Here we explore Frequently Asked Questions that title companies receive regarding title and title insurance policies. You may also visit our glossary of terms to know to learn more about common terms used by title companies, lenders, and real estate agents.
A title is the foundation of property ownership; it is the owner's right to possess, use, and transfer the property.
Real estate is permanent and can have many owners over the years, as well as rights to use the property. To transfer clear title to real property, it is first necessary to determine the rights outstanding on the property through a title search.
A title search is a detailed examination of the historical records concerning a property, performed by a title company. These records include deeds, mortgages, court records, property and name indexes, taxes, and many other documents. The purpose of the search is to verify the property owner's right to sell or finance the property and to discover any claims or defects to the title to the property.
A title search can reveal several types of defects in title, liens, encumbrances, and restrictions. Among these are unpaid taxes, easements, unsatisfied mortgages, gaps or breaks in the chain of title, judgments against the property owner and restrictions of use or transfer.
A title insurance policy is a protection against loss if any of the problems listed above result in a claim against your ownership.
If a claim is made against your property in accordance with the policy, title insurance will assure your legal defense, including paying court costs and related fees. If the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
There are two types of title policies: a lender's policy and an owner's policy (sometimes also referred to as a buyer’s policy). The lender's policy protects the lender's interest in the property as security for the outstanding balance under the buyer's mortgage. The owner's policy protects the buyer's investment in the property up to the face amount of the policy.
This is the process of charging either the buyer or seller for their share of real estate taxes owed on the property for their respective time of ownership. Taxes are said to be "pro-rated" back or forward to the due date of the property taxes. As per the purchase agreement, each party is only responsible for the taxes associated with their time of ownership.
This is the loan interest that accrues from the closing date to the first day of the following month, paid at the time of closing. Monthly mortgage payments are typically due the first of the month, for the principal and interest of the previous month. If a closing is on the 20th, there will be an interest adjustment through the 1st day of the next month. The first payment will then be due on the 1st day of the month following. Interest adjustment is considered a settlement charge, and so will be disclosed on the HUD statement.
No! In fact, a buyer is allowed to use whichever title company they want. As a buyer, making this choice affects not only the quality of the work, but the cost. For instance, working with a title company that is unaffiliated, like Liberty Title usually saves the buyer on fees!