G u i d e
To t h e T i t l e
Table Of Contents
Realizing The American Dream 4
The Professionals Involved 5
Life Of An Escrow 6
Understanding Escrow 7
Life Of A Title Search 8
Understanding Title Insurance 9
What Happens Next To The Buyer 10
Importance Of A Title Search 11
Title Policy Coverage Comparison 12
Who Pays For What 13
Understanding Recurring And Non-Recurring Closing Costs 14
Common Ways To Take Title 15
Tax Calendar 16
Terms To Know 17
Important Contact Information 18
Welcome to the home buying process. You're about to embark on an exciting journey in securing the home of your dreams. Throughout this process, you can count on Landwood Title Company to guide you smoothly through your transaction, and provide all the answers to your questions.
For over 40 years Landwood Title Company has offered their clients a much appreciated comfort in knowing that their transaction will be handled in an efcient manner by experienced, dedicated professionals. We welcome the opportunity to serve you.
the American Dream
A Realtor® is a licensed real estate agent and a member of the National Association of Realtors®, a real estate trade association. Realtors also belong to their state and local Association of Realtors.
REAL ESTATE AGENT
A real estate agent is licensed by the state to represent parties in the transfer of property. Every Realtor is a real estate agent, but not every real estate agent has the professional designation of a Realtor®.
A key role of the listing agent or broker is to form a legal relationship with the homeowner to sell the property and place the property in the Multiple Listing Service.
A key role of the buyer's agent or broker is to work with the buyer to locate a suitable property and negotiate a successful home purchase.
MULTIPLE LISTING SERVICE (MLS)
The MLS is a database of properties listed for sale by Realtors who are members of the local Association of Realtors. Information on an MLS property is available to thousands of Realtors.
These are the people who carry out the title search and examination, work with you to eliminate the title exceptions you are not willing to take subject to, and provide the policy of title insurance regarding title to the real property.
An escrow ofcer leads the facilitation of your escrow, including escrow instructions preparation, document preparation, funds disbursement, and more.
The Life Of An Escrow
Prepare Escrow Instructions and all pertinent documents Preliminary report received
Order demands at Seller’s request
Buyer and Seller sign Purchase & Sale Agreement (Deposit Receipt)
Buyer’s or Seller’s Broker/Agent opens Escrow Escrow holder orders preliminary report
from the Title company
Receive Demands and review. Notify Seller
Buyer and Seller sign and return Escrow instructions to Escrow
Order Statement of Information on Buyers & Sellers and clear Title General
Order Beneficiary Statement at Seller’s request
Receive Beneficiary Statement. Review terms of transfer and notify Seller Bills from termite company, roofers, appliance inspection
company and home warranty company are forwarded to Escrow at the direction of the Seller
Loan documents received from Lender Buyer’s loan documents executed and returned to
Escrow with funds
Review file to determine that all conditions have been met and all documents properly executed, notarized and good
funds received (for Buyer & Seller)
Final documents sent to interested parties Close file, prepare statement and disburse funds
Loan funds received and deposited
Forward documents to the Title Company And review title insurance requirements
With Title Officer Request funds from the
WHAT IS AN ESCROW?
The escrow is the process of having a neutral party manage the exchange of money for real property. The escrow holder is known as an escrow or settlement ofcer or agent. The Buyer deposits funds and the Seller deposits a deed with the escrow holder along with all of the other documents required to remove all "contingencies" (conditions and approvals) in the purchase agreement prior to closing.
WHY DO I NEED AN ESCROW?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
ESCROW - HOW DOES IT WORK?
The principals to the escrow- buyer, seller, lender, borrower - cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow ofcer. If a broker is involved, he will normally provide the escrow ofcer with the information necessary for the preparation of your escrow instructions and documents.
The escrow ofcer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with YOUR property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with instructions; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms
and conditions have been met; and distributing the funds in accordance with instructions and provide an accounting for same - the Closing or Settlement Statement.
Life Of A Title Search
Escrow Officer Opens Title Orders with Open Order Desk
Customer Service Verifies Legal And Vesting if Needed
Title Orders to Searching Plant
Computerized Property Chains -
General Index Seller/Buyers Searcher Examines - Chain & General Index Title Examiner Completes Search Package
and Writes Prelim Title Report
Word Processing Department Types Prelim
Messenger Service Delivers Prelims to Escrow and Lenders
Escrow Submits New Documents, Demands, & Statements of info To Title Unit Escrow Authorizes Recording Upon
Notification of Funding
Documents Record & Encumbrances of Record Are Paid Off
Title Officer Writes Title Polices Word Processing Dept Prepares Final
Title Policy Sent to Escrow & Lender
The purchase of a home is one of the most expensive and important purchases you will ever make. You and your mortgage lender will want to make sure the property is indeed yours and that no one else has any lien, claim or encumbrance on your property. The following Q&A answers some questions frequently asked about an often misunderstood line of insurance, title insurance.
