This is Title & Escrow Done Right!

Title refers to the legal ownership rights to a home. Before a home purchase or refinance transaction can close, the property must have a clear title, meaning no one has a claim to it in the form of outstanding liens or debts. TEEMA Title is responsible for finding anything that can hinder a clear title, and, if anything is discovered, take corrective action to enable the transaction to go through, allowing you to have title insurance to continue on in the loan process and provide you peace of mind about your investment. 

Although most problems happened before you purchased the property, a title insurance policy provides coverage for any events that may affect your ownership of the property. There are two types of policies available, a lender’s policy and an owner’s policy. 

While a lender’s title insurance policy is required in every purchase or refinance mortgage transaction, an owners’ policy is separate and optional. With that said, buyer protection is recommended to ensure that you, as the new homeowner, are protected from any potential legal issues that may arise from the past. If you do choose to purchase an owner’s policy, it will remain active in the event you refinance your mortgage at a later date.

In the event that there is a claim against your rights of ownership in the property, title insurance covers the cost and fees associated with defending against the title claim. The policy will also cover, up to the face amount, any loss of title or the cost of perfecting the title. Without title insurance, you may be faced with huge legal fees and costs and even the loss of all or a portion of your property. 

Examples of problems that can come up after you purchase your property include:

• Fraudulent acts by prior owners, such as forged documents;
• Impersonation of the true owners of the land by fraudulent persons;
• Execution of the deed by someone who is a minor or otherwise not competent;
• Mistakes in public records or in recording the legal documents;
• Defective acknowledgment due to lack of authority of notary;
• Descriptions that appear to be, but are not, adequate;
• Erroneous location of an ancient pipe or sewer line which does not follow the route of a granted easement;
• Invalid, suppressed, undisclosed and erroneous interpretations of wills;
• Previously undisclosed heirs with claims to the property;
• Tax titles that are invalid because of irregularity in the proceeding;
• Liens for unpaid estate, inheritance, income or gift taxes.

TEEMA Title and Escrow Agency will issue the title insurance, handle the search and review of any claims against the title and prepare for the closing. We also typically manage the escrow account, which holds funds that must be set aside for the home purchase or refinance until certain conditions are met or the transaction is complete and the funds are disbursed to the necessary parties. 

For example, if you’re buying a home and you’ve made an earnest money deposit, those funds will usually be held in the title company’s escrow account. While the title company may not seem as present during a loan transaction as your real estate agent or lender, they are an equally important part of the team. The work we are conducting behind the scenes is crucial to make sure you get to the closing table.

1) Title Search and Examination

One of the first steps in the title process involves a bit of detective work. TEEMA will do some research to learn about the history of the property. This is commonly referred to as a title search. For all transactions, this search will show the home’s past ownership details and uncover any red flags that could halt the home sale or refinance.

For home purchase transactions, the title search will also identify all owners who have interest in the transfer of the property and who will be required to execute vesting documents at the time of closing.

TEEMA will also look for and examine liens or judgments against the property for bankruptcy cases, divorce agreements, outstanding mortgages, overdue property taxes, and other debts. These outstanding balances must be paid before the transfer of ownership. A title search may also reveal property restrictions or limitations. Some details that might arise are:

• Boundary issues, if the home or other structures were built outside of property lines
• Easements that could give other parties, such as utility companies, government agencies, or businesses access to your land
• Restrictions or historical status that could mean certain rules must be followed on how you can change or modify the home

The purpose of these exams is to protect you and the lender from being on the hook for any unresolved title issues—for example, mistakes in public records, erroneous surveys, or property or building code violations. It’s important to discover these issues before closing, so that you don’t inherit these problems.

If any snags arise during a title examination, not all will necessarily prevent you from closing. The property title must simply be clear before you can buy the home or refinance your mortgage. If there are any holdups that could prevent you from closing, your TEEMA Escrow Officer will communicate these to you or your agent as soon as they are identified.

2) Fix and Resolve Title Issues

If TEEMA finds any issues, we can start working to resolve them immediately to keep your closing on schedule. We may chat with the seller to learn more about ownership disputes, and they may ask for paperwork to prove someone else doesn’t own the home. For example, if the problem involves an unpaid roofing bill, TEEMA may need to resolve it with the current owner and contractor.

3) Issue Title Insurance

After TEEMA is confident that a property is free of title defects, we move forward and issue title insurance policies. This protects both homebuyers and lenders against claims for things that happened in the past, such as previous owner liens or ownership issues.

While a lender’s title insurance policy is required in every purchase or refinance mortgage transaction, an owners’ policy is separate and optional. With that said, buyer protection is recommended to ensure that you, as the new homeowner, are protected from any potential legal issues that may arise from the past. If you do choose to purchase an owner’s policy, it will remain active in the event you refinance your mortgage at a later date.

4) Settlement and Signing

With a clear title and title insurance policy—and after all other items required by the lender are complete—TEEMA can schedule a closing date, which is also known as the settlement date. TEEMA will work together with the lender to prepare the closing paperwork.

On settlement day, you should be prepared to sign your closing package documents, which include purchase or refinance mortgage paperwork. For a home purchase, it will also include the transfer of ownership agreement for the property.

You may also need to write a check or wire money for closing costs and mortgage escrow for homeowners insurance and property taxes. After signing and notarizing all the necessary paperwork, TEEMA will review all documents again before sending them to the lender. Once all of the paperwork is approved, the lender will wire the funds to TEEMA to disburse.

5) Mortgage Recording and Funding

If everything on your closing day goes according to plan, TEEMA will submit your mortgage for recording at the county records office. Then, local officials will make note of the details for public record. At this point, TEEMA will disburse funds for the new mortgage loan, and taxes and homeowners insurance (if applicable). If you’re refinancing, TEEMA will pay off your previous mortgage and, for any cash-out mortgage refinancing, send you funds.