Correcting Recording Errors

Title defects are problems that occur with the transfer of ownership of a property from one party to another. While these issues (also called clouds on title) may range from wills that have been probated incorrectly to boundary disputes, one of the most common title defects is recording errors on deeds. 

Even when proper protocols are strictly followed in the recording of deeds, there is always the chance for human error. Read on to learn about some of the most common types of recording errors and how these issues are often corrected.

Types of Recording Errors

Recording errors on deeds may occur in one of the following ways:

-Misspelling of a name

-Omission of information

-Incorrect legal description 

-Missing signature(s)

What Is the Correction Process?

When a recording error on a deed is detected, a title agent or attorney may take steps to have the deed corrected. This process will vary according to the type of error that has been identified, but may include one or more of the following actions:

-Submitting a new deed (quitclaim or Warrantor’s deed)

-Completing a corrective deed

-Filing a corrective affidavit

-Tendering other legal instruments to correct the error

Protecting Against Title Defects

Owner’s title insurance is a type of indemnity policy that helps protect a homeowner’s financial interest in a property should a title defect be identified at any point after closing. These plans may remunerate the homeowner should the property be lost to another party whose legal claim to the said property is valid. An owner’s title insurance policy can also help cover the cost of legal fees should the homeowner need to go to court to resolve the dispute. 

For more on correcting recording errors on deeds, contact the team at Linear Title & Escrow today!

Do I Need Owner’s Title Insurance?

Buying a home is one of the biggest financial investments many Americans make. While homeowner’s insurance can help protect a home against monetary loss due to physical damage, title insurance serves to mitigate risks resulting from title problems (referred to as “title defects”). A title defect is any factor that clouds the evidence surrounding true ownership of a property, or one that allows another party to claim some ownership stake in your real estate investment. An owner’s title insurance policy can help assuage this risk, and help protect you from financial loss surrounding your home. 

What Is Owner’s Title Insurance?

An owner’s title insurance policy is a one-time premium paid at closing. It is an indemnity insurance plan that protects the homeowner in the event another party has a valid claim to some form of ownership in their property. While most lender’s require homeowners to purchase a lender’s title insurance policy (in the event the mortgage becomes unenforceable), an owner’s policy is not mandatory. It is, however, highly recommended to help protect your home against title defects that were not discovered during the title search conducted prior to closing. There are two types of owner’s title insurance policies, known as standard and enhanced. Talking with an experienced title agent can help you determine which of these options might be right for your needs.

Key Benefits of Owner’s Title Insurance

Owner’s title insurance offers a number of benefits to you as a homeowner. It can help cover legal costs to defend your property rights in a court of law or remunerate you if the property is lost to a valid ownership claim. Owner’s title insurance can help protect your property and your real estate investment against a number of unforeseen title issues, some of which include:

– Fraud or forgeries

– Unknown heirs

– Recording errors

Liens or judgments

– Boundary disputes

– Restrictive covenants

– False impersonation

– Improperly probated wills

– Easements or other encumbrances

For more on title insurance, please contact the experienced team at Linear Title & Escrow!

Glossary of Mortgage Terms

With mortgage rates still hovering around record lows, many people are looking to purchase a new home or refinance their existing home loan. Our last post highlighted some of the most common title terms to know. We think it’s only fitting to help new and seasoned home buyers and sellers better understand terminology central to the mortgage process. 

Common Mortgage Terms to Know

-Pre-qualification: The process of gaining a tentative estimation of the amount of home loan you can afford based on general financial information you provide.

-Pre-approval: The process of being approved by a mortgage lender to borrow up to a specific amount. 

-Home Appraisal: Completed by a third-party professional to determine the fair market value of a home. A home appraisal also impacts the amount of money a lender will let you borrow.

-Loan Origination: The all-encompassing phases of the home loan process carried out by the lender, from the mortgage application to the relinquishment of funds.

-Loan Discount Points: Enable a home buyer to pre-pay mortgage interest to secure a lower interest rate for a loan. Every point paid down is equal to one percent of the total mortgage amount. 

