The offer is in and accepted, the closing date set. The bank has approved the loan and it seems like smooth sailing from here. All that remains is for your clients to sign on the dotted line and hand over or accept the keys. Sound about right? In a perfect world, maybe, but we all know that factors beyond (anyone’s) control almost always produce some barriers to closing. Here’s a closer look at some of those more common.

Obstacles Common Among Delayed Closings

1. Defects on title discovered: Problems surrounding boundary issues, unresolved seller liens, unknown heirs or illegal deeds, among others, can all prolong the closing date until such obstacles are resolved.

2. Problems missed by appraiser arise prior to closing: Repairs overlooked or undervalued by an appraiser may indeed require repair by the bank before settlement. Issues may include interior and exterior paint, leaks and cracks along with roofing, air conditioning or heating problems.

3. Incomplete documentation: Any documentation pertinent to the real estate transaction determined incomplete by the lender must be fully and satisfactorily submitted before closing can occur. Such paperwork might include information missing from the loan application, complete list of debts or assets, or full disclosure of income.

4. Delayed inspection or homeowner’s insurance documents: For the loan to fund, a myriad of documents, among those home inspection and homeowner’s insurance paperwork, must fall into the right hands prior to closing. Getting ahead of the game and guiding your clients to do the same saves time and stress when closing is days (or hours) away.

5. Communication breakdown: For a successful, smooth closing, all parties must be transparent in their actions, working symbiotically to move the transaction forward in a timely manner. Fluidity of communication, among all parties, cannot be overstressed enough.

Staying abreast of the process and knowing exactly where it is along the path towards settlement can do wonders for the stress level of your clients, and yours as well. After all, you are the tether to which clients cling throughout the (often) tumultuous home buying process. Having a broad knowledge of the potential mishaps and obstacles potentially threatening that golden closing date helps mitigate such events, bringing you, your clients and those privy closer to the smooth ride we all hope for.

Reducing our carbon footprint is something on everyone’s mind these days, prompting us to participate in everything from recycling and using energy-efficient lighting to driving electric cars. Even businesses get in on the effort by reducing waste, and minimizing or eliminating paper usage through cloud-based file sharing and storage. But is a truly paperless work environment really possible? That probably depends on your industry, and in some cases, the laws governing your trade.

Saving a Tree or Two

Paper-saving solutions have been implemented across various industries to reduce waste, preserve natural resources and participate in eco-friendly business practices. Retailers have certainly jumped on board, following the lead banks and credit card companies established a few years back with electronic submission of statements and ATM inquiries. In many locales, it’s becoming common practice to offer the option of emailing purchase receipts rather than providing a paper receipt at the point of sale. These industries have made a concerted effort to reduce, and even eliminate, the paper stream plaguing society, at least in theory. A number of customers still prefer to have paper-in-hand when it comes to their money.

The Medical Sector Cuts Back

While some medical and dental offices are ultra-high tech, asking patients to complete medical histories and HIPAA forms either online or via tablet, others have them fill out paperwork then scan the documents into their systems. The latter still generates a fair amount of paper in the short term, in addition to the time and effort of shredding paperwork once scanned. (Doing so does, however, significantly diminish the amount of paper maintained by an establishment.) Medical and dental practices must factor in the initial software and hardware costs of integrating a truly paperless system plus the human capital needed to assist those less technically advanced when considering the jump to such an environment. Focusing on the long-term benefits and environmental advantages is great motivation to continue on this path.

Paperless Real Estate Transactions

There’s perhaps no other business situation generating such a great amount of paper as a traditional real estate transaction. From the initial contract to the very last page of settlement, pages upon pages of information must be presented and received by parties on either side. A number of companies have come to the rescue, offering up the opportunity to be a truly, bonafide paperless business. Some of these heroes include Paperless Pipeline, Real Estate Paperless Solutions and dotloop, with new companies touting paperless real estate transactions on the rise.

In general, the title and escrow sector is making to push towards a solely digital interface, yet the extent to which this occurs is largely dictated by lenders and state governments. While in some locales paperless closings are commonplace, not all states allow digital signatures. In the Commonwealth of Virginia, for instance, all closing documents must be signed on the dotted line with ink (typically blue ink, at the preference of most lenders). As technology advances, and the benefits of a paperless system embraced, we may just see the day all real estate closings are completed without pen in hand.

Is it possible to have a completely paperless environment, one without even a single sticky note? The theoretical, and realistic for some, answer is yes. It’s simply a matter of overcoming the technological learning curve and mindset, and making the concerted effort to create a truly digitized work environment.

Consider this scenario…

The closing is scheduled for tomorrow. The title company receives the binder and immediately places a call to the realtor indicating the whole thing might not go down. A couple of judgments and an unreleased deed of trust (from two decades ago) on title is threatening the thwart the transaction and demolish future plans of all parties partaking in the sale. Enough to make you run for a bottle of antacid? We think so, too.

Your Owner’s Policy, the Hero

What do you do? Well, that depends on which side of the transaction you’re on. If you’re the seller, having an Owner’s Title Insurance Policy covers your interests, likely without even having to file a claim. Clouds or defects on title not identified at the time of your purchase of the property are, in fact, covered by title insurance. Without an Owner’s Policy, however, you may have to say goodbye to selling your house and hello to a whole host of other issues.

On a side note, and speaking directly to the hypothetical situation described above, you can file a claim if the buyer’s side won’t accept anything other than release of deed of trust.

View From the Other Side

What if there is no owner’s policy? How does this affect the buyer? The title has to be cleared before purchase, of course, which may increase the time it takes to close. If the owner cannot convey clear title, however, the buyer may back out of the transaction (provided the buyer isn’t in breach of contract), and receive a refund of any deposits applied toward the property.

When Might a Claim Need to Be Filed?

Having an Owner’s Policy is a must when protecting your interests surrounding a property. As well, you never know when an unforeseen issue may arise and threaten your rights to your home, forcing you to file a claim against your policy. Some of the most common reasons for filing a claim include:

• Foreclosures with title issues (the bank would file a claim against the owner’s policy)
• Unreleased deeds of trusts
• Judgments against prior owners who weren’t found during title search or missed by the underwriter
• Undisclosed or long lost heirs to the property
• Buyer’s side fails to accept Owner’s Policy

In such a situation as those listed here, the buyer’s side could allow the seller to indemnify, but the seller assumes responsibility for defects on title in the future.

Who Files, and With Whom?

The party filing the claim all depends on the nature of the situation. With an Owner’s Policy comes a claim form that should be completed and submitted to the underwriter as soon as possible. On it, assuming you’re the party filing, you’ll need to describe the details of title clouds or other circumstances preventing you from selling your property.

 What to Expect

The Process: The underwriter’s attorney on staff will act on your behalf, taking care of all necessary paperwork. Since he/she will proceed in your best interest, there’s generally no need to seek counsel on your own accord.

Timeframe: The time is takes to work out all the kinks is circumstantial, depending on the situation and its complexity. Processing the claim could take anywhere from one month to a year.

Potential Outcome: If you’ve covered yourself with an Owner’s Policy and were issued clear title, the claim will typically pay out. Depending upon the title issue, for example the discovery of a long lost heir, the resolution may result in the loss of the property; however, you’d still be compensated for the loss by your Owner’s Policy.

The lesson to be learned is, of course, the dire need to have an Owner’s Title Insurance Policy. Ensuring swift action at the first hint of a title problem is also key to preserving your real estate interests. For more information on Owner’s Title Insurance, contact Linear Title & Escrow at (757) 340-0340 today.