What is title insurance?
Title insurance is used by homebuyers and lenders for protection against back taxes, undisclosed liens, legal judgments, forgeries, fraud and a host of other potential legal/nancial problems that can arise when purchasing or renancing property. Title companies perform upon an exhaustive search of the public record to identify and correct liens and encumbrances on property. Most of the title insurance premium goes towards identifying and eliminating these potential problems before the close of escrow. Consumers pay only once for title insurance – there are no monthly premiums – for coverage that lasts as long as they own the property.
Who needs title insurance?
Both buyers and lenders in real estate transactions need title insurance. Both want to know that the property they are involved with is insured against certain title defects. Title companies provide this needed insurance coverage subject to the terms of the policy. The seller, buyer and lender all benet from the insurance provided by title companies. Title companies routinely issue two types of policies: An “owner's” policy that insures the homebuyer for as long they own their home; and a “lender's” policy that insures the priority of the lender's security interest over the claims that others may have in the property.
Statement of Information
You will be asked to ll out a Statement of Information that enables the title company to distinguish you from others with identical names during their search of County records. It also provides basic information that will be useful to your escrow ofcer.
Unless you are paying cash, assuming a loan, or the seller is nancing, you will need to apply for a home loan if you have not already done so. Apply as soon as possible to comply with the purchase contract and prior to insuring in order to avoid a delay in the closing.
Response to Seller's Notices
If directed by the contract, you may receive the following items which require a response from you:
Ÿ Seller's property disclosure statement listing any existing problems known to the seller
Ÿ Information pertaining to the Homeowners Association (HOA) or Planned Unit Development (PUD), such as Covenants, Conditions and Restrictions (CC&Rs), if applicable
Ÿ Flood hazard disclosure if the real property is in a ood area
Ÿ Independent inspections, such as termite and septic, and any repairs as required
have questions about the preliminary report, contact your real estate agent or your escrow ofcer.
One escrow transaction could involve over 20 individuals, including real estate professionals, Buyer, Seller, attorney, escrow ofcer, escrow technician, title ofcer, loan ofcer, loan processor, loan underwriter, home inspector, termite inspector, insurance agent, home warranty representative, contractor, roofer, plumber, pool service, and so on. And often one transaction depends on another.
When you consider the number of people involved, you can imagine the opportunities for delays and mishaps. While your experienced real estate professional, escrow, and title team can't prevent unforeseen problems from arising, they can help to ensure as smooth a closing as possible.
to the Buyer?
What happens Next
an unpleasant and costly surprise. Some examples include:
Ÿ Previously undisclosed errors with claims against the property
Ÿ A forged deed that doesn't transfer title to real property
Ÿ Instrument executed under expired or fabricated powers of attorney
Ÿ Mistakes made in public record
themselves against loss or damage due to potential problems with the title to their property.
The Preliminary Report
The title company will perform a title search before issuing a title insurance policy. This Labor intensive process searches the history of the property from the county records. The search results may uncover items that need to be corrected before a clear title can be conveyed, such as:
Ÿ Outstanding Mortgages, Liens, Judgments and tax liens
Ÿ Deeds that contain improper vesting and incorrect names
Ÿ Improper notary acknowledgments
Ÿ Easements and restrictions
The title company will issue a preliminary report on the property. A preliminary report gives the buyer, seller and lender an opportunity to review any potential title defects that are to be cured or shown on the title policy.
Reviewing the preliminary report
Your real estate agent should review the preliminary report as soon as it arrives, paying particular attention to certain areas:
Verify the ownership vesting
The name on the report should match the names on the purchase contract. Sometimes the names of an unexpected owner will appear and a corrective document may be required.
Verify the property address
The plat map and legal description should match the address. An owner could own two properties adjacent to or across the street from each other, causing confusion in identifying the correct property.
Verify the exceptions
Carefully review the exceptions. Common exceptions include current taxes, bonds, Mello-Roos assessment, Covenants, Conditions and Restrictions (CC&R), easements and deeds of trust. Be sure the CC&R's or existing easements don't interfere with the buyer's future plans. For example, an easement across the backyard could have a profound effect on the buyer's ability to add a swimming pool.
