SCHEDULING YOUR SETTLEMENT
Choosing Who to Represent You For Settlement
Unless agreed to otherwise, the Purchaser usually has the right to choose the settlement attorney or title company who will conduct the settlement.
- It is not unreasonable, however, for the Seller to request the use of a particular entity to facilitate a 1031 Exchange, to coordinate a sale with a purchase, or in the case of an estate sale.
- Relocation companies and new home builders routinely require settlement with a predetermined settlement company or attorney.
Ordinarily, the title company or attorney does not represent either of the parties but is retained to follow the instructions of the sales contract, agreed to by the two parties.
Timing of Settlement
Settlement should be scheduled as soon as possible to insure that the most convenient time will be available. Settlement companies become very busy during the last week of each month. Request for a change in the date and time may not be possible as the settlement date approaches.
Title Search & Surveys
The settlement company will search the title and order any required surveys.
PREPARATION FOR SETTLEMENT
You will be required to bring several items to the settlement (closing), including a copy of your homeowner’s insurance policy (for fire, theft and other contingencies) and a paid receipt representing one year’s coverage. In some cases, the lender will require delivery of this and the termite documentation prior to settlement. You must also have a cashier’s or certified check for the balance of the down payment and closing cost.
Although the lender will have provided you, as the purchaser, a Good Faith Estimate of Closing Costs as part of the loan application process, your settlement agent or attorney will also calculate for you approximately what you will owe. The following checklist includes some of the items included in the closing costs. Some of them are tax-deductible and certain of them may not be applicable in your situation:
Closing Costs May Include:
- Loan origination fee
- Loan discount (s) or points
- Appraisal fee (due with mortgage application)
- Credit report (due with mortgage application)
- Underwriting and document preparation fees
- Mortgage insurance fee
- Assumptions fee
- Settlement or closing fee
- Abstract or title search
- Title examination
- Title insurance binder
- Survey fee
- Termite inspection fee
- Transfer tax
- Recordation tax
- Escrow for taxes and insurance
Once all inspections have been done and your financing finalized, you will need to attend to the following. The earlier these are done, the fewer last minute surprises will arise.
Contract with your mover.
Unless otherwise agreed in writing, you will not receive keys to your new home until settlement and recordation of the deed transfer. Any arrangements for your early access of the seller staying after settlement must be arranged through your Realtor®, and will require a written agreement.
Contact utility companies.
Gas, Electric, Water, Telephone, Cable
Obtain check for required cash to settle.
Certified funds- The amount of cash needed at settlement can be obtained from the attorney or title company several days prior to settlement. This number can be obtained from your HUD-1 Settlement Statement and can be estimated from your Good Faith Estimate, but it is best to call your attorney or closing company 1-2 days prior to closing for the most accurate number.
Are you going to be using funds generated by the sale of another residence as all or part of your own down payment on this one? If so, be sure that we have discussed this with your settlement company and have coordinated the timing of the two settlements to allow for an Assignment of Funds.
Personal checks may be used only for small amounts owed at settlement if the final figures change at the last minute. Otherwise, a cashiers check or bank check will be needed. This can be obtained from your bank and will usually require a small banking fee.
Establish time of walkthrough.
Normally the walkthrough will take place within 24 hours before settlement and after the seller has vacated the property.
Directions to settlement office.
Make sure you have received directions to your settlement company, either from the company or from myself.
PURCHASING TITLE INSURANCE
At Closing, You Will Be Offered Title Insurance.
What is Title Insurance?
Before answering “what is the title insurance”, it might be best to first answer “What is title?” “Title” is the ownership in real property. Among other things, it means that you have the legal right to possess, occupy, peacefully enjoy and sell your property without interference from others, subject only to restrictions imposed by governmental authorities or previous owners. In most cases, title is transferred by deed which is recorded in the land records of the county in which the property is located. Generally, when property is sold, an attorney for the Buyer or a title examiner goes to the record room and searches the land records for any title defects. A title defect is anything in the entire history of ownership of a piece of real estate which may encumber the owner’s rights under the title. A title defect may cause the owner of real property to lose all or part of his land to a superior ownership interest or claim of another. This is the type of loss which title insurance protects against.
