How Are Title Defects Resolved?

Title defects are factors relating to a real estate property that prevent a clear and free transfer of ownership from one party to the next. Also referred to as “clouds on title,” such defects can interfere with a homeowner’s ability to sell their property or may give rise to the need to defend their property against others who retain ownership rights. Any title defects that are identified must be addressed and corrected before the property can be legally and properly sold and transferred.

How Are Title Defects Found?

Title defects are generally identified during a title search. This investigative process is conducted during the time between contract ratification and the closing proceedings. A title search involves a very thorough, detailed evaluation of the property’s chain of ownership history and usually begins by reviewing public records. The title examiner searches for judgments, liens, unpaid taxes, and any other encumbrance that could prevent the sale of the property and legal transfer of ownership.

What Are Some of the More Common Types of Title Defects?

There are a wide variety of factors that can render the title of a property defective. Some of the most common title defects include:

– Forgery

– Fraud

– Impersonations

– Improperly probated wills

– Property liens

– Judgments

– Boundary disputes

– Encroachments or easements

– Recording errors

– Unreleased deeds of trust

– Unidentified heirs

How Are Title Defects Cleared?

The title defect resolution process is dependent upon the type of problem at hand. Once a defect is found, the examiner conducts title rectification procedures to resolve the issue. Some types of defects can be resolved relatively quickly and simply involve submitting the correct information to the public records office (such as for clerical or recording errors).

With other issues, such as unreleased deeds of trust, the title company may need to contact the previous lien holder (mortgage lender) to initiate the title resolution process. Liens, unpaid taxes, judgments, and other debt-related defects must be paid in full and the receipt of payment recorded to clear these types of title problems. Undisclosed heirs, boundary disputes, improperly probated wills, and other complex forms of defects may require legal action or need to be resolved in a court of law.

Can I Protect My New Home Against Title Defects?

Title examiners are trained to conduct thorough title searches and detect clouds on title. Even with a comprehensive investigation, however, there may still be undiscovered defects that surface months or even years post-closing. Homebuyers can purchase an owner’s title insurance policy at the time of closing to help safeguard against title defects. This type of indemnity policy can help protect against loss of property or financial loss should a defect arise or if another party proves to have ownership rights to the property. Owner’s title insurance can also help cover legal fees in the event such action is necessary to clear clouds on title.

Learn More About Title Defects

Defects can render the title of a home unmarketable and may even threaten the real estate sale. If you have further questions about clearing title defects, Linear Title & Escrow can help.  Please contact our title company in Virginia Beach, VA today to learn more.

What Does a Title Company Do?

Whether you’re a buyer or a seller, closing on a home is a momentous life event. In many instances, the closing (or settlement process) for the real estate sale is conducted by a title agent or representative of a title company. Read on as we provide a general overview of the title company’s role in a real estate transaction.

About title companies

Title companies are business organizations that conduct home closings on both sides of the real estate transaction. A home closing is the process of transferring ownership of a property from the seller to the buyer and finalizing the home loan (mortgage) paperwork. Unless handled by a real estate attorney, closings are conducted by a title agent, often onsite at the title company office.

Title companies serve as neutral third parties to facilitate the closing process between buyers, sellers, mortgage lenders, realtors, and other professionals. From conducting title searches to issuing title insurance policies, title companies are an integral part of the real estate sale.

What is a title search?

A title search is the process of reviewing the ownership chain of a given property to determine if any title defects exist. Title defects are issues or problems with the title of a property that could interfere with an owner’s right to sell the property free and clear. A title search should involve the thorough examination of public records, screening for judgments, liens, recording errors, unpaid taxes, encumbrances, and a variety of other factors. Title defects discovered during the process of a title search (generally) must be resolved before closing can occur.

What is title insurance?

Title insurance is a type of policy designed to protect homebuyers and lenders against financial loss from title defects should any be identified after closing has occurred. There are two types of title insurance policies: an owner’s title insurance policy (which protects the homeowner) and a lender’s policy (which protects the mortgage lender). Visit our title insurance page to learn more about these indemnity policies.

