FREQUENTLY ASKED QUESTIONS
WHAT DOES A TITLE COMPANY DO?
The title company provides insurance against defects in the title or liens insured against. In other words, if the title company says there aren't any other liens on the property and you buy it, and subsequently you are bombarded by someone who says they have a lien on your property, the title company has to take care of it, often by paying it off, out of their pocket - not yours.
WHAT IS A TITLE SEARCH, AND WHY DO I NEED ONE?
A title search is a detailed examination of all public records that affect a property. These records include deeds, mortgages, tax records, court records, property and name indices, and many other documents. The purpose of the search is to verify the seller's true interest in the title and right to sell the property, and to discover any claims, defects and other burdens on the property. The search protects everyone involved in the property transaction since problems with real estate are transferred with the ownership.
WHAT KINDS OF PROBLEMS CAN A TITLE SEARCH REVEAL?
A title search can reveal any party that might have an interest in the property, as well as a number of title defects, liens or other restrictions. For example, things like outstanding taxes, unsatisfied mortgages, and judgments against any recent owner as well as restrictions on the use of the land may require an extensive search.
ARE THERE ANY PROBLEMS THAT A TITLE SEARCH CANNOT REVEAL?
Yes. There are several "hidden hazards" that are impossible for a search to uncover. For instance, a previous owner may have recorded his marital status incorrectly, 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 several years after the purchase of your home and can jeopardize your right to ownership.
WHAT IS TITLE INSURANCE?
The answer to this important question is of vital importance to every person who is a party to a real estate transaction. Buying any kind of real estate could very well represent the largest single investment a person ever makes. And real estate, like every other thing of value, is worth protecting.
- What is Title Insurance?
A policy of Title Insurance is a contract of indemnity between the insured and the insuring company relating to the title to the land described in the policy, protecting the insured against loss of damageby reason of defects, liens or encumbrances of the insured title existing at the date of the Policy and not expressly excepted from its coverage. The Policy is issued after a complete search and examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.
- What Protection Does Title Insurance Give?
It insures that the "record" title, is good subject only to the exceptions expressly set out in the Policy. lt also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.
- What Risks Are Not Covered?
The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located. It does not insure against matters which would only be disclosed by actual inspection or survey of the property. It does not insure against certain matters not shown by the public records such as unrecorded easements, liens or money obligations; unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.
- Can Protection Be Obtained Against Matters Not of Record?
Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called 'extended coverage'.
- Are There Different Kinds of Policies?
Yes. Owner's Policies are issued to real estate owners. Purchaser's Policies are issued to purchasers of real estate under contract. Mortgage Policies are issued to mortgage lenders. In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.
- When Is the Policy Issued?
An Owner's Policy protects only the owner while a Mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both Owner's and Mortgage policies are applied at the same time. The Owner's Policy of title insurance usually is issued after the deed to the buyer is 'delivered' and recorded. A Purchaser's Policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded.
- If I Was Insured When I Bought the Land, Why Should I Have It Re-Issued to My Purchaser When I Sell?
The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title. The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying, or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetencies, divorce actions and other conditions which the title search may disclose.
- How Are Premiums for Title Insurance Determined?
Title Insurance Premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once as the policy is effective for so long as title or "ownership' remains in the name of the insured, or his heirs or devises. Rates are filed with the insurance commissioner who regulates the activities of title insurers.
- Where Can I Get Further Information About Title Insurance?
Contact ProLand Title, or E-mail ProLand Title at bperry@prolandtitle.com
HOW MUCH DOES TITLE INSURANCE COST?
Probably a lot less than you think. Generally the cost of title insurance (including the search, examination and related services) is about one percent or less of the value of the property. This premium is not paid annually, but it is a one time fee usually paid at the closing.
HOW LONG DOES MY COVERAGE LAST?
The insurance coverage never needs to be renewed. It is valid for as long as you or your heirs have an interest in the property.
WHY USE PROFESSIONAL LAND TITLE COMPANY?
Professional Land Title Company (ProLand) has extensive experience and contacts in the real estate/mortgage industry, and can provide you with the full service title work you need. Enough cannot be said about customer service. Without it there is nothing. Just as Sam Walton said,
"There is only one boss. The CUSTOMER. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else."
Listening to our clients' needs is a major part of ProLand Title's customer service. As a result, ProLand Title provides a broad variety of tools to assist today's professionals in obtaining listings and getting to the closing table. These include....
- training for new and experienced REALTORs, on a variety of topics from what happens in a closing to "what is title insurance and why is it needed?"
- qualified 1031 exchange facilitator.
- a knowledgeable staff in all areas from residential to commercial.
- builder programs providing no hassle construction draws.
- escrow closings, buyers and sellers signing at their convenience. We are also accustomed to transactions with out of state buyers and sellers where documents are sent overnight mail.
- counsel with a background of experience second to none.
Locally owned, knowledgeable, customer service oriented, first in professional service, and a financially sound product. This is ProLand Title.
WHAT IS ESCROW?
As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. The technical definition of an escrow is a transaction where one party engaged in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. This third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.
Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow.
The escrow holder must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds.
If the transaction is dependent on arranging new financing, it is the buyer's or his agent's responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. A real estate agent can help identify appropriate lending institutions.
When all instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees - such as title insurance premiums, real estate commissions, termite inspection charges - are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.
Payment of funds at the close of escrow should be in the form acceptable to the escrow, since out-of-town and personal checks can cause days of delay in processing the transaction.
The following items represent a typical list of what an escrow holder does and does not do:
The escrow holder DOES:
- serve as the neutral "stakeholder" and the communications link to all parties in the transaction;
- prepare escrow instructions;
- request a preliminary title search to determine the present condition of title to the property;
- request a beneficiary's statement if debt or obligation is to be taken over by the buyer;
- comply with lender's requirements, specified in the escrow agreement;
- receive purchase funds from the buyer, prepares or secures the deed or other documents related to escrow;
- prorate taxes, interest, insurance and rents according to instructions;
- secure releases of all contingencies or other conditions as imposed on any particular escrow;
- record deeds and any other documents as instructed;
- request issuance of the title insurance policy;
- close escrow when all of the instructions of buyer and seller have been carried out;
- disburse funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;
- prepare final statements for the parties accounting for the disposition of all funds deposited in escrow (these are useful in the preparation of tax returns).
The escrow holder DOES NOT:
- offer legal advice;
- negotiate the transaction;
- offer investment advice.
ProLand Title, Inc. will be happy to provide additional information.
