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    Ask the Expert Series: Title & Settlement Services

    Marty Stanton

    We continue to bring you expert information directly from the professionals typically involved in a real estate transaction. Next in our Ask the Expert series of blog posts is an interview with Marty Stanton, a Partner at KVS Title.  Here are the answers, direct from an expert, to the questions you most frequently ask us.

    1. What is a title?

    A title in real property transactions (buying and selling residential homes and commercial property) is the manner in which a person or entity wishes to transfer and hold these assets.  Titles must be sold “free and clear” of liens and encumbrances which may be secured against the property.  An example of such a lien is a  mortgage loan used to finance the property.  In order to convey title the seller would need to pay the mortgage loans off.  Title to property may be held in a variety of ways depending on the State laws where the property is located.  In Maryland, Virginia and the District of Columbia most people take title in the following way: sole ownership, tenants in common, joint tenants and tenants by the entirety.  Check our future posts for a detailed analysis of each type of tenancy.

    2. What is title insurance? And what does it cost? Do homeowners have to pay an annual premium?

    Title insurance is a safeguard against loss due to unknown defects found in the title to your property.  The cost of title insurance is different based on the jurisdiction where the property is located.  The great thing about title insurance for buyers is you pay for your policy only once and it covers you over the life of your ownership.

    3. Why buy a title insurance policy if a title company has carefully searched the records and title is found to be good?

    The insurance is protection from the hidden risks that could threaten a title even after the most careful title search is completed.  Examples of such risks include fraud, false impersonation, forgery, undisclosed or missing heirs, and mistakes in recorded legal documents.  Buying a home is the single largest purchase many people make in their lifetime and to not purchase insurance against potential loss is a very risky endeavor.

    4. My lender has a mortgage title policy on my property. Why isn’t that enough?

    There are two types of title insurance policies, one to protect the lender’s interest for the amount of the loan, the other to protect the buyer.  If there is a title claim made against the lender’s policy it does not protect the buyer.  A claim against title and the cost to defend it can be very expensive.  The cost of an Owner’s title insurance policy will be worth it’s wait in gold if a claim arises.

    5. What does a title company do other than research the title and prepare the title insurance policy?

    The title company has a fiduciary responsibility to all parties in the transaction: the buyer, seller and lender.  The title company in essence makes sure that the terms of the contractual agreement between the parties and the requirements made to provide the financing are met.  The title company coordinates with each party to gather the necessary information and to organize and disclose that information so the settlement process is smooth.

    6. What is closing?

    Closing is the event where all of the legal documents in the transaction are approved, signed and delivered by the parties.  In order for closing to take place the title company must be in receipt of all of the funds necessary to complete the transaction.  In Maryland and the District of Columbia funds are disbursed at the time of closing.  In Virginia funds are not disbursed until after the deed transferring title from seller to buyer is recorded.

    7. Do I need an attorney for closing? 

    In Maryland, District of Columbia and Virginia closings are completed by licensed title insurance officers and attorneys.  These individuals are to remain neutral because they do not represent any of the parties.  It is customary in other parts of the country for each party to be represented by an attorney.  A buyer and seller can bring their own representation to closing but it is not customary in this area.

    8. What items do I need to bring to closing?

    You will need to bring:

    -Funds for closing in the form of a cashier check or wire from your bank.

    -Photo identification. A valid state-issued driver’s license, passport, military or state issued identification card are acceptable.

    -Any items required by the lender as a condition of closing that have not already been satisfied.

    -Any items required by the title company as a condition of closing that have not already been satisfied.

    -A personal check in case additional funds are needed.

    If you have additional questions about title services or the settlement process, post them here and we’ll get them answered.  For more information about KVS Title check out their website.  Please feel free to contact Marty Stanton directly at marty@kvstitle.com

     

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