-Private Mortgage Insurance (PMI): A form of insurance typically associated with conventional home loans. PMI is generally obtained in cases where a borrower’s down payment is less than than 20 percent of the home’s value, and remains effectual until the LTV (loan-to-value ratio) is less than 80 percent.  

-Amortization Schedule: Outlines the series of mortgage payments that are scheduled to take place over the life of a loan.

-Closing: Conclusion of the real estate transaction. Closing, also referred to as “settlement,” occurs when all documents relating to the mortgage are signed and completed, and the transfer of title (property ownership) from the seller to the buyer takes place.

-Closing costs: Fees rendered by both buyers and sellers during settlement at the close of the mortgage process.

-Fixed-rate mortgage: Financial instrument for which the interest rate remains constant (fixed) over the life of the loan (generally 15 or 30 years). 

-Adjustable-rate mortgage (ARM): Mortgage for which the associated interest rate varies according to current market conditions, resulting in an increase or decrease in loan payments on a periodic basis.

-Closing Disclosure (CD) Form: Document outlaying details of the mortgage, from detailed payment information to closing costs.

For more on mortgage terms and how they may relate to the settlement process, please contact the experienced team at Linear Title & Escrow today!

Glossary of Title Terms

The term “title,” as it relates to real estate, describes ownership associated with a given piece of property. When a person buys a home, he/she assumes “title” of the property, which is conveyed during a settlement proceeding know as “closing.” 

Though the home closing process can seem rather complex at times, knowing common title terms can help you gain a clearer understanding of your rights as a property owner. We’ve put together a list of some of the more common title terms you’re likely to hear as you navigate your way through settlement proceedings.

Title-Related Terminology

-Deed: A real estate document that legally transfers ownership (title) of a property from one party to another. 

-Closing/Settlement: The formal process of finalizing the transfer of ownership rights to real property from one party to another.

-Title Search: The due diligence process of reviewing the historical chain of ownership surrounding a given property to search for and identify any title defects.

-Title Defects (Clouds on Title): Existing liens, judgments, or other legal impediments that could render title unmarketable and prevent a homebuyer from taking full legal possession of a property in a real estate transaction.

-Clear Title/Clear-to-Close: The notification to move forward with settlement, signifying a title searched that revealed no clouds on title. This also indicates that any title defects identified during title search have been resolved and ownership can legally transfer from the home seller to the buyer, free and clear.

-Title Agent: The professional conducting the title search and home closing process.

-CD Form (Closing Disclosure Form): A document integral to mortgage settlement proceedings that details closing costs, loan information, and the overall financial responsibility of the buyer.

-Title Insurance: A type of indemnity insurance plan that protects the homeowner’s property rights (Owner’s policy) or the mortgage company’s financial interest (Lender’s policy) against loss in the event title defects are discovered after closing. 

-Escrow: A financial account established by a neutral third-party that holds, manages, and transfers real estate funds and documentation during the settlement process. 

-Closing Costs: Funds paid by the home sellers and buyers at settlement to conclude the real estate transaction. 

For more on title services and real estate closings, contact Linear Title & Escrow Today!

What Are Title Defects?

Along with facilitating the real estate closing process, one of the central roles of a title company is to run a search for title defects surrounding a property. A title defect, also referred to as cloud on title, is any factor that interferes with or prevents the proper transferal of property ownership from one party to another. Title defects may occur in various forms and generally impede the closing proceedings until resolved. To identify such irregularities, a title search is carried out by a settlement professional prior to closing. Read on to learn about some of the most common title issues and how resolution might occur to allow the real estate closing process to move forward.

Common Title Defects

Title defects can encompass a wide range of factors. However, some of the most common include:

-Liens

-Judgments

-Boundary disputes

-Unreleased deeds of trust

-Errors of omission/recording errors

-Forgery or fraudulent claims to property

-Missing or unknown heirs

-Incorrect probation of wills

-False claims of marital status

How Are Title Defects Resolved?

