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Once you have decided to buy or refinance your property, you will need to select a title company to coordinate the closing and issue title insurance. For closings involving the sale of property, the title company acts as an impartial intermediary and escrow agent between the buyer and seller to make sure that all of the terms of the sales contract are carried out. It ensures that the purchaser delivers the money for the property and that the seller delivers a clear title to the property to the purchasers in the condition promised in the sales contract.

After the purchaser or the purchaser’s agent schedules a closing, the title company conducts a title search on the property, determines whether the seller has good title to the property, and ascertains whether there are unpaid liens, mortgages or unpaid taxes against the property.

The title company contacts the Homeowner / Condominium Association to determine the dues information for the property, including whether there are any delinquencies. In most cases the title company will also order a house location survey. Finally, the title company contacts the seller’s mortgage company(ies) to determine how much is required to payoff any mortgage(s) against the property. If the buyer is financing the purchase through a commercial lender, the title company provides that lender with the information needed to set up the loan, such as the tax data, the survey, the lender’s title insurance binder, and the termite report.

When the loan instructions are received from the mortgage company, the closing agent prepares a final accounting, known as a “HUD-1 Settlement Statement” or “HUD-1″. All of the expenses associated with the transaction are tallied to determine the bottom line for both the buyer and the seller. The HUD-1 includes all fees paid to the purchaser’s lender, any proration for property taxes and homeowner/condominium dues, agents’ commissions, closing costs credits, recording fees, and any other expenses associated with the closing.

On the day of the closing, the title company conducts the settlement, during which the settlement officer has all of the documentation from the purchaser’s mortgage company signed and completed. The seller signs the deed and other forms necessary to complete the transfer, including the tax forms and payoff letters.

The title company then updates the title search (to make sure that nothing has happened in the interim), records the deed and the new mortgage(s) in the city or county land records, pays all service providers associated with the transaction, pays off any mortgages on the property, and disburses the proceeds from the sale to the seller(s). The title company also issues the owner’s and lender’s title insurance and returns the loan papers to the purchaser’s new lender. When received, the title company records the releases for the seller’s old mortgages to clear the title for the purchaser.

For refinances, the title company performs many of the same functions listed above. With a refinance, the title company acts as an intermediary between the home owner, the new mortgage company and the old mortgage company. The title company issues lender’s title insurance, ensures that all of the appropriate parties are paid, and that the land records are amended to reflect the change of mortgage companies.

There are two types of title insurance associated with residential real estate:

1. Lender’s Title Insurance and Owner’s Title Insurance.

Institutional lenders (and most private ones too) will require a borrower to purchase Lender’s Title Insurance for each loan that is secured by real property. The Lender’s Title insurance protects the lender by insuring two things: (1) that the borrower is the true owner of the property, and is therefore able to pledge the property as collateral for the loan, and (2) that the lender has a valid, enforceable lien against the property. The Lender’s Title Insurance only protects the lender; it does not protect the borrower at all. Most lenders will not make a loan without Lender’s Title Insurance.

Owner’s Title Insurance protects the purchaser by insuring the purchaser of the property that the title is clear, and that the purchaser won’t have to pay the legal fees should any future claims or problems arise regarding the title. We highly recommend that anyone purchasing property also purchase Owner’s Title Insurance. Purchasing property in Virginia is a big investment, one that should be protected. The fact that you hold a signed deed to the property does not necessarily mean that you own the property, or that you own the property without the previous liens, taxes, or title problems that were there before you purchased the property. Furthermore, the best title search in the world cannot protect your home (and the equity in your home) from matters not appearing in the public records.

2. An Owner’s Title Insurance Policy can protect you from some of the following title problems:

• Documents executed under false, revoked or expired powers of attorney

• Forgery

• Undisclosed heirs in the chain of title

• Improperly recorded legal documents

• Prescriptive rights in another not appearing of record nor disclosed by the survey

• Failure to include necessary parties to certain judicial proceedings in the past affecting the title

• Defective acknowledgments due to improper or expired notarization

• Gaps in the chain of title (meaning that someone along the chain of title who was never deeded the property suddenly deeds the property out)

• Mistakes and omissions resulting in an improper title abstract

• Forged deeds, mortgages, wills, releases of mortgages and other instruments

• Deeds by minors (which are void)

• Inadequate legal descriptions

• Errors in tax records

• Deeds and mortgages by foreigners who may have lacked the legal capacity to hold title

• Deeds by persons falsely representing their marital status

• Misinterpretation of wills and ancillary instruments

• Forfeitures or real property due to criminal acts

• Probate matters

• Federal estate and gift tax liens

• Rights of divorced parties and community property issues

• Duress in execution of wills, deeds and instruments conveying title

• Special tax assessments

• Real estate homestead exemptions

• Issues of adverse possession

• Utility easements

Administration of estates and probates of wills of missing persons who are presumed deceased.

Unfortunately, when we purchase property, the slate is not wiped clean on the title. Matters that happened long before you took title can have devastating consequences. Therefore, we highly recommend that our clients purchase Owner’s Title Insurance. A one time fee buys ongoing protection for the entire time you own the property. The protection even continues after you sell the property, should any title problems arise that result in your liability from before you purchased the property.

If you are refinancing property, give us a call (or e-mail your application) when you have selected a mortgage company and applied for a loan.

If you are purchasing or selling property, as soon as you have a signed sales contract, you should fax a copy to our office.

