TITLE COMPANY FAQS
The title is a document proving the right to ownership of real estate property. The rights include right of possession, right of control, right of exclusion, right of enjoyment, and right of disposition. Titles change hands as properties are bought sold and passed on through wills. Any time the title is transferred the county clerk’s record the information.
It’s possible that there is information on the title that might inhibit you from declaring rightful ownership. These are called “defects.” Any defect could revoke your rights to reside and use the property as the rightful owner.
There are a few options, but some common are:
- Errors in tax records
- Unpaid judgments
- Forged documents
To put it simply, the title is the document addressing who is the rightful owner, and the deed is the document recording the transfer of ownership.
The title report is the document you receive from your title company after conducting research. It will outline any easements, boundary lines, or defects that are associated with the property.
A title company will check the information associated with the piece of real estate and issue title insurance. They conduct thorough research on behalf of the buyers to confirm the property is free of defects and the person selling the property does, in fact, have the legal rights to sell the property. During the search, the title company will pull information on:
- Outstanding mortgages
They will also look for easements or encroachments that could challenge the ownership claim. When these results come back free and clear, the title company will issue title insurance on behalf or either the lender or buyer.
Title insurance is a policy protecting either the buyer or lender from title issues and defects. It will cover financial loss in the event defects arise.
Most lenders will require you to purchase title insurance to protect the loan. You aren’t required to buy title insurance if you buy the property in full without the assistance of a mortgage lender. However, you might want to purchase insurance because it will protect your investment. If someone comes forward claiming they are the rightful owner of the property, the title insurance will kick in to cover your rights to occupy and use the property as you wish and be free from debts and obligations that you didn’t create. It will include:
- Legal costs
- Loss compensation
- Resolving problems
- TItle search
Unlike other insurance policies, title insurance is a one time fee. Different factors come into play when defining the amount. Usually the size of the loan, your credit score, and the location determine the final cost.
It depends on what you are hiring the title company to help you complete. Most title companies maintain escrow and assist at closing of a property. If they are your escrow agent they might reach out to you a few times for information. If they are working with you on the closing, you will meet an agent at that time.
Purchasing property is tied up in a lot of legal documents to protect your investment. The agent you work with will meet with you and explain all the paperwork you are signing. In the event something were to go wrong at the close, your closing agent would work with you to help you resolve the issue.
Escrow is an account maintained by a third party. They hold the money for the purchasing of a property until all the title comes back free and clear and all the legal documents have been signed. If there are no issues and the transaction goes smoothly, the escrow agent will release the money to the appropriate party.
Much of the closing is the signing of documents legalizing the buying and selling of a property. Typical documents signed at the time of closing are:
- Mortgage Note
- Mortgage or deed of trust
- Settlement statement
The mortgage note is the document signed promising to repay the lender the agreed upon amount.
The word mortgage is often misused. It’s not the loan from the lender to buy your property. It’s a document that creates a lien against the property.
A deed of trust is like a mortgage pledging property as collateral. It’s used in some states instead of a mortgage. For example, the state of Tennessee is a deed of trust state.
A lien is the legal rights granted by the owner of a property to seize said property in the event of foreclosure. Most mortgage lenders will have a claim on a property until the borrowed amount is paid in full. If for any reason, the lender is not satisfied with the payments, they have the legal rights to seize the property.
- A contact phone number
- Your marital status
- Your mortgage/lender information
- Your homeowners’ insurance information
- Proper picture identification (a Driver’s License, Passport or Picture Identification issued by the state)
- Spouse, if married (your spouse’s signature may or may not be required by your lender; please ask your Hyde Park Title contact if you are unsure)
- Certified funds for any amount exceeding $1,000 if you need funds to close.
I’m married, does my spouse need to come to closing?
Your spouse will need to be present if your spouse is the co-borrower for the loan on the subject property.
If your spouse is not the co-borrower, your spouse may or may not be required to come to closing. Your lender will ultimately decide if they require your spouse to sign certain loan documents, so you must confirm with your lender first.
In the event of a cash purchase, your spouse is not required to be present for closing.
Your spouse will not need to come to closing if the property you are purchasing is an investment property (unless your spouse is a co-borrower on the loan).