FAQ for Real Estate

What and Why title Insurance?

There’s a lot that happens between the time a buyer finds a house and the day it belongs to them.  Let’s walk through the basic steps from contract to close.

Let’s start with the WHY.

If your purchase requires you to use a mortgage, one part of your closing costs will be title insurance. This is a one-time charge, and the policy you purchase, protects the lender. Sellers will pay for the policy which protects you.  If that seems confusing it is.  The Buyer pays to protect the lender and the seller pays to protect the buyer. 

What is everybody being protected from????   Read On.  

Escrow and Earnest Money

First, Earnest money will kickstart the escrow process. This starts when the buyer submits their earnest money, to neutral third party.  In Missouri and Kansas that is generally the sellers Title company.

Title Search

Next, a title search takes place and copies of documents are gathered from various public records. They review documents relating to the property’s ownership history. This can include:

• Deeds (transfer of ownership)
• Security instruments (deeds of trust/mortgages)
• Judgments and liens 
• Home Owners Association (HOA) documents (if applicable)
• State, county, city, municipality ordinances/restrictions

1. Information found in these documents will be examined and addressed in a preliminary title report. Any issues arising from the search will be addressed in a preliminary title report.
2. The preliminary report is then sent to all relevant parties so they know the conditions required for title to be issued. 

The preliminary title report/title commitment is often referred to as “the road map to closing” because it lists all outstanding debts, liens and encumbrances (“road blocks”), as well as any other action needed to be taken by either or all of the parties prior to passing title to the proposed buyers. Additionally, certain exceptions to ownership are disclosed in the preliminary title report/title commitment. Those may include:

• HOA
• governing documents
• city, county and state property usage restrictions
• perpetual property-tax assessments
• restrictions defined in plat maps or other instruments of record.

Title Curative

After the preliminary title report is issued, the curative work begins. Curative work must be done in order to eliminate items identified as “road blocks”.   These “road blocks” could prevent transfer of title.

For Examples include paying off any liens against the property or clearing up any newfound problems with earlier transfers of the title.

If these items are not eliminated or released prior to the closing, they will be listed as exceptions on the final title policy and will not be covered.

For example, in order to remove a lien, the seller could be required to pay a contractor who, never having been paid, placed a lien on the property.

Document Preparation

During the document-preparation phase, the appropriate forms are prepared by closers or escrow officers. Depending on the state where the property is located, the prepared documents presented and signed at closing will create the final settlement for the transfer of title. Some of the forms you can expect to see at closing include:

• Real-estate closing documents (seller and buyer)
• Loan-related closing documents (buyer and borrower) 

Your title company or lender may request additional documentation or information.  Because the closing date is a legal document, all requests should be acknowledged, addressed and documents returned as quickly as possible.

Settlement or Closing

At closing, all parties will review and sign paperwork. The closer will oversee the signing documents to complete the transaction to ensure that all requirements are met. After all signatures are obtained and funds have been collected, the closer will complete the remaining steps necessary to finalize the transaction.  Items to bring to closing:

• Government issued identification.
• Bank account information (seller) in which the account name matches the contract.
• Certified funds in the amount provided by the closer (buyer)
• Additional personal check for any discrepancies

Post-Closing Tasks and Recording of Legal Documents

The closing may be over, but the work isn’t done. As part of the post-closing title companies will:

• Disburse funds to the designated per the settlement statement.
• Send the original loan-closing package back to the lender, along with lender title policy if applicable.
• Record documents with your county, such as conveyance deeds, security instruments (mortgage or deed of trust)
• Title Insurance is issued.
• The owner's title policy, if not provided at closing, will be sent to the buyer along with the original recorded conveyance deed. 

Tami Hayes

913-579-1951