, windstorms, hail, and vandalism. As well as structural damages to the home or detached structures.

What are Pre-Closing procedures?

As part of the Closing Agent's responsibility, he/she will coordinate the Pre-Closing procedures and serve as a focal point for the transaction. The closing agent will first search and examine public records to determine the details of the property being bought and sold. They will also review all documents related to the transaction, including deeds, mortgages, liens, etc. After this first step is complete, the Closing Agent will prepare the document called a Title Commitment. This document discloses all information about the title, including any defects, current owner, and anything that must be excluded from coverage. This document confirms that all requirements have been met to obtain a Title Insurance Policy, which is typically issued within 45-60 days of closing. Depending on the location of the property, the Closing Agent will likely order a boundary survey and elevation certificate, if applicable. A survey is required on all transactions where a lender is involved. Experts recommend obtaining a survey for all transactions whether or not they are required. The elevation certificate is required for the homeowner to obtain Flood Insurance.

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