In short, if you own a title insurance policy, the title insurance company will defend you, without cost, against an attack or claim upon your ownership interest in your property as insured and you will be protected against financial loss caused by a title defect.
If my title has been examined for defects, why do I need Insurance?
There are many defects which even the most meticulous search of the land records will not uncover: For instance, it is impossible for an examiner to know whether the marital rights of all previous owners have been relinquished; whether all deeds, mortgages and judgments affecting the property have been properly indexed in the land records; whether all signatures are valid; or whether an unknown heir of a previous owner had a valid claim against the property. Without owner’s title insurance you may have no avenue of recovery for these types of problems.
If I have to purchase lender’s insurance, why do I need owner’s coverage as well?
In almost every instance, a lender will require you to purchase lender’s title insurance protecting it up to the value of its loan on the property. This coverage only protects the lender, not you, and the coverage diminishes as the loan is paid off. As you build more equity in the property, you expose yourself to a higher risk of loss occasioned by a title defect. In this situation the protected lender will suffer no loss while you as the owner of record bear the substantial risk of the damage. Owner’s title insurance will protect you against any covered loss from failure of title up to the full amount of the policy.
What are some reasons or examples of why I should have Owner’s Title Insurance?
Owner’s Title Insurance will protect you against those hidden risks which would not be disclosed by even the most meticulous search of the public records. Some examples of those hidden risks are:
- Inadequate Surveys
- Fraud in connection with execution of document
- Incorrect legal descriptions
- Undue influence on a grantor or executor
- Non-delivery of deeds
- False impersonation by those purporting to be owners of the property
- Unsatisfied claims not shown on record
- Incorrect representation of the marital status of grantors
- Deeds executed under expired or false powers of attorney
- Undisclosed or missing heirs
- Confusion due to similar or identical names
- Wills not properly probated
- Dower or curtsey rights of ex-spouses or former owners
- Mistaken interpretation of wills and trusts
- Incorrect indexing
- Mental incompetence of grantors
- Clerical errors in recording legal documents
- Conveyance by a minor
- Delivery of deeds after death of grantor
- Birth of heirs subsequent to date of will
Are there different types of title insurance?
Yes. There are three different types of Title Insurance. A Lender’s Policy, Standard Owner’s Policy and the Owner’s Advantage Policy.
Lender’s Coverage is required by all corporate lenders as a condition of the purchaser’s loan. This covers only the lender for the amount of the loan they are making to a borrower. The Lender’s Policy that the lender is provided with is the standard ALTA 1992 Loan Policy, It provides coverage to the Lender against such title encumbrances as fraud in connection with the execution of the document, incorrect representation of the marital status of grantors, wills not properly probated, and many other circumstances that might jeopardize the Lender’s security in the property.
The Standard ALTA 1992 Owner’s Policy protects you as the owner of real property against fraudulently executed documents, incorrect representations and improperly probated wills as well as any unsatisfied claims that may not appear in the County land records.
The Owner’s Advantage Policy covers you, the owner against all that is included in a standard ALTA 1992 policy but with additional and enhanced coverage. Subject to limitations, some of the benefits of an Advantage Policy include:
- Mechanic’s lien coverage is provided for work done prior to the date of your policy.
- Zoning coverage is now provided, insuring that your land is properly zoned for a single-family residence.
- Subdivision coverage is now provided in the event your land is a portion of an improperly created subdivision.
- Coverage is provided if you as the owner are forced to remove an existing structure, other than a boundary wall or fence, due to a previous owner’s failure to obtain the necessary building permit.
- Coverage is provided if an adjacent builder builds onto the homeowner’s property without permission.
- Coverage is provided for forgeries affecting your ownership after the date that your title insurance policy is issued.