Tag: ALTA

Closings with Karissa: Why Title Insurance?

I routinely hear the question: Is Title Insurance worth it?. My answer, is yes, it is quite important. You wouldn’t buy a house without homeowners’ insurance or buy a car without car insurance. I’m sure you have Health and Life insurance. If you are protected in other aspects of life, why would you not protect the title to your home as well?  and does not have liens attached? The best part is that title insurance is a one-time fee that is paid at closing and you never have to worry about it again. As long as you own the property it is protected. So it would be crazy not to do it!

Who thought up Title Insurance… and why?

Title Insurance used to be done by opinions given by Conveyancers prior to 1876 when Joshua Morris founded Real Estate Title Insurance Company of Philadelphia.  The purpose was to have land conveyances financially guaranteed instead of the old system of relying on opinion-based reporting without financial backing.  Now, instead of “trust me” the industry offered “if we are wrong, I will pay you.” Other companies in Chicago, Los Angeles, Minneapolis and New York followed shortly after and ALTA was created to assist in standardizing and unifying the Title Insurance industry.

What is ALTA?

In 1907 the American Land Title Association (ALTA) formed as the primary association of the Title Insurance industry. The association set the precedence for title insurance, they did not standardize title insurance policies nationally until 1929.

What can Title Insurance protect against?

Title insurance protects against hidden issues, liens and encumbrances that can be costly to the new homeowner. The following are examples of potential issues:

  • Lack of Access
  • Unpaid Mortgage
  • Seller claims to have ownership, but do they really?
  • Neighbors have an easement through the property
  • Previous owners deceased family member is buried on the property
  • Legal Judgment for previous owner that attached to the property

No one is exempt from uncleared title issues. Even Abraham Lincoln’s father lost his home to title defects when Abe was a little boy…Twice.

So, why title insurance?

No one wants to live with the fear of losing their home due to a claim by someone else or from a lien that could put their home in foreclosure. Especially if they the option to have an insurance policy that says they own their home and no one else has a claim to it. Title Insurance, while not required, is still very important.

Title Insurance can sometimes be overwhelming and appear confusing.  However, the Tallgrass Title team is here to assist with your title insurance questions, just give us a call!

 

Closings with Karissa: Settlement Statements

As we prepare to close a transaction, we create settlement statements, which are documents demonstrating all debits and credits associated with the transaction. The American Land Title Association (ALTA) has provided a standard template for these forms, so they are recognizable and readable, no matter which title company you close your next transaction with. Whether the transaction is cash or financed, our office will provide ALTA Settlement Statements to both the Buyer and Seller. The Buyer and Seller statements are unique to their respective side of the closing and can only be shared with the other party if we have express permission in writing.

Sellers

When reviewing the Seller Settlement Statement you will find the sales price, any applicable credits the Seller gave to the Buyer in the contract, a tax proration (either a credit or debit depending on the time of year and if Seller paid them prior to closing or not), title expenses that consist of closing fees and title insurance premiums owed to the title company, any commissions due to realtors, payoffs of current liens, and any invoices or repairs that the Seller has agreed to pay for.

Buyers

When reviewing the Buyer Settlement Statement you will find the sales price, any applicable loan amounts, any applicable Seller credits the Seller agreed to within the contract, a tax proration (either a credit or debit depending on the time of year and if Seller paid them prior to closing or not), loan closing charges determined by the lender, impounds for the Buyers new escrow account collected at closing by the lender, title expenses that consist of closing fees and title insurance premiums owed to the title company, recording fees to file the deed and mortgage of public record with the county register of deeds office, and fees for any inspections or additional work the Buyer has requested prior to closing.

Buyer Settlement Statements may also be referred to as Buyer Settlement Statements.

Bottom Line

Both the Buyer and Sellers statements will include an amount that is either due from or due to that party.  If an amount is due from, this represents the amount due to the title company to close the transaction. If an amount is due to, then you should expect a proceeds check following closing!

This Buyer/Borrower settlement statement reflects the amount the due from the borrower in order to finalize the transaction.
This Seller settlement statement reflects the proceeds the seller will receive after all seller costs are paid.

Signing

As part of “closing” Buyers and Sellers need to review and sign their respective ALTA settlement statements in order to acknowledge their acceptance of the breakdown of debits, credits, and bottom line.

Sellers are more than welcome to sign in our office, with their realtor, on their own or electronically.

Buyers of cash purchases can do the same as above but in the case of a loan will need to sign with the title company, lender or mobile notary.

Questions?

If you have questions about you or your client’s ALTA Settlement Statement, give us a call! We are here to help make this a positive experience.

Closings with Karissa: Property Taxes

Closings with Karissa is back with a few helpful reminders on property taxes and second half payments.

It’s that time of year again.

Real estate taxes are due to the county treasurer. Do you pay them before closing? Will the Title Company pay them before closing? What if the seller’s lender pays them before closing and the Title Company collects for them too? These are some of many questions that might swirl around homeowners’ heads right before closing.

First & Second Half

Taxes are available for payment in November of the current year with due dates of December 20th of the current year and the following May 10th. Taxes can paid in full in December or paid half and half in December and May. They first half is considered delinquent on December 21st and will start accruing late fees and penalties on that date. The second half is considered late on May 11th and will start accruing late fees and penalties on that date. If your closing is taking place after one of those dates and you do not have taxes set up in escrow, it is advisable for payments to be made prior to closing to avoid extra charges.

Taxes & Your Closing

Taxes are considered a lien on real estate. They are always there (unless the landowner is tax exempt) and will be in first lien position to all other liens – including mortgages. This means that taxes will always be paid out first in the event of a court action and your closing agent will make sure that tax payments are up to date.  If current taxes are not yet paid, they will apply that payment to your settlement statement to be paid at closing, including any applicable fees.

If closing takes place in October or November, it is likely that the seller rather than the buyer will receive the annual tax statement.  This is because the county treasurer’s office may not have new owner information updated prior to mailing out November tax statements.  If this happens the taxes are still the responsibility of the party that agreed to pay the year’s taxes as part of the real estate contract.

Things to remember:

  • Taxes are due December 20th and May 10th
  • The Title Company will pay off taxes based on the terms of the contract
  • The Title Company will never keep funds collected for taxes already paid, they will always refund payments rejected by the treasurer for previous payment.

If you have more questions about taxes, please reach out to your closing agent and they will walk you through taxes and prorations. It is our job and our pleasure at Tallgrass Title!