FAQ

Your home is an investment. With each mortgage payment you are building equity. Your home also helps you keep up with inflation as it appreciates in value. The average trend in the United States is 3%. Your annual property taxes and interest payments on a mortgage for an owner occupied home is tax deductible. Renting however, is not tax deductible and does not build equity and tends to fluctuate on a yearly basis. Should you decide to take advantage of your growing equity by taking out a home equity loan, the interest is also tax deductible.

• False impersonation of the true owner of the property.

• Forgery.

• Undisclosed or missing heirs.

• Instruments executed under invalid or expired power of attorney

• Clerical errors in recording legal documents.

• Improperly probated or misinterpretations of wills.

• Deeds by persons of unsound mind.

• Deeds by minors.

• Deeds by persons supposedly single, but in fact married.

• Liens for unpaid estate, inheritance, income or gift taxes,. judgments, taxes.

• Fraud.

• Encroachments that a survey could disclose.

• False Affidavit.

• Perjury. Erroneous interpretation of Statues and Rules of Law.

• Suppressed or undiscovered wills or Codicils.

• After-born or adopted children.

• Dower Claims.

• Claims arising by reason of foreign divorces.

• Bankruptcies in other jurisdictions.

• Unrecorded contract of Sale.

These “Problems” make the purchase of title insurance a prudent on-time investment that provides “peace of mind.” The owner’s title insurance policy remains in effect as long as the insured or the insured’s heirs own the property. Title insurance will pay for defending against any lawsuit attaching the title, clear the title problem or pay up to the amount of the policy settle, should there be an occasion. Without this title policy you may not be fully protected against errors and may be fully accountable for any claims brought against your property. Owner’s title insurance used simultaneously with a loan policy is the best value a property owner can get.

• The truth in Lending statement: a disclosure form from containing the interest rate, annual percentage rate, amount financed, and the total cost of the loan over its life. Signed by Buyer.
• Itemization of amount financed: a disclosure, which summarizes and explains the prepaid finance costs as disclosed on the Truth in Lending Statement. Signed by Buyer.
• Consolidated Buyer and Seller Settlement Statement: Itemizes the details of the financial transaction between the buyer and the seller. Signed by the Buyer and Seller.
• Monthly Payment Letter: a disclosure containing the monthly payment amount for the new mortgage and the itemization of that payment, including principal. interest rates, insurance and other monthly escrows. Signed by Buyer.
• Mortgage Note: the promise of the borrower to repay the lender. Signed by Buyer.
• Mortgage: a lien on the property to secure the borrower’s promise to pay the mortgage note. This is the document which provides the lender the right to foreclosure if the borrower fails to make the payments called for the mortgage note. Signed by Buyer.
• Warranty Deed: this document transfers the title to the property from the seller to the buyer. Signed by Seller.
• Tax Pro-ration Agreement: in this document the buyer and seller acknowledge that taxes have been prorated between them as of the date of closing on the basis of the best available estimate of the tax liability. The buyer and the seller agree to re-prorate the taxes when the actual amount of the taxes is known. Signed by Buyer and Seller.
• Homeowner’s Dues Pro-ration Agreement: Same as the tax pro-ration agreement except that it addresses home owner’s dues. Signed by Buyer and Seller.
• Acknowledgement of Survey and Termite Report: in this document the buyer and seller acknowledge that they have reviewed the survey and termite report. Signed by Buyer and Seller.
• Notice to Owner: a disclosure to the buyer that the Lender’s Title Insurance Policy to protect only the lender and the buyer may only purchase an owner Title’s Insurance Policy to protect his or hers interests. Signed by Buyer.
• Anti-Coercion Notice: an acknowledgement from the borrower that the lender did not require him/her to obtain homeowner’s insurance from a particular company. Signed by Buyer.
• Borrower’s Affidavit: An affirmative statement from the Seller that they have not altered the property in any way that may cloud the title. Signed by Seller.
• 1099 Form: an Internal Revenue Service that reports the amount of the gross proceeds from the transaction. Signed by Seller.
• Confirmation of Payoff: a disclosure containing information on how much money is being paid, and to whom, to redeem liens affecting the property. Signed by Seller.
• Bill of Sale: an instrument conveying title to personal property. Signed by Seller.

Escrow is a transaction where one person delivers something of value to a third person, to be held until the happening of a specified event or condition, upon which it is then delivered by the third person to‘ another. Both parties to a real estate transaction entrust legal documents and various funds to the escrow holder, which transfers the papers and funds upon the closing of escrow. As a neutral third party, both buyer and seller- are assured that all mutually agreed to terms are met before the transaction is completed.

• Convenience. Using the escrow holder as a common depository, the buyer and seller can proceed simultaneously in providing funds, deeds, inspection reports, insurance information, and other required documents. Both parties give written instructions, the requirements of which must be met before the transaction is complete, to an experienced escrow officer. Lenders also specify their conditions for completing the loan process. Provided that the instructions are clear and mutually consistent, the escrow officer, as a limited agent for all parties, saves time in the closing process.

• Protection. The authority given to an escrow holder is strictly limited by instructions provided by the buyer and seller. The escrow officer is authorized by instructions to allocate funds for items during the escrow period, such as real estate commissions, title insurance, liens, recording fees, and other closing costs. Instructions also specify the method of collecting funds, proration of insurance and taxes, and time limitations on settling the transaction. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met. Confidentiality is another important aspect of escrow. To effectively handle a transaction, your escrow officer must be instructed as to the required terms necessary to close. The officer will discuss escrow matters only with the parties directly involved, specifically the buyer, seller, lender, and real estate agent. No one else has access to this information, except through proper legal procedures. The escrow officer retains impartiality and confidentiality concerning the real estate process.

• Closing Escrow. Upon closing, the escrow holder causes the required documents to be recorded and disburses funds according to the instructions given to the escrow officer. Escrow fees are included in these costs, and are based on the sales price of the property, the loan amount, and services required.

• Responsibilities Of Each Party

The Buyer

• Deposits funds to pay the purchase price, and funds for property and closing costs

Provides deed of trust or mortgages needed to secure the loan.

Arranges for borrowed funds to be deposited into escrow.

Provides, if required, documents such as inspection reports, insurance policies, and lien information to verify compliance to the instructions.

The Seller

Deposits the deed to the buyer with the escrow holder.

Provides evidence to meet the buyer’s conditions of sale, such as proof of repair work and inspections

Submits other documents, such as tax receipts, mortgage information, insurance policies, and warranties.

The Lender (When Applicable)

Deposits loan funds, lender instructions, and other loan documents with the escrow holder.

The Escrow Holder

• Serves as a central depository for funds and documents.

• Obtains a title insurance policy, when required.

• Fulfills the lender’s requirements if applicable.

• Secures approval from the buyer on requested documents.

• Prorates insurance, taxes, and rents, as instructed.

• Fulfills buyer and seller instructions.

• Allocates funds for closing costs, and verifies that required funds from each party are deposited into escrow.

• Once all conditions are met, the escrow holder causes the necessary documents to be recorded.. Executed loan documents are forwarded to the lender.