It is important to secure the professional services of a Title Agency to efficiently and accurately handle the complex transaction of buying or selling a home.
The Title Agency duties include:
1. An “abstract of title” – meaning: the abstract of title includes transfers, grants, wills and conveyances, liens and encumbrances. It also provides any evidence or proof of satisfaction or other related facts or information pertinent to a piece of property such as:
(a) determine the legal owner of the property
(b) reveal any mortgages, liens, judgments, or unpaid taxes that will have to be satisfied before the property is conveyed
(c) detail any existing easements, restrictions, or leases that affect the property.
*All potential buyers of a property should request this to determine the status of the property.
2. Once the "abstract of title" is completed, the Title Agency will issue a “title opinion letter” or if a title insurance policy is to be issued on the property.
3. The Title Agency will then prepare a “Commitment of Title Insurance” to the lender/prospective buyer.
*The title opinion letter and the title insurance commitment will each set forth all things that need to be completed and any problems that need to be corrected before the purchaser can receive a “good title”.
The title insurance company will complete all the necessary documents and undertake all steps to correct the problems.
Once these things are done the parties are ready to exchange paperwork and “close”the deal.
The purpose of the closing is to sign and exchange all the documents necessary to convey the title, secure the lender, and deal with collateral issues such as leases, rights-of-way and to explain in an orderly manner the costs to each party. This is done by preparing a closing statement or what is referred to in the industry as a “HUD 1”. The closing statement will include the mortgage lender’s charges, the charges for preparing all required documents, the Title Agency’s fees, recording costs and the amount of the payoffs to release any existing mortgages, pro-ration of city and county taxes, real estate commission fees, survey fees, and any other costs associated with the deal.
At closing, the Title Agency will collect the purchase money funds from the buyer and lender as well as the settlement costs from each party. With these funds, the Title Agency then pays all of the expenses of the transaction, pays off any existing mortgages, and pays the seller the net proceeds of sale. All of this is done in accordance with the HUD 1 settlement statement.
After closing, the Title Agency will record the legal documents (deed, mortgage, assignments, etc.) at the county courthouse and then return the original documents to the correct party. New owners receive their deed which should be stored in a bank lock box or other secure location. The lender receives the original mortgage documents which they hold until the loan is paid in full. Once the loan is paid, the lender will “release” their lien against the property at the courthouse and will forward the original mortgage documents to the home owner.