Compare the Alta Homeowner's Policy
1 Someone else owns an interest in your title 2 A document is not properly signed
3 Forgery, fraud, duress in the chain of title 4 Defective recording of any document 5 There are restrictive covenants
6 There is a lien on your title because there is: a) a deed of trust
b) a judgement, tax, or special assessment c) a charge by a homeowner's association 7 Title is unmarketable
8 Mechanics lien
9 Forced removal of a structure because it:
a) extends on another property and/or easement b) violates a restriction in Schedule B
c) violates an existing zoning law*
10 Cannot use the land for a Single-Family Residence because the use violates a restriction in Schedule B or a zoning ordinance
11 Unrecorded lien by a homeowners association 12 Unrecorded easements
13 Building permit violations* 14 Restrictive covenant violations 15 Post-policy forgery
16 Post-policy encroachment
17 Post-policy damage from extraction of minerals or water 18 Lack of vehicular and pedestrian access
19 Map not consistent with legal description 20 Post-policy adverse possession
21 Post-policy cloud on title
22 Post-policy prescriptive easement
23 Covenant violation resulting in your title reverting to a previous owner 24 Violation of building setback regulations
25 Discriminatory covenants
26 Pays rent for substitute land or facilities 27 Rights under unrecorded leases
28 Plain language statements of policy coverage and restrictions 29 Compliance with Subdivision Map Act
30 Coverage for boundary wall or fence encroachment* 31 Added ownership coverage leads to enhanced marketability 32 Insurance coverage for a lifetime
33 Policy adopted by the California Land Title Association (CLTA)
34 Post-policy inflation coverage with automatic increase in value up to 150% over five years 35 Post-policy Living Trust coverage
ALTA Homeowners ALTA Standard or CLTA X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
*Deductible and maximum limits apply. Available for certain 1-to-4 unit residential properties. Coverage may vary based on an individual policy.
Please contact your Landwood Title Representative for more information.
Landwood Title Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.
The SELLER can generally be expected to pay for: ! Real Estate Commission
! Document preparation fee for Deed
! Documentary transfer tax (County Tax)
($1.10 per $1,000.00 of sales price)
! Any city Transfer Tax
! Payoff of all loans in seller’s name ! Interest accrued to lender being paid off,
Statement Fees, Reconveyance Fees and any Prepayment Penalties
! Termite Inspection (according to contract) ! Termite Work (according to contract) ! Home Warranty (according to contract)
! Any judgments, tax liens, etc., against the seller ! Tax proration (for any taxes unpaid at time of
transfer of title)
! Any unpaid Homeowner’s Association dues ! Any bonds or assessments ! Any and all delinquent taxes
! Notary Fees ! Escrow Fee
! Title Insurance Premium
The BUYER can generally be expected to pay for:
! Title Insurance Premium ! Escrow Fee
! Document preparation (if applicable) ! Notary Fees
! Recording charges for all documents in buyer’s
! Termite Inspection (according to contract) ! Tax proration (from date of acquisition) ! Homeowner’s Association transfer fee ! All new loan charges
! Interest on new loan from date of funding to 30
days prior to first payment date
! Assumption/Change of Records fees for takeover
of existing loan
! Beneficiary Statement Fee for assumption of
! Inspection Fees (roofing, property inspection,
! Home Warranty (according to contract) ! Fire Insurance Premium for first year
YOURS OR THEIRS - The Personal vs. Real Property Dilemma
The distinction between personal property and real property can be the source of difficulties in a real estate transaction. A purchase contract is normally written to include all real property; that is, all aspects of the property that are fastened down or an integral part of the structure. For example, this would include light fixtures, drapery rods, attached mirrors, trees and shrubs in the ground. It would not include potted plants, free-standing refrigerators, washer/dryers, microwaves, bookcases, swag lamps, etc.
There are two types of costs or expenses in an escrow: the recurring costs and the non-recurring costs. This chart will define and give examples of both types.
Costs which the party pays at closing and will continue to pay after the close of escrow, as part of maintaining the property.
Costs which are charged ONE TIME ONLY as an expense of closing the transaction.
