What Occurs When a Title Defect Is Found?

In real estate, a title defect (also referred to a “cloud on title”) is an issue interfering with the proper transfer of property ownership from the seller(s) to the buyer(s). During the settlement process, the title agent or closing attorney will conduct a thorough title search, reviewing the history of the deed through public records to determine if any other parties have any ownership stake in the property.

What Is a Title Search?

A title search also seeks to reveal if any liens or other claims against the piece of real estate are in effect. The overarching purpose of a title search is to identify such concerns and allow for the resolution of title defects, which is necessary loan settlement can occur.

Common Title Defects

Title defects may involve a wide range of encumbrances. Some of the most common defects include errors or omissions on public records, improperly probated wills, unidentified heirs, mechanic’s liens, tax liens, unpaid mortgages, and unknown easements, among others.

Title Resolution

When title defects are discovered, the title agent initiates a remediation process to resolve the defect and render the title clear and free. While some types of clouds on title are corrected quickly (such as errors in public records), others may require more research, time, and even court proceedings to rectify.

The type of defect dictates the course of action taken to resolve the issue. In many cases, however, title problems are amended via the recording of a supportive or corrective document that supplies the accurate information and releases the encumbrance. (A quit claim deed is one such type of document.) Title defects that surface in the form of liens, judgments, or defaults on mortgages must be paid and receipt of payment must be submitted and recorded.

Protect Your Interests With Title Insurance

Though titles agents work diligently to conduct a thorough title search, there may be unidentified or unforeseen defects that surface after closing. The best way for homebuyers to protect their financial interests and prevent the loss or real property is through an Owner’s Title Insurance policy. This indemnity policy remunerates the homeowner in the event that a title defect arises and they subsequently lose their interest in the property. It can also cover the costs of defending their ownership stake in a court of law.

For all of your title needs, questions, and concerns, contact the knowledgeable team at Linear Title and Escrow today.

Top Questions About Title Insurance

As you go through the process of closing on a home, you’re likely to hear the term “title insurance” as some point throughout the proceedings. This officious-sounding phrase may be recognizable or completely unfamiliar, depending on whether you’re a seasoned pro or first-time home buyer. While a straight-forward concept in most regards, there is (at times) some confusion about what title insurance actually is and whether it’s truly necessary. To help make sense of it all, we’ve compiled a list of the title insurance questions we’re asked most often.

What, Exactly, Is Title Insurance?

Before we get into specific questions about title insurance, let’s first review what title insurance actually is. Title insurance is a type of indemnity policy that protects a participating party against financial losses associated with a specific piece of real estate in the event a title problem arises following the settlement process.

What is the difference between lender’s title insurance and owner’s title insurance?

A lender’s policy safeguards the financial interests of the institution supplying the mortgage should the loan become unenforceable due to title problems that interfere with the proper transfer of ownership. An owner’s policy protects the home buyer against financial loss surrounding their property should title defects surface after closing.

Is title insurance mandatory?

Most lenders do require that home buyers purchase a lender’s title policy. Owner’s title insurance is not mandatory, but is highly recommended for most people who purchase real estate.

How can owner’s title insurance protect my interests?

Having an owner’s title insurance policy in place can cover legal costs for defending title as well as remunerate the homeowner should another party be successful at proving a sound ownership stake in the property for which the policy covers.

What can I expect to pay for title insurance?

Both lender’s and owner’s title insurance is paid in a single payment submitted during the home closing process. The cost of these policies is based on the loan amount and sales price for a new purchase and the loan amount for a mortgage refinance.

What will an owner’s title insurance policy cover?

Depending on the policy type (standard vs. enhanced), owner’s title insurance may cover court costs associated with defending the homeowner’s interests and financial loss due to a range of title defects, such as fraud, recording errors, and improperly executed wills, among others.

Do I need a new policy if I refinance?

