About the Title Insurance Process
Frequently Asked Questions About Title Attorneys
When you buy a home or piece of property, there is a variety of different steps to go through before you get the keys and call it your own. One of these steps is getting a clear title, and it is a necessary part of every real estate transaction. Title companies must conduct a search on every title in order to check for claims or liens against them before they can be issued. Title insurance protects against errors in public records.
The idea of going through this process can be quite daunting for many potential homebuyers, and it is one of the roadblocks that might prevent them from moving forward with their decision. Fortunately, the team at Elite Title Solutions, LLC, is here to help you through the process and answer any questions you might have. Some of the most frequently asked questions clients have about the title insurance process include:
What is title insurance?
When you get title insurance, it will serve to protect you against loss if there are imperfections or omissions in title or defects in the title of a property. The most common claims filed against a title that property owners find themselves dealing with are back taxes, liens, and conflicting wills. Title insurance is slightly different than traditional types of insurance in the sense that it offers protection against past occurrences that could result in a claim at a future date. Your coverage will last as long as you have an interest in the property at hand and can continue to any future heirs of the land.
What are the steps of the title process?
In order to get title insurance, you must go through the following steps:
- Open an order for the title insurance with a title officer who will typically respond within 24 to 48 hours. A preliminary report will then show the record title in its current state and will serve as an offer to provide insurance.
- Your title officer will perform three searches: property, name, and tax searches. This will allow them to create the preliminary report.
- Your legal representation will perform an analysis of the documents of record in order to discover whether any of the information present would prevent the buyer from using the property for its intended purposes and whether antiquated leases can be eliminated from the policy.
- A site inspection will be ordered to prepare for American Land Title Association® or ALTA coverage. Based on the inspection report, the initial title product will be used to show any issues that would impact the title.
- The title insurer will insure up to the total sale price or loan amount and a title insurance company will be selected.
What information will the title company need after I sign my contract?
After the contracts have been signed by both the buyer and the seller and submitted to the title company, the title company will issue a receipt and copy of the contract to each party. Typically, this will include a cover letter with the name of the closing agent, their contact information and “for guaranty file” number, or GF. The GF number is used to identify the file when communicating with the closer. An “opening title” refers to the process of setting up a working file for the transaction. This is the first step in the process of issuing a policy. You might be asked for the following information at this step in the process:
- A survey if applicable
- Tax statements
- Any objections of the title commitment document once issued
- Any objections of the closing documents once issued
- Any objections of the settlement statement, which will be used to make sure you get the credits you are entitled to, once issued
- If applicable, the request for release of earnest money to the other party
Will you get a clear title?
A clear title is a property title that is free from issues that could put ownership in jeopardy, including boundary disputes or easements. A clear title ensures that there is no question about who claims legal ownership of the property. We will check for a clear title as we help you through the homebuying process. If any issues come up during the title search, this is where title insurance comes into play. Title insurance protects the lender and covers up to the value of the mortgage if a defect is found. Through an owner’s title insurance policy, the title insurance company pays outstanding balances and the equity up to the total purchase price.
How does a title insurance policy protest against all these claims?
Title insurance protects you against loss due to title defects, liens, or other related issues. As previously mentioned, it protects you from claims of ownership by other parties, and it even protects you from losses that occurred before you bought the property. If there is a claim against your property, the title company will defend you in court and cover the losses.
Examples of more issues that title insurance gives you protection from include:
- Undiscovered liens
- Missing heirs
- Public record mistakes
- Undiscovered will
- Disputes over boundaries and surveys
- Unlawful deeds
- Undisclosed owners
- Undisclosed easements
- Does title insurance protect your asset?
Getting title insurance is a great way for the homeowner to protect the investment they have placed in the property, including their down payment. This will prevent property loss or damages the owner might experience due to defects.
What happens in escrow?
Most people do not encounter the word “escrow” until it becomes a part of their lives. The purpose of an escrow is to protect the assets of the buyer and seller during a real estate transaction. An escrow is a process in which the buyer and seller submit written instructions, documents, and funds to a neutral third party. This information will stay with the neutral third party until a set of conditions are met. In a standard real estate transaction, the buyer does not pay the seller directly. Rather, the buyer deposits the funds to an escrow company who certifies that the title to the property is clear and all instructions in the contract are met. After that point, the company transfers ownership of the property to the buyer through a process called recordation, and the seller is paid.
What are the responsibilities of each party in escrow?
It is important to understand the responsibilities of each party in escrow in order to promote a successful transaction process. Both the buyer and the seller have the duty of loyalty, the duty to make full disclosure, and the duty to practice a great deal of care to conserve the money placed in escrow and pay it only to the rightful parties.
When it comes to the escrow officer’s duties, these include:
- Receiving and holding buyer’s funds in a non-interest paying trust account during escrow
- Reading and complying with all agreements in the Purchase Contract and Joint Escrow instructions
- Abiding by the instructions agreed upon by the buyer and seller
- Preparing Escrow Instructions and General Provisions
- Obtaining reports as needed
- Ensuring the escrow has signatures of both the buyers and sellers
- Ordering evidence of insurance from the buyer insurance agent
- Sending signed loan documents to the new lender
- Ensuring that all necessary funds are paid and the necessary paperwork is in order
- Ensuring that the conditions are agreed upon by the buyer and seller