Closing times can vary due to a variety of factors. A refinance transaction will generally take thirty to forty five minutes to complete and a sale will take closer to an hour.

Anyone who is a title owner of the property must be present at closing, whether they are selling the property or refinancing the current financing. For those who are purchasing property, anyone who is on the loan or will be taking title to the property should attend the closing.

Contrary to popular belief, spouses cannot sign for one another. If for some reason any of the parties cannot attend the closing, we can arrange to have a Power of Attorney document prepared that will allow someone else to sign on their behalf.

Please let us know as soon as possible if anyone will need a Power of Attorney so we can be sure it is prepared, properly executed, notarized and returned to our office prior to closing. In addition, we must obtain the approval of the mortgage company for the Power of Attorney. If any of the parties already have a prepared Power of Attorney, they should please fax us a copy as soon as possible so that we may review the document to ensure that it will be acceptable.

Generally loan officers help their clients through the application and loan approval process. In most cases, once the mortgage company underwriters approves the loan, the loan officer does not attend closing. The settlement officer conducting the closing reviews the loan documents with the customer. If there are any problems, most loan officers are accessible during settlement to discuss any questions or issues that may arise.

Under Virginia Law, an escrow agent is prohibited from disbursing proceeds from the sale of property until the deed and deed of trust have been recorded in the appropriate land records. Therefore, the sellers do not receive a check at the closing for the sale of their home and must wait until these documents have been recorded. Generally, The Title Professionals records and disburses within one business day of closing. If you would like your funds wire transferred, bring wire information to closing.

If you are Purchasing property or Refinancing, you will need to bring the following items to your closing:

• A government issued photo I.D. (such as a driver’s license or military I.D.) so that we may notarize your loan documents.

• Certified funds payable to “The Title Professionals, LLC” for your down payment and closing costs. A certified cashier’s check may be used for funds under $10,000. For funds over $10,000 we require a wire transfer. If you are uncertain of the exact amount, we will accept a personal check for the difference in small amounts, and we will be happy to issue a refund check if your certified funds are more than you owe.

• Any documents that the mortgage company or we have asked you to bring to closing, such as the new hazard insurance policy, gift letters, etc.

If you are Selling property, please bring the following items to closing:

• A government issued photo I.D. (such as a driver’s license or military I.D.) so that we may notarize your document

• Your Social Security Number

• Your forwarding address

• All keys to the property, garage door openers, etc.

• Information on what you would like us to do with your proceeds. If you will owe funds at settlement, please bring a rtified funds payable to “The Title Professionals, LLC.” A certified cashier’s check may be used for funds under $10,000. For funds over $10,000 we require a wire transfer.

• Any documents that the title company has asked you to bring to closing

• The invoices for any repair bills for the property that you want paid from your proceeds.

As the escrow agent, we gather information from numerous third parties, such as lenders, homeowner and condominium associations, county tax offices, realtors, etc. to determine the bottom line for clients who are closing. Because we must rely on these third parties, sometimes we are unable to provide you with the exact amount you need to bring to settlement until shortly before closing. For example, many lenders will not provide the settlement agent with the final figures until the day before or even the day of closing. However, you should be able to determine the approximate amount you need for closing from your loan officer’s or realtor’s “Good Faith Estimate.”

Coordinating a settlement date between buyers, sellers, real estate agents, lender, movers, and settlement agent can be like trying to get a family of five to agree on a restaurant – it is impossible to please everyone. It is possible, however, to have a smooth efficient settlement without hassle if you keep a few principles in mind: When choosing a settlement date, it is important to determine the type of financing (if any) the seller has secured against the property. If the seller has no mortgage, a conventional mortgage, or VA insured mortgage, the settlement date has no financial impact on the seller’s payoff figures. However, if the seller has an FHA insured mortgage, then it would behoove the seller to schedule the closing towards the end of the month, particularly between the 22nd and 26th. FHA loans do not have prorated interest, so in order to pay the loan off, a full month of interest must be paid for each month (whole or partial) that a seller has the loan along with the principle balance. For example, if a seller with an FHA loan closes after making a May payment, he pays interest from May 1st to May 31st. However, if the same seller closes one week later on June 2, that seller will pay interest from May 1st to June 30th. It is best to avoid closing on the last two days of the month because the settlement company may need several days to receive lender funds, record, and disburse all of the funds.

If the seller does not have an FHA mortgage, try to avoid scheduling the settlement for the last week of the month. The cliché regarding timing of closings is “pay now or pay later.” The total per diem interest paid on the new loan will be higher at the beginning of the month, but the time between closing and the first payment will be longer. Only the buyer who is in a truly precarious financial position, receives any advantage to closing at the end of the month. All expenses between the buyer and seller will be prorated at closing. At the end of the month, lenders, title companies and real estate agents are swamped with closings. The result tends to be that loan papers are delayed, settlement agents get behind schedule, and real estate agents sometimes find it necessary to leave in the middle of closing. If the closing can be scheduled prior to the last week of the month, the client will experience shorter waiting times for a settlement agent and/or lender papers. Lenders and settlement office personnel will also be more accessible for questions and assistance.

Finally, try to avoid scheduling a closing for 5:00 P.M. or later. Most businesses, including the mortgage companies, repair people, insurance agents, etc., are closed after 5:00 P.M. If there are any problems which are not resolved at settlement, everyone will have to wait until the following day to settle the issues. This is a particular problem with 5:00 P.M. Friday settlements, especially if the parties are planning to move over the weekend.