Both a lender’s and an owner’s policy will remain in effect until the homeowner or their heirs sell or transfer ownership of the property to another party. If the loan is refinanced, the lender will require the purchase of a new Lender’s policy; however, a re-issue rate will be given. The original owner’s policy will still be applicable following the refinancing of a home loan.

Learn more about this topic by visiting our title insurance page or contacting our knowledge team at Linear Title & Escrow today!

7 Things You Should Know About the Closing Process

Are you getting ready to close on your new home? Preparing for the real estate settlement process is an exciting endeavor. But it is essential that you understand what is involved in getting your contract to close, especially to help facilitate the process for streamlined success. We work as a third-party facilitator to close home loans each and every day. To help you best prepare for this process, we have listed the top seven things you should know about the real estate closing procedure.

  1. Understand the closing timeframe. From contract to close, it takes about 30 to 45 days for the real estate settlement process to be complete. During this period, your loan goes through approval and funding activities, which takes up the bulk of this timeframe.
  2. Expedite information submission. Your lender will request very specific information and will use this documentation during the loan approval process. To keep your closing date within sight, be sure to submit any information requested as thoroughly and quickly as possible. Insufficient documentation submission can cause a lag in the timeframe between contract submission and the closing date.
  3. Factors that may stall the proceedings. In some cases, the closing process may be delayed due to unforeseen circumstances, such as title problems surrounding the proper transfer of ownership. Title defects that are identified must be resolved prior to closing on the home.
  4. Schedule the home appraisal and inspection. The home inspection and home appraisal should both be completed early on the closing process.Typically, you will schedule a home inspection of the property you are intending to purchase, while your lender will be responsible for arranging the home appraisal (which takes place following the home inspection).
  5. Carefully review your Closing Disclosure (CD) form. Your lender is required to submit to you a CD form at least three business days prior to your closing date. Be sure to review this document carefully, as it will contain information pertinent to your loan and the financial responsibilities associated with your purchase. Any discrepancies in the information entailed will need to be addressed and resolved prior to sitting at the closing table.
  6. Arrange for the final walk-through. Usually scheduled a day or two before closing, the final walk-through is your chance to make certain the property is in the agreed upon condition before you sign the papers to purchase the home.
  7. Know what to bring to the closing table. Depending on your specific state and loan requirements, you will need to provide two forms of identification (one should be government-issued) at closing. A cashier’s check in the exact amount of your down payment (minus any good faith deposit) or wire transfer instructions should also be brought to the closing table.

In addition to each of these factors, it is important to stay in close contact with your real estate agent so that you can remain apprised of the progress of your closing procedure. By keeping these things in mind, you can be better prepared and have a greater understanding of what to expect as you take this milestone step towards home ownership.

Do you have other questions about the closing process? Our team is happy to help! Contact Linear Title & Escrow today and speak with one of our knowledgeable team members.                                     

Top 5 Ways to Prepare for Your Home Closing

Buying a home is a big step and an exciting venture, whether it’s your fifth home or your first. But being completely prepared throughout the entire process is key to helping streamline the settlement proceedings and avoiding a prolonged wait to enjoying your new place. When it comes to getting ready for a home closing, you can never be over prepared. From the mortgage application to the final closing hour, here are the top five ways to make sure you’re as prepared as you can be for that golden day.

Provide necessary documentation as soon as possible.

Once your contract is accepted, your lender will move forward with completing the mortgage approval process. Be sure to submit all necessary documentation as quickly as possible and respond to any requests for additional paperwork promptly. This will help to minimize delays in the processing and funding of your loan.

Stay in contact with your real estate agent and lender.

The best way to remain current on the state of your closing is to stay in contact with your real estate agent and respond to any inquiries from your lender or title agent as early as possible. At times, additional information on your application or other pertinent documentation may be required to move your closing process forward. Remaining “in the know” on the state of your settlement proceedings can help disseminate information more quickly and mitigate any potential snags.

Carefully review your Closing Disclosure (CD) Form.

