- What are some common hidden title issues?
Even after conducting a title search there may be some hidden title problems. Not all title problems will appear in the public records. All of the issues listed below can make your title worthless. A title insurance policy can protect you from a loss caused by a title claim.
Here are some examples of why it's important to buy title insurance: 1) Fraud: Someone represents that they are the true owner of the land, but they are not.
2) Forgery: Someone has given a forged deed.
3) A bad Power of Attorney: a person claims to have "power of attorney" but does not have the legal authority to act for another person; or, the power of attorney has expired; or, the power of attorney is not properly executed and/or notarized.
4) Delivery of a deed after the death of the grantor, without the pre-written consent of the deceased.
5) Estates/Wills not properly probated.
6) It is discovered that a will isn't legally valid.
7) Mistaken interpretation of a will.
8) Un-disclosed or missing heirs.
9) Birth of heirs after the date of the will.
10) Surviving heirs were omitted from a will that involved the property.
11) There is an undisclosed divorce of a spouse who claims to be an heir.
12) Mis-representation of marital status.
13) Dower or curtsy rights of ex-spouse or past owner.
14) A deed is to, or from, a defunct corporation.
15) Deeds made by minors.
16) Undue influence over the grantor (duress).
17) Mental incompetence of a signer on a deed/mortgage.
18) Non-delivery of deeds.
19) Deeds were made by non-citizens.
20) Erroneous reports were furnished by tax officials.
21) There are errors in tax records.
22) Mistakes were made in recording legal documents.
23) Incorrect indexing.
24) Confusion due to similar or identical names.
25) Falsified title records.
26) Unsatisfied claims not shown on the public record.
27) Representations on legal documents (e.g., Notary seals) are invalid or incorrect.
28) A deed incorrectly identifies public property as private property.
29) The property was condemned but there is no official record of the condemnation.
30) Incorrect legal description.
31) Easements exist that were not located by a survey.
32) Inadequate surveys.
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- What happens on settlement day?
1) If you are the buyer you should do a walk-through of the property you are buying. This is to ensure the seller has taken all of their belongings and cleaned the house. Check for damage that you have not seen before. Also, take readings from all the utility meters (electric, gas, water) depending on where the property is located these may be prorated on the HUD-1 settlement statement.
2) Meet with the settlement officer (a/k/a title agent) for settlement. Remember to bring your two forms of ID and your certified check for your closing costs.
3) You will need to bring your homeowner's insurance policy. You should also have a receipt showing it has been paid, or an invoice. The settlement officer (title agent) will add it to the HUD-1 settlement statement.
4) You will have to sign a Promissory Note and a Mortgage. The Note is your promise to repay the loan. The mortgage puts the property you are buying up as collateral. If you don't make all the payments to the lender as agreed, then the lender will be forced to sell your property and apply the sale proceeds to the amount you owe. You will also be asked to sign some additional documents that your lender may require.
5) Your Settlement officer (title agent) will calculate the final HUD-1 settlement statement and explain it to you. He/she will provide you with a detailed explanation for each item. If you have questions regarding " money, fees or costs", now is the time to ask.
6) The seller will pass ownership to the buyer using a deed. The seller signs the deed and gives it to the settlement officer so that he/she can record it at the county courthouse. Buyers do not sign the deed. When the deed is recorded it is sent to the buyer.
7) The seller will turn over all warranty papers regarding appliances in the property.
8) If there are electronic garage door openers the seller will deliver them at closing.
9) Finally, the seller will pass the house keys to the buyer.
10) After settlement the deed and mortgage will be delivered to the recorder of deed's office at the county courthouse.
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- What fees make up my closing?
The closing costs are the fees that you will be required to pay in order to close on a real estate transaction.
For a seller these costs may include: Notary fees, Transfer tax, Mortgage payoffs, credits to the buyer, and Fed Ex to send a payoff.
