Keys to Home OwnershipEvery time you buy or sell a home you will work with a title company on the closing of the property. The title company is selected by the buyer (usually through the lender or Realtor on the buyer’s side, based on who the lender and/or Realtor usually work with.) The title company I frequently work with is Chase Legal Title in Anderson. Debbie Swain from Chase just sent me a ton of user-friendly information about titles to share with you. A lot of this stuff happens behind the scenes, a buyer or seller may not even realize all that is involved when preparing to close on your property.

The lender will send a buyer’s file to the title company after he/she applies for a loan to buy a property. The title company will then do a “title examination,” to see if there are any problems with the property: other mortgages, liens, pending lawsuits, etc. For example, perhaps the title company might find an old mortgage from a previous owner that wasn’t released when a property was sold previously. The title company will also check the names of owners to look for any pending lawsuits that might affect the property. The title company will then work to settle these discrepancies.

Payoffs will then be ordered for the properties. With the help of the Realtor, the seller’s mortgage numbers will need to be accessed so the title company knows how much money is owed on the property currently — therefore the banks can receive the payment for the home upon the sale. The title company also relies on the Realtor to inform them of the property sale price, home warranty costs, commission amounts, closing cost contributions from seller, etc.

Once the buyer’s loan is approved and all liens are cleared, the closing can be scheduled. The lender will send the title company all the informationg about the loan, and the title company has other costs as well. These will go into the HUD-1, or settlement statement. (Those miscellaneous fees include recording fees, transfer fes, the fees to prepare the title, etc.) When you get a hud for a a purchase or sale of a property, every fee for each party will be itemized. Realtors, lenders and the buyers and sellers have a responsibility to look at the HUD carefully to make sure all of the information is accurate.

The title company will prepare all other documents for closing, finalize the HUD, issue the checks that are given out at closing and conduct the actual closing itself. I asked Debbie what she thinks clients can do to make sure their closings go smoothly.

“In order for a closing to run smoothly a buyer should communicate well with the Realtor and title company, if needed, and make sure that anything the lender has asked for is obtained for them quickly,” Debbie says. “Often times the loan is approved with conditions, such as copy of tax returns, letter of explanations — these items are often asked for in the beginning but the buyer waits to give them to the lender. The loan cannot close until these items are reviewed by the underwriter.”

Because sometimes buyers don’t realize all that goes into a closing, it’s important to stay in touch with your Realtor and lender, and provide anything they ask for quickly! You may think there is plenty of time, but often there isn’t.

Debbie also points out that “the title company does not represent the buyer or seller in any way. The title company is involved at the request of the buyer’s lender, however. The title company’s concern is to make sure the title passes from seller to buyer properly.”

We also talked with Debbie about the importance of title insurance. We cover title insurance in another blog post.

Thanks to Debbie Swain at Chase Legal Title!

More information about titles:

Animation: What happens at closing?

Legal Definitions: What is a title search?

Hud.gov: Sample HUD-1 settlemen statement.

About.com: Understanding the HUD-1.

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