In order to close a loan on and take ownership of a property, the title must be rendered free and clear. The resolution approach for addressing defects identified during a title search depends on the type of cloud on title that has been identified. In some instances, such as recording errors, it is simply a matter of filing the correct information with the local government recording office. Other types of title defects, like mechanic’s liens, are absolved by financial means, or bringing a delinquent account up to date. Title defects may present more difficult circumstances, in some instances, and may require legal proceedings to resolve. An example of this type of defect might include undisclosed heirs or property/boundary disputes.

Safeguard Against Title Defects

While title defects are a blip in some real estate transactions, homeowners can help mitigate the risk of property or financial loss by purchasing Owner’s Title Insurance at the time of closing. This type of indemnity policy can remunerate the owner for certain costs associated with defending title or resolving title defects weeks, months, or even years after closing. 

For more information on title defects, title search, or the benefits of title insurance, contact the experienced team at Linear Title & Escrow. 

How to Prepare for Your Closing

The process of finding the perfect home is an endeavor full of excitement. But if you are buying your first house, you may be wondering what to expect from the time your contact is signed to the day you sit at the closing table. We have put together a few tips on how you can get ready for the big day. Even if you are not new to the home buying process, the information below can still be a good reminder of how to best prepare for your closing.

  1. Submit loan documentation promptly (and thoroughly). Without a doubt, mortgage application procedures involve quite a bit of paperwork. Promptly providing your lender the documents necessary for home loan approval can help make for a smoother experience. Throughout the approval process, the professionals involved in your real estate transaction may require information from you. Complying with such requests as quickly as possible can help prevent snags that may delay settlement proceedings.
  2. Order a home inspection. Once you and the seller have both signed the purchase agreement, it will be time to request a home inspection. When it is complete, you and the seller can then decide if repairs need to be made or whether you will purchase the property as is. 
  3. Have a realistic expectation of the closing timeframe. Home closings take place about 45 days or so (on average) after your contract is signed. But keep in mind, the closing date that is established early on is only a best estimate of when it will actually take place. In some cases, title defects may need to be resolved before the closing process can move forward, which can delay settlement. 
  4. Review your Closing Disclosure (CD) form in detail. Three business days before your scheduled closing, your lender will submit to you a CD form outlining the details of your loan and other relevant financial information. It is extremely important that you review this document and notify your lender of any discrepancies right away. Any concerns must be resolved before the day of closing.
  5. Complete a final walk-through of the property. You will need to schedule a walk-through of the property a few days before your closing date to ensure it is in its agreed-upon condition. 
  6. Prepare closing costs in the form of wire transfer instructions or certified check. Before your closing day, the title agent conducting your settlement will contact you with the final figures you will owe to close on your new home. You will be asked to provide these funds via a wire transfer or certified check.

Being prepared for your home closing can help minimize any stress and streamline the settlement process. For more information on how you can best prepare for your upcoming home closing, please contact the experienced professionals at Linear Title & Escrow.

Owner’s Title Insurance: Standard vs. Enhanced Policies

Protecting your real estate investment against the risk of title defects is important, regardless of the age of the property. Title insurance is a type of indemnity policy that helps guard your financial interests and ownership stake should title defects be discovered after closing, giving another party plausible rights to your property. Most mortgage lenders mandate that homebuyers purchase a lender’s title insurance policy to protect the financial institution’s interests should the loan become unenforceable. Owner’s title insurance, however, is not required – but it is highly encouraged. 

How Can Owner’s Title Insurance Protect Your Interests?

Purchased at the time of closing, owner’s title insurance can offer financial reimbursement should ownership claims by another party, such as an undiscovered heir, lead to the loss of your property. An owner’s policy may also cover the cost of litigation should you be required to defend your property rights in a court of law. There are two types of owner’s title insurance, known as standard and enhanced policy, that offer varying levels of coverage. Read on to learn more about the differences in these plans and how each might protect your financial and real estate interests.

What Is the Difference Between a Standard and Enhanced Owner’s Title Insurance Policy?

