Frequently
Asked Title Questions
What is a
title?
A title is the foundation of property ownership. It is the owner's
right to possess and use and transfer the property.
Why is transferring
title to real estate differ from transferring to title to personal
property, such as a car?
Real estate is permanent and can have many owners over the years,
as well as rights to use the property. In order to transfer clear
title to real property, it is first necessary to determine the rights
outstanding on the property.
What is a
title search?
A title search is a detailed examination of the historical records
concerning a property. 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 property.
What kind
of problems can a title search reveal?
A title search can reveal several types of defects in title, liens,
encumbrances and restrictions. Among these are unpaid taxes, easements,
unsatisfied mortgages, judgements against the property owner and
restrictions of use or transfer.
What is title
insurance?
Title insurance is a policy of protection against loss if any of
the problems listed above result in a claim against your ownership.
How does
title insurance protect my investment if a claim should arise?
If a claim is made against your property, title insurance, in accordance
with the policy, 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.
What are
the different types of title policies?
There are two types of title policies- a lender's policy and an
owner's policy. The lender's policy protect 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.
What is a
HUD Settlement Statement (HUD-1)?
This is a summary of the financial portion of the real estate transaction.
The HUD will list the purchase price, loan amount, closing costs
for both buyer and seller and show all pro-rations and sums to be
disbursed by the title company to all parties.
What is pro-ration
of property taxes?
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.
What is pre-paid
interest?
This is interest due from the date of a loan closing to the first
day of the following month. Most loans require payments to be due
on the first day of the month. Each monthly payment reflects the
principle and interest due on the loan for the previous month. A
loan closing on the 20th day of the month will require interest
adjustment through the 1st day of the following month. The first
payment will then be due on the 1st day of the month following.
Interest adjustment is considered a settlement charge and will be
disclosed on the HUD.
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