Title companies generally act as the combined agent of the buyer, seller, real estate agents and mortgage companies related to a real estate transaction. The title company reviews title, issues insurance policies, facilitates closings and files and records paperwork. Title companies review public records related to real estate and inform all interested parties of the status and condition of title to the subject property.
Title companies are often the closing agents for real estate transactions as the agent for each party to the transaction. In its role as agent, the title company obtains signatures on all closing documents and receives and distributes payments related to the conveyance transaction. After all parties have signed the pertinent documents, the title company will record documents in the local county land records office.
Title companies issue policies of title insurance on behalf of title insurance companies. The title company acts as an independent agent of the insurance company for issuing the title policy.
Is a search of the title to my property necessary?
Yes. A professional search tells you and a lender the property is insurable. Because of laws enacted to protect the rights of the owners and heirs to a property, combined with the rights of lien holders, municipalities, and other governmental agencies, research on a title has become a necessity. However, even after extensive research, the main protection an owner or lender has against risk is through the purchase of a title insurance policy.
What is title insurance and why is it important?
Title insurance ensures that you have complete ownership of a property after you purchase it. While this may sound like an obvious consequence of a completed real estate transaction, it’s not: because transferring title to property is relatively easy in Tennessee, all one must do is draft a legal deed and sign it. While every state and local government has provisions that allow you to record such deeds, in most cases recording a deed is NOT absolutely necessary to make the transfer of property both legal and valid. Thus, there’s always a real chance that months or years after you purchase a property, one or more long lost family members will come out of the woodwork claiming that your purchase was invalid because the former owner transferred the property to them first.
Title insurance protects your significant investment in a property you purchased by covering any losses or damages that may result in defects in your legal title to a property. Without title insurance, if there is a defect in title, a person can lose any ownership interest he or she thought they had in the property without any compensation or method of redress.
My lender purchased a title insurance policy on my property – isn’t that enough?
A lender’s policy only protects the lender’s interests, not yours. And, it only goes into effect if the lender takes possession of the property through foreclosure or some other means.
A basic owner’s policy, such as the one we offer, protects you against issues that occurred prior to your purchase date, but have not yet been discovered. For example, it can protect you from previous owners making a claim of ownership on the property, or a special assessment or unpaid property tax that was not found at the time of purchase.
The enhanced owner’s policy* at Southland Residential Title offers more comprehensive coverage. It includes everything the basic policy covers, and also protects you against situations like prior building permit violations, claims against your property that may occur in the future, and more situations.
What makes a title defective?
Any number of problems that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden “defects” are dangerous indeed because you may not learn of them for many months or years. Yet they could force you to spend substantial sums on a legal defense, and still result in the loss of your property. These are just a few examples of what can make a title defective and why you need title insurance.
Documents executed under false, revoked or expired powers of attorney
False impersonation of true land owners
Improperly recorded legal documents
Failure to include rights in another not appearing of record and not disclosed by survey
Defective acknowledgments due to improper or expired notarization.
Mistakes and omissions resulting in improper abstracting
Forged deeds, mortgages, wills, releases of mortgages and other instruments
Duress in execution of wills, deeds and instruments conveying title
Errors in tax records
What are the most common situations covered by title insurance?
The most common situations covered by title insurance are: forged deeds, inaccurate property legal descriptions, heirs claiming an interest in the property, unpaid taxes from a prior owner, no right of access to and from the land, or when someone else has filed a lien against your title.
What should I bring to closing?
Please remember to bring a current photo ID to the closing. If you are the buyer, please bring two forms of ID as many lenders now require a secondary form of identification in addition to a primary photo ID. Examples of secondary ID include (but are not limited to): Voter’s registration card, Military ID card, Social Security Card, State Issued ID card, Passport, etc.).
Let us know as soon as possible if you are not able to attend a closing and/or require a Power of Attorney; please note that a separate POA preparation and recording fee will apply.
Can I write a personal check at closing?
Tennessee’s “Good Funds” law requires that any aggregate amount in excess of $1,000 must be in the form of a cashier’s check payable to Southland Residential Title, LLC, or wired to our escrow account. Please contact us for our wiring instructions. If aggregate funds are less than $1,000, then a personal check is acceptable.
How long will closing take?
Although every transaction is unique, in our experience the closing typically lasts around thirty minutes for a seller and around an hour for a buyer.
As a buyer, when will I know how much money I need for closing, or as a seller, how much I will receive at closing?
If you are buying with a new loan, your lender will be able to give you “loan estimates” of your closing costs and down payment. We, as your closing agent, can give you an exact figure once the lender has provided us with the final loan instructions and closing package. Sometimes these instructions are not provided until a day or even a few hours prior to closing.
As a seller or as a buyer without a new loan, our office would be able to estimate the cost for you in advance of the closing, but final figures may not be available until we have accumulated information such as the exact amount of seller closing costs used (if applicable), insurance premium, title work, tax information, termite and pest inspection fees, surveying fees, or assumption fees (if any), etc. Once again, this information may not be available until immediately prior to closing.
What is the closing disclosure or settlement statement?
The Settlement Statement is the document prepared by the title company at closing which shows where all of the money in the transaction is coming from and going to. It gives a ‘financial picture’ of the closing transaction. At closing, the title company is responsible for preparing the ALTA Settlement Statement in accordance with the contract, lender’s instructions, market practice and state and federal laws.
How much will it cost to close on my purchase?
The closing costs are based on the purchase price or loan amount of the transaction. Therefore, the cost varies because of recording fees, transfer and indebtedness taxes, and title insurance premiums all increase as the purchase or loan amounts increase.
What are the requirements for LLCs/Corporations or Trusts?
We require the above-mentioned entities to provide us with documentation during the closing process that reflects the entity in good-standing status with the state they’re located in as well as authority of members within the entity to sign on behalf of their organization.
For LLCs, we require:
Articles of Organization.
Certificate of Good Standing from appropriate jurisdiction where LLC is formed
Operating Agreement and all Amendments.
Roster of Members with certification that it is complete and current.
In the event that any of the members of the Limited Liability Company is itself an entity, the company reserves the right to require receipt and review of documentation with respect to that organization as well.
A resolution from the LLC authorizing the purchase, conveyance and/or encumbrance together with designation of authorized signatories.
For corporations, we need:
Articles of Incorporation and any other amendments thereto, certified to be true and complete by an officer of said corporation.
Bylaws, certified to be true and complete by an officer of said corporation.
An appropriate resolution by the Board of Directors authorizing the conveyance and/or encumbrance by the Corporation and authorizing certain specifically identified corporate officers to execute, acknowledge and deliver deeds, mortgages and other documents required for the transaction or the same must be contained in the proposed instrument or instruments to be insured.
Certificate of Good Standing from the State of Incorporation. In the event that the Corporation is not incorporated under the laws of the state of the property, a Certificate of Authority to transaction business as a Foreign Corporation within the property state should be provided unless ownership of this property is an isolated act of the corporation in that State.
Proof, satisfactory to the Company, that the sale or transfer of the subject property is not a sale or transfer of all or substantially all of said corporation’s assets. If this is not the case, further requirements may be necessary.
For Trusts, we require:
Copy of the Trust document and any amendments thereto.