Within three business days of your scheduled closing, you’ll receive a CD form from your lender. This important document should be reviewed by you and any co-applicants right away and as thoroughly as possible, as it’ll contain detailed information about your loan, interest rate, payment schedule, and other descriptions outlaying the terms of your mortgage. Any discrepancies in the information regarding your loan must be addressed and resolved before going into closing.

Schedule the final the walk-through.

In general, the final walk-through of the property you’re intending to purchase should be scheduled 24 hours before your closing day and time. This gives you a last chance to make sure the property is in its agreed-upon or proper condition and that any necessary repairs have been completed.

Bring proper ID and payment to your closing appointment.

On the day of your home closing, it’s essential to bring two forms of proper identification and either a certified check in the amount of any funds you owe or exact wire transfer instructions to complete the settlement transaction.

Need further tips on getting ready for your upcoming closing? Contact the Linear Title & Escrow team today!

How Title Agents Prepare for a Home Closing

Closing on a real estate sale is essentially the process of passing ownership of a home from one party to another. While there are several key players who assist in this along the way, the title company (and its agents) are there the guide the settlement proceedings along and put together the pieces for the big day.

You may wonder what goes on behind the scenes when getting your home loan ready to close. Here’s a closer look at what what title agents do to prepare for your settlement and get you into your new home as soon as possible.

Behind the Scenes

The average home loan takes about 45 days to close. During this time, a number of steps must take place to ensure a timely, organized, and proper settlement transaction. Title agents take over the process once the real estate contract has been ratified and the request for title on the property has been submitted to the title agency.

The first step on the title agent’s part is to conduct a title search on the property to make certain that it can be properly transferred from the current homeowner to the party seeking to purchase. A title search takes anywhere for three to five days to conduct, on average. During this time, the settlement agent will check public records and additional sources to learn if any liens or other defects are clouding the title. If defects are identified, they must be resolved and the title rendered clear before the parties can close the real estate transaction.

Once the title search is complete, the settlement agent works to collect all of the documents pertaining to the closing process. This includes any property-related information and mortgage details. Compiled into a title binder, the documentation is then forwarded by the title company to the seller’s title agent along with the buyer’s mortgage lender.

The title agent is also responsible for retrieving the loan payoff amount for the seller. At this stage in the process, provided that any title issues have been resolved, the title agent will issue a clear title and schedule the closing date and time.

The Day of Closing

In the days leading up to the closing, and sometimes on the day of, the title agent will receive the closing documents from the lender. These documents are then scanned, placed in proper order, and prepared for the buyer or buyer’s representative to read through and sign when it’s time to close on the loan.

Closing day is exciting for everyone. As title agents, we work to make the process of closing on a home as smooth and streamlined as possible. For more on what goes into preparing for a real estate settlement, get in touch with the Linear Title & Escrow team today.

How Are Closing Costs Determined?

Closing on a home is exciting even for the most seasoned of buyers. But if you are planning to purchase your first home or even refinance your current mortgage, you may be wondering what to anticipate in terms of closing costs.

Buyer vs. Seller

Both the seller and the buyer can expect to pay settlement costs. On average, the cost to close on a piece of real estate ranges from 3 – 6% of the sale price. To provide a better understanding of what makes up the cost to settle on a home, we have listed the associated fees from both the buyer’s and seller’s perspectives.

 Buyer Closing Costs:             

• Home inspection and appraisal                                   

• Loan origination fee                                                   

• Pre-paid interest (discount points)                               

• Private Mortgage Insurance (PMI)                            

• Transfer taxes                                                           

• Recording fees                                                           

• Underwriting fees                                                       

• Courier fee                                                                 

• Title insurance                                                           

• Title search and closing fees                                        

• Homeowner’s insurance    

Seller Closing Costs:

• Loan pay-off amount

• Real estate commission

• Prorated HOA fees

• Property taxes

• Deed preparation

• Grantor’s tax

• Settlement fee

• Notary Fee

• Termite inspection

• Home warranty

• Home repairs 

In some cases, buyers and sellers may negotiate terms to include seller concessions, where the seller contributes a certain dollar amount towards closing fees on the buyer’s behalf. The contributable allowance of seller concessions, however, will vary based on the type of mortgage for which the buyer is applying.

