FAQs |
1. How The Real Estate Closing Process Works2. Just what is a title defect?3. Is Owner's Title Insurance expensive?4. Does Owner's Title insurance insure against title defects?5. The Lender's policy will not protect the owner?6. What is the danger of loss?7. What does Owner's Title Insurance protect against?8. What protection does Owner's Title Insurance provide against defects and hidden risks?How The Real Estate Closing Process WorksThere are many tasks performed behind the scenes to complete the settlement of your new home. This page is designed to educate you on those tasks so you can anticipate what is needed, when it is needed, and the potential issues that can delay your closing. STEP 1: The title search is ordered. We have a team of title examiners who review the title to your property at the courthouse, researching ownership and chain of title, payment of real estate taxes, any lien of record, and the legal description. STEP 2: Your processor will contact you and the other parties in the transaction to confirm the date and time of closing, and will walk you through the rest of the settlement process to the day of closing. STEP 3: Our title insurance underwriter reviews the title search, the survey and contract to determine potential risk in the transaction. Any clouds on the title, such as judgments, IRS liens, unreleased deeds or trust, and ownership claims are identified for correction prior to the settlement. The underwriter will provide a commitment to insure, called a title insurance binder, to your lender to advise the status of the title to the property. STEP 4: Our processor then begins to accumulate all of the other documents for your closing including the deed, the termite and moisture letter, seller mortgage payoffs, repair bills, the preliminary accounting statement (called the HUD-1 settlement statement) and your homeowners insurance. All of these documents are then faxed to your lender for their review and approval. This normally takes place 2-4 days before closing. STEP 5: Once your lender gives final approval to close, they will send us your loan documents for signing and final adjustments to the HUD-1 settlement statement. This normally takes place the day before your scheduled closing. Your processor will call to confirm the time of closing and give you a final amount for your cashier's check. Just what is a title defect?It is any one of a number of things that could jeopardize your interest. It could be an unsatisfied mortgage, lien, judgment or other recorded claim against the property. It could arise through easements, use restrictions or other existing covenants. Or it could be a hidden risk. To name only a few of these: fraud or forgery in previous documents; improperly executed deeds; the marital status of previous owners; deeds executed under expired powers of attorney… the list could go on and on. A look at court records would reveal many instances of these and hundreds of other ways in which parties you may never have heard of could claim an interest in your home. Is Owner's Title Insurance expensive?No. Owner's Title Insurance is one of the most inexpensive forms of insurance. Rates vary from region to region and depend on the amount of service required. But the premium is surprisingly low in relation to the cost of your home - one of the most important purchases you will ever make. Does Owner's Title insurance insure against title defects?No. BUT Owner's Title Insurance does eliminate the risk of loss to you through claims against the title as described in your policy. The insuring company assumes all legal expenses involved in adjudicating claims and protects you against any loss whatsoever arising from claims attacking your title, within policy limits, even though they may occur through errors made in the public records. The Lender's policy will not protect the owner?The loan policy does not protect the borrower. The loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale. But, this policy only protects the lender's interest. It does not protect the borrower. That is why a real estate purchaser needs an owner's policy, which can be issued at the same time as the loan policy, usually for a nominal one-time fee. What is the danger of loss?If the lender has title insurance protection and the owner does not, what possible danger of loss exists? As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or beneficial interest. The lender acquires title insurance protecting the lender's interest up to $80,000. But the purchaser's down payment of $20,000 is not covered. What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title. What does Owner's Title Insurance protect against?Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title: * False impersonation of the true owner of the property What protection does Owner's Title Insurance provide against defects and hidden risks?Title insurance will pay for defending against any lawsuit attacking the title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it. Owner's title insurance, issued simultaneously with a loan policy, is the best title insurance value a property owner can get. |
Prime Title and Escrow Company | 4664 South Blvd. Virginia Beach, Va 23452 | 757-497-2790 ( phone ) | 757-497-2729 ( fax ) |
