Title Examination and the Closing Process Chapter 7 Title Examination and the Closing Process

Title Examination the process of verifying the ownership rights being offered by the seller of a property marketable title insurable title title perfect of record

Title Search Detailed examination of all public records that reveals the ownership history of a property recording requirement Grantor / grantee indexes tax records search lien search

Other Title Issues Title abstract Title Opinion Title insurance paid for in full at the time the policy is issued not transferable protects only against past events that were in existence, but undiscovered at the time the policy was issued Required by mortgage companies Buyer pays

Title Case Study Matt and Kristen Royston buy small commercial property & title insurance 2 small retail stores and a small customer parking lot Assumption that parking lot provided adequate spaces for the building. Half of parking on adjoining property (with easement access).

Case Study – part II After several months of ownership, neighbor told them he really owned part of the parking easement, and this property was included in his deed. Roystons now in jeopardy of losing occupancy permit on their building because they could not provide the required parking spaces. An error had been made in the boundary description of the easement.

Case Study – part III Claim made on title insurance Title company investigated Title Company bought additional parking spaces from neighbor, adding the land to the Roystons' deed. The couple now owned the additional spaces and the occupancy permit was valid.

Torrens System System of land registration Provides certificate Court proceedings Only 1 certificate per property Optional in only 11 states Still not used much. Cost of court proceedings Time of transfer

Title Closing the final step in the process of transferring title from grantor to grantee Buyer’s responsibilities before closing obtaining financing examining the title evidence having the property surveyed obtaining property insurance having the property inspected Seller’s responsibilities before closing prepare the deed remove encumbrances cooperate with inspectors

Closing Costs Costs generally paid by the buyer at the closing loan origination fee loan discount points appraisal fee credit report fee lender’s inspection fee mortgage insurance premium attorney fees hazard insurance premium recording fees for the mortgage courier fees Costs generally paid by the seller at the closing real estate brokerage commission documentary stamp taxes, where required recording fees for the satisfaction of the seller’s mortgage

HUD Settlement Statement Settlement statement shown in Figure 7.1 relates to the transaction between Williams and Howell. The transaction amount is $189,000. The seller has an outstanding loan for $113,245 that must be repaid. The buyer is borrowing $150,000 from his lender. Both buyer and seller must pay certain closing costs. After consideration of these costs and the prorated taxes, the buyer must bring $37,243.28 to the closing and the seller will leave the closing with $58,548.96.

Figure 7.1

Figure 7.1 (continued)

Escrow Closing Instead of conventional closing (where all parties present) In some east coast states Most western states (incl. Texas) Parties sign separately Coordinated by escrow agent (attorney/title company) Advantages Easier to coordinate closing Buyer/seller assured title is acceptable & money properly received before transaction complete.

End Chapter 7 Exam next Thursday (March 10th) Chapters 2-7 Extra articles/class notes Articles/PowerPoint on web http://www.uta.edu/faculty/seththomas/ Scantron required