When purchasing owner’s title insurance, you have the option between a standard or enhanced policy. While both cover certain types of common title defects, an enhanced policy provides coverage for a wider range of title problems. It is essential to understand the similarities and differences in these plans to help you decide the best option for your personal needs.

Similarities 

Both of these policy types provide coverage for:

-Land rights (such as easements)

-Ownership rights (including liens or heirs)

-Lack of vehicular or pedestrian access (only legal access is covered with standard policies)

-Unmarketable title (resulting in an inability to obtain a loan or sell the property)

Differences

Enhanced policies offer more extensive coverage, including title defects such as:

-Property encroachments

-Subdivision and zoning violations

-Damages resulting from the use of easements

-Restrictive covenant violations (existing)

-Post-policy forgeries

In addition, enhanced coverage increases 10% annually to reflect property value increases (up to 150%).

Additional Information About Owner’s Title Insurance

Owner’s title policy premiums are based on the sales price of the home and are paid at closing. In general, the difference in cost between standard and enhanced policies is typically only a few hundred dollars. 

Your home may be one of your greatest financial assets. Having an owner’s title insurance policy in place can help bring you peace of mind, safeguard your property ownership rights, and mitigate the potential for financial loss. For more information on standard vs. enhanced title insurance policies, please get in touch with Linear Title & Escrow today!

5 Common Questions About Title Insurance

Whether you’re new to the homebuying process, or even a seasoned buyer, you likely have several questions about title insurance and how it works. Title insurance is an indemnity policy protecting mortgage lenders and homeowners against monetary loss if post-settlement title defects surface or the loan is deemed unenforceable. Read on to explore some of the most commonly asked questions and answers surrounding the topic of title insurance.

Lender’s vs. Owner’s Title Insurance

Before delving further into these FAQs, it important to understand that there are two forms of title insurance: lender’s vs. owner’s. While lender’s title insurance guards the economic stake of the loan or mortgage company, an owner’s policy protects the homebuyer’s ownership rights and financial interests in the property. For more in-depth information, please visit our Title Insurance page.

FAQs About Title Insurance

Title insurance is integral to the homebuying process for many individuals. To help you understand more about this topic, we have listed five commonly asked questions and associated answers about title insurance:

What Is Covered by Title Insurance?

An owner’s title insurance policy covers court costs or other legal fees incurred should you need to defend your property rights. This may include protection against someone making an ownership claim to your property or other types of title defects. A lender’s policy covers the monetary investment made by mortgage lender if a title defect or other event renders the loan invalid. 

Are Title Insurance Policies Required?

Mortgage lenders almost always require homebuyers to obtain a lender’s policy as part of the home loan process. While purchasing an owner’s policy is entirely up to the buyer, this form of title insurance coverage is highly recommended. 

How Are Title Insurance Costs and Coverage Amounts Determined?

The cost and coverage amounts for owner’s title insurance policies are determined according to the selling price of the property, while lender’s policies are dependent upon the amount of the home loan.

Who Covers the Cost of Title Insurance?

A lender’s title insurance policy is the financial responsibility of the homebuyer. The homebuyer also cover’s the cost of an owner’s policy; however, a portion of this amount may be negotiated within seller concessions, if applicable. 

Do I Need a New Title Insurance Policy If I Refinance My Loan?

An owner’s policy will be effectual for as long as the property remains in your legal possession. Mortgage lenders will require you to purchase a new policy if you decide to refinance your loan, but this may be offered at a discounted rate. 

For assistance in navigating the homebuying process and understanding how title insurance applies to your real estate transaction, please contact Linear Title and Escrow today.

What to Expect With Closing Costs

When it comes to closing a real estate transaction, it is important to have a solid understand of the settlement process. Closing costs are the fees due (financial responsibilities) by both the buyer and the seller at the time of sale and vary according to a number of factors. If the prospect of buying or selling a home is in your near future, you may be interested in learning what your associated settlement expenses might entail.

How Are Closing Costs Determined?

