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Title Company
2. In the event that you wish to use a Power of Attorney, arrangements must be made one (1) to two (2) weeks in advance with the escrow officer and the Power of Attorney must be approved by the buyer’s lender and your title company. 3. Should the funds deposited in escrow be insufficient for closing, you will need to bring a cashier’s check or certified check to the title company for the remainder of the purchase price. Either type of check should be from a Washington state bank or savings & loan and should be issued in the exact amount of the balance due. The amount of the balance may be obtained by phoning the escrow officer prior to signing the papers. The check should be made payable to your escrow company.
Common Questions & Sources for Assistance
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Details or your sales agreement: Real Estate Agent Possession and key to your new home: Real Estate Agent Loan requirements and financial matters: Lender, Mortgage Company or Real Estate Agent Escrow instructions: Title Company, Escrow Officer or Escrow Assistant
After the Sign-Off
After you and the seller have signed all necessary instructions and documents, the escrow officer will return them to the new lender for a final review. Following the review, the lender is ready to fund the buyer’s loan and advises the escrow officer so that the necessary work can be completed to record the documents and “Close” the escrow.
Escrow closing signifies legal transfer of title to the property from the seller to the buyer and is the culmination of the transaction.
Usually the Statutory Warranty Deed and Deed of Trust are recorded the same working day as escrow’s receipt of loan funds. This completes the transaction and signifies the “close of escrow.” Once all the conditions of the escrow have been satisfied, the escrow officer advises you of the date the escrow will close and takes care of the technical and financial details including paying off the sellers loan.
What a Title Company Does
A Preliminary Report shows the condition of title before a sale or loan transaction. After completion of the transaction a title insurance policy is issued.
Title Policy is insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances on the property. Drafts a Deed of Trust along with other necessary documents. This document is filed with the county showing a property is transferred to a trustee by the borrower (trustor) in favor of the lender (beneficiary) and reconveyed upon payment in full. Pays off existing loans when so ordered. Taxes and insurance are prorated upon instructions from the buyer and seller.
Computes interest on loans. Acquires hazard insurance. Signing of documents is assisted Records the appropriate documents with the county recorder’s office, giving public notice. Disburses the documents and money to each party involved.
What’s the coverage?
(The best resource is the title office listed who prepared the Preliminary Report ~ call them)
Owner’s Insurance
The ALTA Standard Coverage Policy is designed to insure the owner of any type of real property (commercial, industrial, vacant land, residential) against loss by reason of those matters covered under the policy of insurance.
What is covered?
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3. Some of the coverage’s provided under the ALTA Standard Coverage Policy are: Title to the real property owned by a person other than the insured
Defects, liens and encumbrances upon title which are recorded
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6. Lack of a right of access to and from the real property The insured has a marketable interest in the real property
There are no forgeries or failed conveyances in the chain of title
What is not covered?
Some of the matters not covered by the ALTA Standard Coverage Policy are:
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6. Matters which a correct survey would show
Unrecorded matters
Matters which a physical inspection of the real property would disclose
Rights of parties in possession Unpatented water and mineral rights Matters known, created or assumed by the insured
ALTA Homeowners Title Insurance Policy
(American Land Title Association)
The ALTA Homeowners Title Insurance Policy is designed to insure the owner of residential property (one-to-four family residences), including condominiums, against loss by reason of those matters covered under the policy of insurance.
What is covered?
The ALTA Homeowners Title Insurance policy provides all of the coverage’s afforded the ALTA Standard Coverage Policy, plus:
1. Mechanic’s lien protection arising out of work done on the real property for which the insured did not agree to pay
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4. Rights under unrecorded leases Unrecorded easements
Forced removal of dwelling structure upon adjoining real property
ALTA Extended Owners Policy
(American Land Title Association)
The ALTA Owner’s Policy is designed to insure the owner of real property against loss by reason of those matters covered under the policy of insurance. Do not confuse this policy with the ALTA Residential Title Insurance Policy. The ALTA Owner’s Policy is the broadest form of insurance provided an owner of any type of real property (commercial, industrial, vacant land, residential)
What is covered?
The ALTA Extended Owner’s Policy provides all of the coverage’s afforded under the ALTA Standard Coverage Policy, plus:
1. Matters which a survey would disclose
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Easements not disclosed by the public records
3. Encroachments, discrepancies or conflicts in boundary lines not shown by the public records
4. Rights of parties in possession
What is not covered?
Like all policies of title insurance, the ALTA Owner’s Policy does not provide coverage against matters known, created or assumed by the insured.
Additional requirements
Since the ALTA Owner’s Policy provides such a broad coverage, additional requirements for the issuance of the policy may include:
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4. A correct survey
A field inspection
A check of all utilities to make sure that they have no unrecorded easements Copies of all leases and/or tenant lists
Since these requirements take time to complete, plan accordingly. Furthermore, the policy may contain further exceptions. Therefore, so not necessarily expect a clean report.
