What is the difference between title and escrow?
The Title Company is the insurance company that issues the Title insurance Policy. Escrow is the company hired as the third party “neutral” closing and settlement agent. The Title and Escrow company may be the same but often times are not.
What risks are associated with the Commitment for Title?
- Failure to review the form in a timely manner
- Failure to recognize provisions that preclude the buyers intended use of the property
- Failure to understand the implications of the provisions within the form
- Delayed closing
What is the significance of the Title Commitment?
- Sets forth the conditions under which the title is insured
- Sets forth any exceptions to full coverage
- Gives the buyer the opportunity to disapprove any exceptions
What risks for licensees and brokers are associated with failing to review the Title Commitment?
- Items within the Title Commitment may relate directly to contractual terms and conditions
- Failure to recognize property conditions the seller may not be aware of
- Failure to identify important disclosures related to property condition
- Failure to discover problems that may delay closing
What is the difference between a Title Officer and an Escrow Officer?
A title officer is the individual who researches and prepares the commitment for title. They work for the Title Insurance Company. The escrow officer is the individual who works as the “neutral” third party in a closing and settlement capacity. The escrow officer works for the Escrow Company.
What information is contained in Schedule A?
- Proper identification of the property
- Accurate title insurance information
- Verify the best available title insurance policy will be issued
What are the risks for buyers failing to review Schedule B?
- Inadequate title insurance coverage
- Failing to obtain coverage for buyer’s intended use of the property
- Failing to identify exceptions to the insurance coverage
- Incurring fees related to uninsured property conditions
What are the buyers options if they have concerns related to exceptions within Schedule B?
- Seek the advice of an attorney immediately
- Negotiate with Title for the removal of the exception
- Seek an endorsement to cover damages resulting from a specific defect
What is the difference between a special warranty deed and a general warranty deed?
A general warranty deed is a promise to the buyer that the seller will warranty any prior problems with title, not just during the seller’s ownership, but back along the chain of ownership.
A special warranty deed, on the other hand, limits the seller’s promise — or warranty — to title problems that come up while the seller owned the property.
What are the types of title polices that can be issued?
Lender’s Policy – Covers the Primary Lender for the life of the loan. As the loan is paid down, the coverage goes down with it. When the loan is paid off (either through life of loan payments or refinance) the Policy is no longer in affect.
Owner’s Policy – Covers the new owner for the history and prior owner acts affecting the property. Owner’s Policy is in effect for as long as the new, current owner owns the property 1 year or 100 years. Acts of new owner after issuance are not covered, only prior owner acts at time of purchase. Per line 104 the seller pays the owner’s title policy cost.
What is the role of the Title Company?
A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property. Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title.
Title companies also often maintain escrow accounts — these contain the funds needed to close on the home — to ensure that this money is used only for settlement and closing costs, and may conduct the formal closing on the home. At the closing, a settlement agent from the title company will bring all the necessary documentation, explain it to the parties, collect closing costs and distribute monies. Finally, the title company will ensure that the new titles, deeds and other documents are filed with the appropriate entities.