For a buyer these costs may include: Mortgage company fees, such as points (i.e. loan origination fees, loan discount fees), escrow reserves (i.e. taxes and insurance), private mortgage insurance (PMI), and other fees that may be required by your lender. Title Insurance fees, Attorney's fees, Notary fees, Recording fees, Termite certifications fees, Surveying fees, Real estate agent commissions, Property taxes, the balance of your down payment.
24 hours before your closing your title insurance agent should provide an estimated HUD-1 for your review. You should review your HUD-1 to make sure that all costs, fees and calculations are correct and you should check to make sure that you have been credit for deposits and other agreed upon buyer/seller credits. Check all lender fees against the good faith estimate that was provided at the time of application.
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Settlement is also known as closing. It is the event where the ownership of a property is transferred from the seller to the buyer.
Once all the title research is completed, the mortgage loan is approved, and all the paperwork is ready to be signed and recorded you will go to settlement. Closing is usually at the title agent's office but can also be held at an attorney's office, a real estate office, or even in the house being sold/purchased.
It involves completing of all the paperwork needed to finalize the transaction set forth by the contract (also known as the agreement of sale) that was executed by the buyer and seller. Once all of the documents have been signed, the funds disbursed and the deed and mortgage recorded, the transaction has "closed."
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Title insurance is protection against loss arising from problems connected to the title to your property. Before a property is purchased, it has gone through many ownership changes. We think of all past owners as links in a chain. This is called the chain of title. A weak link in the chain could cause trouble. For example, twenty years ago an owner died and left the property to his heirs. One of the heirs could not be found; but has now surfaced to claim the property. Title insurance covers the insured party for any claims and legal fees that arise out of such a problem. - What should I look for when selecting a Title Agent?
Look for someone with a sound reputation for honesty, integrity, knowledge, and experience in all phases of title insurance, as well as efficient and dependable service to their clients – someone like Clear Title and Escrow.
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- When does Title Insurance protection begin and end?
Title insurance protects against losses arising from events that occurred prior to the policy date. Policy coverage extends back in time for an indefinite period. Title insurance is the only type of insurance that insures past events. This is contrary to property, life or auto insurance, which protect against losses resulting from future events.
- Who chooses your title insurance agent?
You should choose your title insurance agent. Many people let their real estate agent, mortgage lender or attorney pick the title insurance agent. The decision is yours to make. If you are paying the bill you should choose the agent that will best protect your interests. Would you let your real estate agent or lender choose your doctor, dentist or attorney? Of course not. You should decide which title agent will insure the largest purchase you will ever make.
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- Why do I need a new policy each time I refinance?
The lender is concerned that new title issues may have arisen since you purchased the property. Your lender will require that you purchase a new lender's policy each time you refinance; even if you refinance with the same lender. A title insurance policy assures your lender that you actually own the property. It insures that no one else has a preemptive position in front of the lender, and if someone does, it pays the lender's losses. A lender's policy is only good for the life of a loan. It ceases to exist when you pay off the mortgage. New title searches uncover new liens. You will have to pay off these new liens as a condition of refinancing. Discounted rates are available if a new policy is taken out within short periods after the last policy. Pennsylvania now requires a disclosure be signed by all purchasers of title insurance informing them that they may be entitled to a lower rate of insurance.
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- Why do I need Title Insurance?
You need title insurance to protect you and your lender. Your home is often the largest single investment you will ever make. Title insurance protects you against loss from defects in the title, and/or claims made by others that a defect exists. The purpose of title insurance is to protect against loss caused by defects. Lenders require title insurance before they will loan money. Without title insurance your down payment and equity are at risk should a title defect be discovered.
Once insured, you are protected from title defects and claims against the title to your property even if they are not discovered for many years. Defects or problems could include fraud, forgery, unknown heirs, liens and encroaching neighbors. If you are uninsured and your title is challenged you will have to pay to defend yourself in court and after paying all the attorney's fees you could still lose the property. An owner's title insurance policy also pays for your attorney's fees as well as paying you if you suffer a loss.
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