Can I choose the title company for my home closing?

The ability to choose a title company can vary among states. In Virginia, however, the buyer has the right to choose the title company for their home closing.

Finding the right title insurance company for your closing can contribute to a positive settlement experience. If you are searching for a title company in Virginia Beach, VA to handle your home closing, our team at Linear Title & Escrow can help. Please contact us today to learn more.

Home Closing FAQ

Buying a home is a milestone in life, whether it’s the first property you’ve ever purchased or one of several. Knowing what to expect when it’s time to close on your home loan and take ownership of your new abode can be very helpful as you navigate the home buying process. Read on to discover some of the most frequently asked questions about closing on a real estate transaction.

What does “closing on a home” mean?

For home buyers, “closing” on a home means signing documents to finalize the home loan (or mortgage) and the transfer of ownership (title) of the property. For sellers, “closing” means to transfer the legal and ownership rights of a property to the buyer.

Where will the closing take place?

Home closings often take place in the office of a title company or a real estate attorney. They may also be conducted in the mortgage lender’s office or another location designated for convenience.

Do buyers and sellers have to be present at a home closing?

It’s important to understand that essentially two closings take place during a real estate transaction: one is for the buyer and a separate closing for the seller. While it’s common for the home buyer to attend the closing, it is not required. All states allow for closings to be conducted via power of attorney for both buyers and sellers.

As a home buyer, can I choose the title company for my closing?

Yes. Buyers have the right to choose the title company that conducts their closing transaction.

What do I need to bring on closing day?

Your title agent will inform you of the exact items you will need in order to close. These generally include:

-A government-issued photo ID

-A cashier’s check in the exact dollar amount of monies due

-Documentation indicating proof of homeowner’s insurance

-Closing Disclosure (CD) form (This is a form sent by the lender to the buyer at least three business days prior to closing. It contains all the details of the loan and the buyer’s financial responsibility pertaining to the sale.)

How long does the closing process take?

From contract to settlement, the entire closing process takes (on average) about 45 days. While there isn’t really an average time attached to the actual closing itself, as this can vary according to individual buyers, home closings typically take a minimum of an hour.

Do you have other questions about the closing process? We can help! To learn more, contact the experienced team at Linear Title & Escrow today.

Title Terms to Know

The title process is integral to a real estate transaction. As such, it can be helpful to have an understanding of certain title terms, whether you are new to the home buying experience or a seasoned pro. Read on to learn some of the most common title terms to help you along your way.

Title: Refers to the ownership rights associated with a piece of real estate.

Title search: The process of reviewing the ownership history of a property to identify title defects.

Title defect: Existing judgments, liens, encumbrances, or other legal factors that could cause a title to be “unmarketable.” Without resolution, title defects could prevent a homebuyer from the full legal scope of ownership rights surrounding a property.

Title agent: A professional who carries out a title search and/or closing procedures.

Escrow: A financial arrangement managed by a neutral third party that temporarily holds and transfers real estate funds throughout the settlement process.

Lender’s title insurance: An insurance policy that protects the lender’s interest in the event a mortgage/home loan becomes unenforceable.

Owner’s title insurance: An insurance policy that protects a homeowner’s financial interest in their property should certain title defects be discovered after closing.

Closing: The settlement process of transferring ownership rights of a property from one party to another.

Closing costs: Fees paid by homebuyers and sellers during the settlement process to finalize the real estate transaction.

Deed: A legal document that represents the transfer of title (ownership) of a property from a seller(s) to a buyer(s).

Conveyance: The transfer of a property’s title from one party to another.

Encumbrance: A limitation or other factor (such as a lien or easement) restricting or otherwise impacting how a property owner can utilize said property.

For more information or to learn more about the title terms listed above, please contact the team at Linear Title & Escrow.

What Are the Benefits of Owner’s Title Insurance?

Purchasing a home is an exciting life event. It is also one that involves a significant financial investment. As such, most people purchase a homeowner’s policy to protect against damage to the dwelling’s structure or that which may occur from natural disasters, fires, or other events. But what a homeowner’s policy does not cover are intangible threats to the property, such as unpaid liens, boundary disputes, or other title defects that may arise after closing on the home loan.