! Fire Insurance Premium
! Homeowner's Association Dues
! Real Property Taxes
! Interest on the New Loan
Recurring and Non-recurring
! Title Insurance Premiums
! Recording Fees
! Endorsement Fees to Title Company
! Sub-Escrow Fee to Title Company
! Reconveyance Fees
! Documentary Transfer Tax
! Escrow Fees ! Notary Fees ! Messenger Fees ! Appraisal ! Credit Report ! Loan Origination ! Loan Processing ! Document Fees
! Tax Service Contract
! Real Estate Broker Commissions
! Fees for Property Disclosures or City Reports
! Transaction Coordinator Fee
! Home Warranty Premium
! Transfer or Document Fees to a Homeowner's Association
Common ways to
TENANCY IN COMMON JOINT TENANCY COMMUNITY PROPERTY
COMMUNITY PROPERTY with Right of Survivorship Parties Division Creation Possession and control Transferability Liens against one owner Death of co-owner Possible advantages/ disadvantages 1
Two or more persons Two or more natural persons Spouses or 2 domestic partners Spouses or 2 domestic partners Ownership can be divided
into any number of interests, equal or unequal Ownership interests must be equal Ownership interests must be equal Ownership interests must be equal One or more conveyances
(law presumes interests are equal if not otherwise specified)
Single conveyances (creating identical interests); vesting
must specify joint tenancy
Presumption from marriage or domestic partnership or can be designated in deed
Single conveyance and spouses or domestic partners
must indicate consent which can be on deed Equal Equal Equal Equal Each co-owner may transfer
or mortgage their interest separately
Each co-owner may transfer his/her interest separately
but tenancy in common results
Both spouses or domestic partners must consent to transfer or mortgage
Both spouses or domestic partners must consent to transfer or mortgage Unless married or domestic
partners, co-owner’s interest not subject to liens of other debtor/owner but
forced salecan occur
Co-owner’s interest not subject to liens of other debtor/owner but forced sale can occur if prior to co-owner’s/debtor’s death
Entire property may be subject to forced sale to satisfy debt of either spouse or domestic partner
Decedent’s interest passes to his/her devisees or heirs
by will or intestacy
Decedent’s interest automatically passes to
surviving joint tentant (“Right of Survivorship”)
Decedent’s 1/2 interest passes to surviving spouse or domestic partner unless
otherwise devised by will
Decedent’s 1/2 interest automatically passes to surviving spouse or domestic partner due to
right of survivorship
Co-owners interests may be
Right of Survivorship (avoids probate); may have tax disadvantages
Qualified surviorship rights; mutual consent required for
transfer; surviving spouse or domestic partner may
have tax advantage
Right of survivorship; mutual consent required
for transfer; surviving spouse or domestic
partner may have tax advantage Entire property may be subject to forced sale to satisfy debt of either spouse or domestic partner
1 “Persons includes a natural person as well as validly formed cooperation, limited partnership, limited liability company or general partnership. Trust property is vested in the trustee (usually a natural person or corporation).
2 Transfers by spouses/domestic partners may require a quitclaim deed from the other spouse/partner for title insurance purposes.
3. If co-Owners are spouses/domestic partners, property may be subject to legal presumption of “community property” requiring consent of both spouses/partners to convey or encumber title notwithstanding vesting as “joint tenancy”
Beginning of the fiscal year.
First SECURED PROPERTY TAX installment is due.
FIRST INSTALLMENT payment deadline. A 10% penalty is added after the deadline.
Second SECURED PROPERTY TAX installment due.
Second SECURED PROPERTY TAX installment payment deadline. A 10% penalty plus $10.00 cost is added after the deadline.
Delinquent SECURED and SECURED SUPPLEMENTAL accounts are transferred to delinquent tax roll and additional
penalties added at 1.5% per month on any unpaid tax amounts, plus $15.00
*If a delinquent date falls on a weekend or holiday, the delinquent date is the next business day.
A change - either to alter, add to, or correct - part of an agreement without changing the principal idea or essence.
An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
Taking over another person's nancial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real property.
The recipient of benets, often from a deed of trust; usually the lender.
Close of Escrow
Generally the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.
Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”
A document through which a conveyance of property is affected.
Deed of Trust
An instrument used in many states in place of a mortgage.
Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.
Earnest Money Deposit
Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.
A right, privilege or interest limited to a specic
Real estate insurance protecting against re, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.
A trust type of account established by lenders for the accumulation of borrower's funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.
A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
A form of encumbrance that usually makes a specic parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.
The instrument by which real property is pledged as security for repayment of a loan.
A payment that combines Principal, Interest, Taxes, and Insurance.
Power of Attorney
A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”
The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.
A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.
Filing documents affecting real property with the
Your Title Order Number Your Escrow Number Your New Address City/State/Zip
Title Ofcer Email
Escrow Ofcer Email
Escrow Assistant Email
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