Have other questions about the closing process? Talk to our knowledgeable team at Linear Title & Escrow today!

Key Benefits of Owner’s Title Insurance

Buying a house is an exciting endeavor. It’s also a significant financial investment. Homeowner’s insurance is an excellent way to protect the structure of your home and cover any damage that may result from fire, certain natural disasters, and other occurrences. But what about intangible threats to your real estate investment, such as improper transfer of ownership due to title defects that surface after you’ve closed on your new home?

Lender’s vs. Owner’s Title Insurance

Owner’s Title Insurance is a type of indemnity policy that covers your financial interests should title problems be discovered after settlement. While most lenders require that homebuyers purchase Lender’s Title Insurance policy to cover their interests if you default on your loan, an Owner’s policy is completely optional. It is, however, highly recommended. Here’s why.

3 Advantages of Owner’s Title Insurance

Even when a very thorough title search is performed on a property prior to your closing, there are still instances in which undetected title issues arise months, years, and sometimes even decades after the home is purchased. A wide range of title defects exist, but common examples of such a situation include undisclosed heirs with an ownership stake who learn of the property or unpaid back taxes on the property. Having an Owner’s policy in place can protect the investment you have made in the home and may save you from a devastating financial loss.

Three key benefits of an Owner’s Title Insurance policy include:

  1. Legal Fees: Should you need to go to court to defend your rights to the property, an Owner’s policy will cover your court costs and other legal fees.
  2. Financial Loses: In the event that you lose your home due to defects that occurred prior to you taking ownership, an Owner’s policy will reimburse your loss up to your policy amount for covered title defects.
  3. Peace of Mind: Knowing you have an insurance policy in place to protect your financial stake in your home can offer peace in mind in the event another party has a successful ownership claim against your property.

Protect Your Asset With Owner’s Title Insurance

Once you purchase an Owner’s policy, its coverage stays in effect for as long as you own the property – even if you refinance your loan. Keep in mind, an Owner’s policy does not cover title problems that occur after you close on the property – only those that affect the property’s ownership before it came into your possession.

Even with a clear title, the chance for defects to threaten your rights to your property after closing does still exist. An Owner’s Title Insurance policy can help protect your investment and the place you call home. For more information on Owner’s and Lender’s policies, visit our Title Insurance page or contact us today.

5 Common Real Estate Closing Questions

Buying a new home is an exciting time in your life. But like many other homebuyers, you likely have questions about the closing process. To give you a better understanding of what to expect, we’ve listed a few of those most common:

How long does the closing process take?

The entire real estate closing process, from contract to close, takes about 30 to 45 days. Factors that may affect the length of this time period include the type of mortgage for which you’re applying, whether any title defects on the property exist, and any repairs that need to be made to the home before you take ownership, among others.

What is the CD Form?

The Closing Disclosure (CD) Form is the document describing the financial details of your real estate transaction, such as loan payment amounts, loan rate, and closing costs. This document replaces the HUD-1 settlement form (used prior to October 3, 2015) and is submitted to you by your lender at least three days prior to closing. It’s important to carefully review this document upon receipt and contact your lender with any questions as soon as possible.

Do I have to purchase title insurance?

Lenders typically require homebuyers to purchase Lender’s Title Insurance, which protects their interest in the event you default on your loan or the mortgage becomes unenforceable. Owner’s Title Insurance is optional, but highly recommended. An Owner’s policy protects your financial interest and investment if title defects are detected after you close on the home.

Do seller concessions cover title fees?