Owner’s title insurance is an indemnity policy that helps protect a homeowner’s financial interest in the event title issues are discovered after closing. Purchasing an owner’s policy is optional but strongly recommended. Read on to learn some of the key benefits of owner’s title insurance.

How does owner’s title insurance work?

During the settlement process, a title search is conducted to identify any title defects, which are essentially ownership or financial claims another party may have over the property in question. While the goal of a title search is to detect any defects, there are times when undiscovered title issues surface months or years after the property is purchased. Such instances could lead to financial loss, legal fees, and even the loss of the property. An owner’s policy can help mitigate these risks and help protect the homeowner from sustaining a significant financial loss.

Why purchase owner’s title insurance?

Having an owner’s title insurance policy in place can offer the homeowner a number of key benefits should title defects arise after settlement. Some of the key benefits of title insurance include:

Protect against financial loss: Should another party prove to have a legitimate claim on a homeowner’s property, an owner’s policy would reimburse the financial loss for covered title defects up to the policy amount.

Help cover legal fees: At times, it may be necessary for a homeowner to defend their rights to their property in a court of law. Owner’s insurance can help cover court costs and additional legal expenses.

Provide peace of mind: For a homeowner, knowing that a policy is in place to help against financial loss from potential title defects can bring peace of mind to the home buying process.

How long does an owner’s policy last?

An owner’s title insurance policy will remain in effect as long as the homeowner or their heirs own the property, even if the loan is refinanced at some point. It is important to understand that an owner’s title insurance policy will only apply to title defects discovered after the loan has closed on the property in question, or only those impacting the ownership chain before the homeowner took possession.

Even when the title of a property is rendered free and clear following a title search, this is still the risk that title defects could be identified months or years after closing. To learn more about protecting your homeownership interests with an owner’s title insurance policy, please contact Linear Title & Escrow today.

Title Insurance FAQ

If you are in the process of buying a home, the term “title insurance” is one you’re likely to hear. To help provide a general understanding of what title insurance means and how it may impact your real estate investment, we’ve compiled some of the most common questions about these types of insurance policies.

Are there different types of title insurance?

There are two general types of title insurance: lender’s title insurance and owner’s title insurance. A lender’s policy protects the mortgage lender’s interest for the remaining dollar amount should the home loan become unenforceable at any point over the repayment period. An owner’s policy protects the homeowner against financial loss up to the amount of the real estate transaction should title defects arise or another party proves to have a legitimate ownership claim to the property.

Do I have to purchase title insurance?

Most mortgage lenders require homebuyers to purchase a lender’s title insurance policy. Buying an owner’s policy is entirely optional but is highly recommended, given the risks undiscovered title defects might pose to a homeowner’s property.

How much does title insurance cost?

The cost of lender’s and owner’s title insurance policies is based on the sales price and loan amount for a new purchase and the loan amount for a home loan refinance. The cost of an owner’s title insurance premium is calculated as a percentage of the purchase price of the home and corresponds with the value of the property. The cost of a lender’s policy will vary by state and/or other factors but generally averages between $500 – $2,000.

What does title insurance protect against?

Title insurance helps remunerate a homeowner or lender for financial loss in the event certain title defects are discovered after closing and such defects allow another party to have a proven and legal ownership stake. Owner’s policies may also cover all or part of legal costs should a homeowner be required to seek legal action to defend against title defects. Some of the most common title defects include:

-Undiscovered heirs

-Forgery or fraud

-Improperly probated wills

-Recording/clerical errors

-Unpaid mortgages

-Liens

-Judgments

Are title insurance policies transferable?

Owner’s and lender’s title insurance policies will remain in effect until you or your heirs sell the property or transfer ownership to another party. During a refinance, the lender will typically require the purchase of a new lender’s policy, but a re-issue rate will be established. An original owner’s insurance policy will still be in effect following the refinancing of a mortgage.

How can I purchase title insurance?

Payment for title insurance is provided as a one-time premium at the time of the real estate sale and is included in overall closing costs. 