Closing costs are determined based on loan amount, taxes, mortgage insurance, and other fees. For buyers, closing costs generally average between 3 – 6% of the total purchase price. Seller costs are derived from deed preparation and other administrative fees and typically hover around 6 – 10% of the sale price, with bulk of these expenses resulting from real estate commission. 

What Do Closing Costs Include?

While total closing costs may be unique to each individual sale, buyer and seller settlement fees generally include the following:

Buyer closing costs:

   -Mortgage insurance, origination fee, and loan discount points (if applicable)

   -Home appraisal fee

   -Homeowner’s insurance

   -Title search and recording fees

   -Transfer taxes

   -Property taxes

    -Lender’s and owner’s title insurance

    -HOA fees (if applicable)

    -Boundary survey fee (if applicable)

    -Other settlement/administrative expenses

Seller closing costs:

    –Loan payoff amount

    -Agent commission

    -Property taxes

    -Deed preparation and courier fees

    -Title transfer and recording fees

    -Home repairs (if applicable)

    -Seller concessions (if applicable)

    -Other settlement/administrative costs

For more information about closing costs or the settlement process in general, contact Linear Title and Escrow today!

New to the Home Buying Process? 11 Terms to Know

Let’s be honest: there’s possibly nothing that simultaneously generates equal levels of excitement and anxiety quite like buying a new home (especially if you’re a first-time home buyer). But doing your due diligence and arming yourself with the knowledge and education of the home buying process can quell some of those nerves and help make certain you make the right moves along the way. Following are eleven terms central to the home buying process that are important for you to know and understand.

  • Earnest money deposit: Formerly referred to as a “good faith deposit,” earnest money is generally a small amount of money given to the seller from the buyer at the time of contract submission to show their serious intent to purchase the property. Once submitted, these funds are typically held in an escrow account by the title company (or other third-party, such as an attorney) and applied toward the down payment on closing day.
  • Contract ratification: This term refers to the point in the real estate transaction where the contract (and associated terms) have been agreed upon and accepted by both parties, but has not yet been signed or put into effect.
  • Home appraisal: In order for a lender to approve a loan/mortgage request, a proper appraisal by an independent third party must be conducted. The appraised value of the home is generally the loan amount amount up to which a lender will offer funding.
  • Home inspection: A home inspection is also performed by an independent third party contractor and is executed to identify any obvious or potential issues with the home that may impact its value. These concerns may be structural, such as pertaining to the roof, or aesthetic in nature.
  • Closing: The signing of documents in the transfer of title on real estate from one party to another is known as “closing” on the loan and is also referred to as “settlement.” On average, the closing process (from contract ratification to close) is between 45 – 60 days.
  • Closing Disclosure (CD) Form: This document includes details of the loan, the buyer’s financial responsibilities to the lender, and other information surrounding settlement on the property. The lender will send the CD Form to the buyer at least three business days prior to closing and should be reviewed by the buyer thoroughly upon receipt. Any inaccuracies or discrepancies regarding the information contained in this document must be addressed and resolved before closing on the loan.
  • Closing costs: Expenses paid by the buyer and seller during the real estate settlement are known as closing costs.
  • Title search: Title is the collection of rights surrounding a piece of real estate that establishes legal interests to such property. Before initiating the closing process, a title agent will conduct a title search to identify any circumstances that may interfere with the proper transfer of legal possession from one party to the next.
  • Title defects: Any factors that prevent the marketability or transfer of title are referred to as title defects. Some of the most common title defects include fraud, liens, forgery, and recording errors.
  • Title insurance: This is a type of indemnity insurance that protects the lender or owner against financial loss due to title defects discovered after the loan has closed. Lender’s and owner’s title insurance are different types of policies and carry independent costs. Lender’s policies are almost always required while owner’s polices (though not required) are highly recommended.
  • Seller concessions: Contributions to closing costs made by the seller on behalf of the buyer are known as seller concessions. These contributions can help lower the overall out-of-pocket costs for the home buyer.

At Linear Title & Escrow, our experienced team is always ready to answer your questions and guide you through the closing process. To learn more, contact us today!