Title search and Clearing
A title search is done to uncover any possible defects tied to the properties title, these defects referred to as “clouds”. Are issues that must be resolved before the sale is completed. Clearing title issues. As an initial assessment, we do a comprehensive search & examination of the title which involves searching real estate records in the county where the specific piece of property is located. A title search will determine the legal owner of the property; reveal any mortgages, liens, judgments, or unpaid taxes that will have to be cleared before the property can be sold. As well as detail any existing easements, restrictions, or leases affecting the property.
Clearance of title issues that include:
Municipal lien searches
Homeowner’s association letters
Once the search has been completed, a “commitment of title insurance” is prepared for the lender and/or the prospective buyer. The title commitment distinguishes all issues that need to be completed and discloses any problems that need to be corrected in order for the buyer to receive a “clear title”. The title company undertakes correction of any problems to produce a property with a clear title and thru their underwriter issue a policy of title insurance covering the lender and the buyer. Once these things are done the parties are ready to exchange paperwork and “close” the deal.
First Title Source Title Insurance Company provides comprehensive title insurance protection and escrow closing services for home buyers, brokers, mortgage lenders, commercial property professionals, homebuilders, attorneys, developers, title agencies, and legal professionals to facilitate real estate purchases, construction, refinances or equity loans.
Title insurance protects both real estate owners and lenders against loss or damage occurring from liens, encumbrances, or defects in the title or actual ownership of a property. Unlike traditional insurance, which protects against future events, title insurance protects against claims for past occurrences. Such claims include property ownership by another person, fraud or forgery of the title documents, unidentified easements, outstanding lawsuits, liens against the property.
Purchasing Title Insurance
An escrow or closing agent initiates the insurance process upon completion of the property purchase agreement. There are five major U.S. title insurance underwriters, of which the agent or attorney typically recommends one.
There are two types of title insurance:
Lenders’ insurance and owners’ insurance. Almost all lenders require the borrower to purchase a lender’s title insurance policy to protect the lender in the event the seller was not legally able to transfer the title of ownership rights. A lender’s policy only protects the lender against loss. An issued policy signifies the completion of a title search, offering some assurance to the buyer.
Since title searches are not infallible and the owner remains at risk of loss, there is a need for additional protection in the form of an owner’s title insurance policy. Owner’s title insurance, often purchased by the seller to protect the buyer against defects in the title, is optional.
Often, a lender’s policy and an owner’s policy are required together to guarantee everyone is adequately protected. At closing, the parties purchase title insurance for a one-time fee. To prevent abuse, the Real Estate Settlement Procedures Act (RESPA) prohibits sellers from requiring purchase from a specific title insurance carrier.
Risks of No Title Insurance
Having no title insurance exposes transacting parties to significant risk in the event a title defect is present. Consider a homebuyer searching for the house of their dreams only to find, after closing, unpaid property taxes from the prior owner. Without title insurance, the financial burden of this claim for back taxes rests solely with the buyer. They will either pay the outstanding property taxes or risk losing the home to the taxing entity. Under the same scenario with title insurance, the coverage protects the buyer for as long as they own or have an interest in the property.
Escrow & Closing
An escrow is a process wherein the Buyer and Seller deposit wrote instructions, documents, and funds with a neutral third party until certain conditions are fulfilled. In a real estate transaction, the Buyer does not pay the Seller directly for the property. The Buyer gives the funds to an escrow company who, acting as an intermediary, verifies that the title to the property is clear and all written instructions in the contract have been met. The company then transfers the ownership of the property to the buyer through recordation and pays the Seller. This process protects all parties involved.
States license and regulate all title and escrow companies. The governing state departments can inspect a company’s records at any time, providing further oversight of the company’s management and position as an impartial third party to the transaction.
Escrow services are generally provided by a title insurance company instead of an attorney. The stability, reliability, and performance of your title and escrow company are vital to protect the interests of all parties to the transaction. First Title Source is a safe escrow company.
How is an Escrow opened?
Once you have completed the contract or Purchase Agreement, and the Seller has accepted the offer, your real estate agent or lender will open the escrow. The earnest money deposit and the contract are placed in escrow. As a neutral party to the transaction, First Title Source can respond only to those written instructions agreed to mutually by all “interested” parties (Seller and Buyer); First Title Source cannot otherwise alter the contract or create instructions, which protects all interested parties.
How to hold title?
You should inform your escrow officer and lender as soon as possible of how you wish to hold title to your home and exactly how your name(s) will appear on all documents. This allows your lender and title company to prepare all documents correctly. (Changes later, such as adding or deleting an initial in your name, can delay your closing.) You may wish to consult an attorney, accountant, or other professional before deciding how to hold the title.
What happens at First Title Source?
During the escrow period, our title department begins researching and examining all historical records pertaining to the subject property. Barring any unusual circumstances, a commitment for title insurance is issued, indicating a clear title or listing any items which must be cleared prior to closing. The commitment is sent to you for review.
Your escrow officer follows instructions on your contract, coordinates deadlines, and gathers all necessary paperwork. For example, written requests for payoff information (called “demands”) are sent to the Seller’s mortgage company and any other lien holders.
1031 Exchange Services
A 1031 exchange allows owners of the business or investment property, through the use of a Qualified Intermediary, to sell one property and purchase a similar or “like-kind” property while deferring capital gains. First Titles’ 1031 exchange services empower investors to preserve equity and save tax dollars through tax-deferred exchanges. Under Section 1031 of the Internal Revenue Code, you can defer the payment of capital gains taxes when you sell an investment property and acquire “like-kind” replacement property.
A 1031 exchange transaction typically requires the assistance of a qualified intermediary, like First Title Sources Exchange Company. When you work with First Title Source, you have peace of mind knowing your transaction is in the hands of an industry leader. We provide:
Local and Nationwide service from knowledgeable, experienced 1031 exchange attorneys and professionals
Qualified intermediary services for all types of exchanges, including simultaneous, deferred, reverse
and improvement exchanges
Online ordering combined with the personal attention
Owner and Encumbrance Report
These are simplified non-insurance title reports designed for informational purposes to aid in closings of equity and home improvement loans. This search is also widely used by Investors and Homeowners to check open liens and Judgments against the property.
The property report is a limited search of public records and reflects:
› Current owner of the property
› How the property was conveyed to the current owner
› Open mortgages
› Liens and judgments
› Tax information
› Legal description
An O&E or Owners and Encumbrances report provides current information such as the current or last owner, liens and encumbrances of records, any pending litigation, construction permits filed in the past (usually) 6 months, ordinance violations, and current taxes as well as other current matters. A title search is the running of the title, an abstract of title, that goes back 30 years for title insurance purposes, an O&E is not sufficient for title coverage.
An O&E report is often used by buyers at auctions to be aware of current title matters.