Have other questions about title insurance policies? The Linear Title & Escrow team is ready to assist. Please contact us today for more information.

What Does a Title Search Include?

The term “title” in real estate represents the ownership rights attached to a property. It also entails the right to utilize or maintain an equitable interest in said property. When a real estate sale occurs, the title is transferred from the seller(s) to the buyer(s). For the legal transfer to be carried out, the title must be free and clear of any defects.

What is a title defect?

A title defect is any factor that prevents the proper transfer of property ownership from one party to the next. Title defects are generally identified through a title search. This investigative process takes place in the time between real estate contract ratification and the settlement (closing) of the loan. A title search seeks to identify any problems with the title as well as any other parties who may hold some ownership stake or legal rights to a property.

Who conducts a title search and how is it accomplished?

A title agent representing a title company or a real estate attorney are generally the professionals who carry out a title search. The person responsible for the title search will examine public records to screen for defects and review legal information pertaining to the property in question. This typically includes a search of municipal, county, or local tax collector records.

What does a title search look for?

A title search looks for any problem or issue (defect) that may prevent proper ownership transfer. Title defects can vary, but some of those most commonly discovered include:

-Liens or judgments

-Unpaid taxes

-Forgery or fraud

-Recording errors (in public records)

-Undisclosed heirs

-Easements or usage covenants

-Boundary disputes

-Improperly probated wills

What happens if title defects are found?

If a title defect is discovered, steps must be taken to resolve the issue in order for the real estate transaction and closing to proceed. In some instances, such as when recording errors are identified, resolving the defect is simply a matter of resubmitting the correct documentation to the appropriate office of public record. More complex types of title defects may require legal proceedings and may need to be resolved in a court of law.

A title search is integral to a real estate sale and a successful transaction. To learn more about the title search process or title defect resolution, please contact the experts at Linear Title & Escrow. 

What Do Closing Costs Include?

Closing costs are fees paid by homebuyer and the seller at the time of settlement. While every closing proceeding will incur such costs, including loan refinances, the type and amount will vary according to several types of factors. Read on to learn what closing costs might include for a buyer and a seller, and when refinancing an existing mortgage.

How Are Closing Costs Calculated?

Closing costs for home purchases, sales, and refinances are calculated based on the amount of the loan, mortgage insurance, taxes, and additional fees. In general, closing costs for homebuyers tend to range between 3 – 6% of the overall sale price, while seller costs are often between 6 – 10% of the overall sales price and include real estate commission on the sale of the property. Refinancing closing costs commonly fall between 2 – 6% of the total loan amount.

It is important to understand that the total amount of closing costs will be different for each individual case. The settlement fees for a purchase, sale, and refinance generally include the items listed below.

Buyer Closing Costs

   -Mortgage application and origination fees

   -Loan discount points (if applicable)

   -Home appraisal fee

   -Boundary survey fee (if applicable)

   -Homeowner’s insurance

   -Property taxes

   -Title search

   -Recording fees

   -Transfer taxes

   -Property taxes

    -Lender’s and owner’s title insurance

    -HOA fees (if applicable)

    -Other administrative or settlement costs

Refinance Closing Costs

-Mortgage application and origination fees

-Loan discount points (if applicable)

-Home appraisal fee

-Home inspection fee

-Mortgage insurance

-Title search

-Recording fees

-Other administrative or settlement costs

Seller Closing Costs

  –Loan payoff amount

  -Property taxes

  -Deed preparation fees

  -Courier fees

  -Title transfer fees

  -Grantor’s tax and HRRT fee (if applicable)

  -Recording fees

  -Seller concessions (if applicable)

  -Home repairs (if required)

  -Real estate commission (for agents)

  -Other administrative and settlement costs

Contact the experienced team at Linear Title & Escrow to learn more about the settlement process or for closing cost estimates.

What Factors Affect the Home Closing Timeline?

The real estate transaction begins with the acceptance and ratification of a sales contract and ends with closing or settlement. Throughout the process, a variety of steps must occur in order to move the mortgage approval proceedings along and prepare to transfer the title (ownership rights) of the property from the seller to the buyer.