Understanding Preliminary Reports
After months of searching, you have found it – your perfect dream home. But is it perfect?
Will you be purchasing more than just a beautiful home? Will you also be acquiring liens placed upon the property by prior owners? Have documents been recorded that will restrict your use of the property?
The Preliminary Report will provide you with the opportunity, prior to purchase, to review matters affecting your property which will be excluded from coverage under your title insurance policy unless they are removed or eliminated before your purchase.
What is a Preliminary Report?
A Preliminary Report is a report prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, together with the liens and encumbrances thereon, which will not be covered under a subsequent title insurance policy.
What role does a Preliminary Report play in the real estate process?
A Preliminary Report contains the conditions under which the title company issues a particular type of title insurance policy. The Preliminary Report lists, in advance of purchase, title defects, liens and encumbrances which would be excluded from coverage if the requested title insurance policy were to be issued as of the date of the Preliminary Report. The report may then be reviewed and discussed by the parties to a real estate transaction and their agents.
Thus, Preliminary Report provides the opportunity to seek the removal of the items referenced in the report that are objectionable to the buyer prior to the purchase.
When and how is the Preliminary Report produced?
Shortly after escrow is opened and order will be placed and the title company will begin the process involved in producing the report. This process calls for the assembly and review of certain recorded matters to both the property and the parties to the transaction. Examples of recorded matters include a deed of trust recorded against the property, or a lien recorded against the buyer or seller for an unpaid court award or unpaid taxes.
What should I look for when reading my Preliminary Report?
You will be interested, primarily, in the extent of your ownership rights. This means that you will want to review the ownership interest in the property you will be buying as well as any claims,
restrictions or interests of other people involving the property.
The report will note a statement of vesting the degree, quantity, nature and extent of the owner’s interest in the real property. The most common form of interest is the “fee simple” or “fee”, which is the highest type of interest an owner can have in land.
Liens, restrictions and interests of others which are being excluded from coverage will be listed numerically as “exceptions” in the Preliminary Report. Among other things, these might be claims by creditors who have liens or liens for payment of taxes or assessments. There may also be recorded restrictions that have been placed in a prior deed or contained in what are termed CC&Rs (Covenants, Conditions and Restrictions).
Interests of third parties are not uncommon and may include easements given by a prior owner that limit your use of the property. When you buy property you may not wish to have these claims or restrictions on your property. Instead, you may want to clear the unwanted items prior to purchase.
In addition to the limitations noted above, a printed list of standard exceptions and exclusions, listing items not covered by your title insurance policy may be attached as an exhibit item to your Preliminary Report. Unlike the numbered exclusions, which are specific to the property you are buying, these are standard exceptions and exclusions appearing in all title insurance policies of the type anticipated by the Preliminary Report. The review of this section is important as it sets forth matters which will not be covered under your title insurance policy, but which you may wish to investigate, such as governmental laws or regulations regarding building and zoning.
Can I be protected against title risks prior to the close of the real estate transaction?
Yes, you can. Title companies can protect your interest through the issuance of “binders” and “commitments.” A binder is an agreement to issue insurance giving temporary coverage until such time as a formal policy is issued. A commitment is a title insurer’s contractual obligation to insure title to real property.
Discuss with your title insurer the best means to protect your interest.
How do I go about clearing unwanted liens and encumbrances?
You will wish to carefully review the Preliminary Report. Should the title to the property be “clouded”, you and your agents will work with the seller and the seller’s agents to clear the unwanted liens and encumbrances prior to your taking title.
Explanation of Preliminary Reports
A Preliminary Report will usually contain the following elements:
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12. The name of the person or firm that requested the Preliminary Report (PR).
The address of the subject property. The Title Company’s file number.
The applicant’s file number or reference number.
A paragraph stating that no liability is ever intended under a PR and indicating what should be requested if the customer desires assumption of liability prior to policy issuance.
The most recent date and time that the public records have been searched. In other words, a lien or Deed of Trust recorded after the dates shown would not be disclosed on the PR.
The name of the title officer who produced the PR and who may answer questions about the report (requests for information about the status of the escrow should be directed to the Escrow Officer).
The office address and telephone number of the title company issuing the PR. A paragraph describing the interest in the land that is covered by the report. For example: A fee. A condominium. A leasehold.
A paragraph telling you that in addition to the standard printed exceptions there will appear in the title policy exceptions which pertain specifically to the estate in question.
A legal description of the property which should be used for preparing any documents that will be recorded.
A site or plat map of the property described in the report.
The exceptions to each parcel of land are different due to the unique nature of real property. Below is a discussion of some of the more common exceptions that you may see during your review of a Preliminary Report.
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2. Property Taxes. Each year on February 15 the lien of the following year’s property tax attaches to the land, pursuant to law. Property taxes are assessed on the calendar year. Taxes become delinquent May 1 for the first half and November 1, for the second half.
Easements. Easements are a right to use the land of another for specific purposes. Easements can be created in a number of ways, including dedication on a subdivision map or a Grant of Easements to another party.