If the seller contributes concessions to closing costs on your behalf (as the homebuyer), then certain title fees may be covered. These may include the Lender’s Title Insurance premium and title search fees, among others.

What should I bring to closing?

On the big day, you’ll need to bring a government-issued ID (driver’s license or passport) to your closing. In some cases, the lender may require two forms of identification or additional paperwork. You’ll also need to present a certified or cashier’s check in the exact amount of your closing costs or provide detailed wire transfer information.

Do you have other questions about your upcoming closing? Contact our knowledgeable team at Linear Title & Escrow today!

Real Estate Closing Checklist for the Home Seller

Selling a home carries the same excitement as buying a new house, for many people. Though most sellers have less to do at closing when compared with buyers, it’s still important to ensure everything is in order to facilitate a smooth settlement process.

Pre-Closing Preparation

In the days and weeks leading up to your closing as a home seller, there are myriad tasks that must be completed. Here’s a checklist highlighting some of main responsibilities pertaining to a seller’s closing, to help make certain you’re ready for the big day:

• Prepare for home inspection.

• Inform your lender of your intent to sell.

• Request loan payoff amount from lender.

• Complete any necessary repairs (or negotiate these items with the buyer).

• Schedule cancellation date(s) with utility companies.

• Review the Closing Disclosure (CD) Form for accuracy.

What to Expect on Closing Day

Buyers and sellers usually have separate closings, and different responsibilities in terms of settlement costs. As the seller, your closing costs typically will include:

• Remaining mortgage balance

• Property taxes and HOA fees owed

• Agent’s commission on the sale

• Title fees and transfer taxes

• Seller concessions/other contract agreements

Make sure to bring the following items to your closing:

• Government-issued ID

• Keys, remotes and list of entry codes

• Certified check or wire instructions for payoff amount

• Wire transfer instructions for proceeds of sale

If you have any questions along the way, be sure to reach out to your real estate agent, lender and/or title company as soon as possible. The more prepared you are for your closing, the more efficient and streamlined the overall settlement process.

Need more information on what to expect at a seller’s closing? Reach out to the Linear Title & Escrow team today!

Real Estate Closing Checklist for the Homebuyer

Buying a house is an exhilarating and life-changing event, whether it’s your first home or one of many. But how can you make certain you’re prepared for the big event?

Preparation and Communication

Careful preparation and ongoing communication with your agent and lender are crucial for facilitating a smooth closing experience. Ensuring you have all of your necessary paperwork and documentation organized and ready to submit to your lender and title agent when needed helps minimize delays in loan approval, and ultimately the closing process. It’s highly important to respond to any lender or title agent requests for information as quickly and thoroughly as possible.

Review the Closing Disclosure Form

The Closing Disclosure (CD) Form is a document submitted to you by your lender at least three business days prior to your closing date. (The CD Form replaces the HUD-1 settlement statement, formerly used for real estate closings prior to August 1, 2015.) This important document outlays the terms of your mortgage, payment amounts and other financial details related to your home loan. Careful review of your CD Form is crucial, as this reflects the information that will appear on your final closing documents. Any discrepancies or questions regarding this form should be resolved and answered prior to sitting at the closing table.

The Day of Closing

It’s extremely helpful to have an idea of what to expect, and what to bring, when the big day finally arrives. To help you prepare, we’ve created a list of what you need to bring to your closing:

  • Government-issued photo ID
  • Any paperwork required by your mortgage lender
  • Certified check in the exact amount of down payment or wire transfer information

Homebuyers and sellers have different closings, as both parties rarely sit at the closing table together. A homebuyer’s closing with our team typically lasts around 30 minutes, unless it involves a Power of Attorney (in which case, requires additional time). Be sure to ask the closing agent any questions you may have as you go through the documents in your closing package. Upon signing the final documents and receiving your keys, you’re free to visit and move into your new home right away!

Have other questions about a homebuyer’s closing? Contact the Linear Title & Escrow team today!