On average, real estate transactions take about 45 days to close, but this timeline can be affected by a number of factors. Read on to learn what some of these factors might be and how to minimize barriers to closing while fostering the best possible scenario for settlement.

Home Appraisal

Home appraisals are third-party assessments of a home’s value and an integral part of the mortgage process. Delays related to a home appraisal may occur if any noted repairs need to be satisfied prior to closing or if a home appraises for less than expected and the contract terms must be renegotiated.

Title Defects

Title defects are issues that affect the proper and legal transfer of property ownership from the buyer to the seller. A title agent or attorney will conduct a title search to detect any problems with the title that may prevent this ownership transfer. Any title issues will likely need to be resolved before closing can occur. While there are a broad array of title defects that can arise, some of the most common include:

• Recording errors

• Unknown easements or other encumbrances

• Boundary disputes

• Judgments or liens

• Unpaid taxes

• Undiscovered heirs

• Improper probation of wills

Responsiveness to Information Requests

Throughout the contract-to-closing timeline, the lender will typically request various types of information. In addition to paperwork needed to process, approve, and prepare the loan, this documentation may include proof of homeowner’s insurance and home inspection verification, among others. Providing any requested documents or information and completing any required forms promptly can help reduce the chance of closing delays.

Funding of the Loan

To further reinstate the importance of promptly responding to any information requests, any delayed or incomplete paperwork will stall the funding of the home loan. This, in turn, can extend the real estate settlement process and cause a delay in closing. It is also essential to ensure proper wiring instructions are submitted to facilitate the disbursement of funds.

To learn more about the closing process, please contact the experienced team at Linear Title & Escrow today.

How Do You Clear a Title Defect?

A title defect is any factor that allows a person or persons to have an ownership stake in a property. Defective titles can be a barrier to the home closing process, as they must be resolved before the settlement of the real estate transaction can occur. These defects prevent the proper and legal transfer of title from one party to the next.

When title defects are detected, a process must ensue to clear or resolve the encumbrances and render the title marketable. Read on to learn how title defects are identified, the process for resolving common title defects, and how to protect your property against title problems.

How Are Title Defects Identified?

Title defects are identified through a title search, which takes place in the time between contract ratification and closing. A property title search examines the ownership history of the property through public records, screening for any liens, judgments, or other claims that could interfere with the transfer of ownership. Title searches are conducted by title agents or attorneys.

Common Types of Title Defects

While a myriad of factors can cloud a title, making it defective, there are some types of title defects that tend to be more common. These include:

-Recording, filing, or other clerical errors

-Easements or encroachments

-Liens against the property

-Improperly probated wills

-Unreleased deeds of trust

-False impersonations

-Boundary disputes

-Unidentified heirs

-Forgery

-Fraud

What Is the Process for Resolving Title Defects?

Title resolution is dictated by the type of issue discovered. After a title defect has been identified, the title agent or attorney launches a rectification process to correct and resolve the defect. Certain types of title defects, such as clerical errors, can be amended relatively quickly. In other instances, title resolution may be more time-consuming and intensive, or may even need to be resolved in a court of law.

Often, title defects surrounding recording or clerical errors are cured by submitting corrective or supportive documentation containing accurate information. Once the correct information is recorded, the encumbrance can then be released to render the title free and clear. Debt-related title problems, such as judgments, liens, or defaults on mortgages, must be paid in full and receipt of the payment must be properly recorded for defect resolution.

Protect Your Property Against Title Defects

Title agents and attorneys are trained to perform thorough title searches and identify title defects. There may be instances, however, when unforeseen or undiscovered defects arise after closing has occurred. Homebuyers can help protect their real estate investment and safeguard against the loss of their property by having an owner’s title insurance policy in place. Owner’s title insurance is a type of policy that indemnifies the property owner in the event that a title defect is discovered and their property is lost to a party with proven ownership rights. This type of policy can also help cover legal costs should court proceedings become necessary to correct title problems.

For more on title searches or title defect resolution, please contact the experienced team at Linear Title & Escrow.