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What is Title Insurance and Why Do I Need It?
Protect Your Monday from Wire Fraud Schemes When Buying a Home
What To Expect During The Closing Process
Understanding the Closing Disclosure
Understand the Loan Estimate
A title insurance policy protects the insured against any loss suffered as a result of the title to land not being as represented in the policy. It is a one time premium insuring protection as long as the buyer owns the property. The seller provides an Owner’s Title Insurance Policy to the buyer; the buyer provides a Lender’s Title Insurance Policy to the lender. Unlike other kinds of insurance, title insurance insures against past events, affecting the right to real property, rather than unforeseen future events.
You need title insurance because any home, no matter how new or apparently secure, is built on land as old as the earth itself. Undoubtedly, this land has had many previous owners. Claims against any one of these persons can be filed against the property and against you as the present owner. Such hazards as fraud, missing heirs, old liens and, many others can and sometimes do, arise like ghosts out of the past. Title insurance protects you against claims and title faults. It makes your home safely yours. Your title insurance policy is your shield of protection and will defend your ownership against loss. Your protection and peace of mind last as long as you and your heirs remain in ownership.
Unlike the annual premiums of most other forms of insurance, you pay a small, one-time premium for title insurance. The premium will depend on the type of coverage you and/or your lender request. In cases where discounts are available, Pacific Northwest Title will always quote the lowest rate.
There are two basic types of title insurance policies: an Owner’s Policy and a Lender’s Policy.
Owner’s Policy:
Owner’s title insurance, which the seller typically pays for at closing, is issued generally for the amount of the purchase price. It protects the purchaser and the purchaser’s heirs as long as they own the property.
Lender’s Policy:
Most lenders require title insurance as security for their investment in the property. The borrower typically pays for the Lender’s Policy, which is issued for the loan amount.
Based on the results of the title examination, Pacific Northwest Title will issue a Preliminary Title Commitment for Title Insurance. The title commitment will include the following:
Washington State is a community property state. If marital status is not disclosed on the Deed, the property purchased is presumptively subject to the community interest of the purchaser’s spouse, if married. In order to avoid confusion, be sure to include marital status on all Deeds. Below are some examples of how to vest individuals, marital communities, registered domestic partnerships, trusts and business entities.
Purchased by a single individual:
– John A. Smith, a single man
Purchased by husband & wife/ a married couple:
– John A. Smith and Jane A. Smith, husband and wife -OR-
– John A. Smith and Mike Jones, a married couple
Purchased by a registered domestic partnership:
– John A. Smith and Joseph B. Jones, a Registered Domestic Partnership
Purchased by a married person or a registered domestic partner as their separate estate:
– John A. Smith, a married man, as his separate estate -OR-
– John A. Smith, A Registered Domestic Partner, as his separate estate
Note: In order to insure the separate estate of a married person or a registered domestic partner a conveyance from their spouse or registered domestic partner may be required.
Purchased by two single individuals as tenants in common and not with rights of survivorship:
– John A. Smith, a single man and Jane A. Smith, a single woman, each as their separate estate
Purchased by two single individuals as joint tenants with right of survivorship:
– John A. Smith, a single man and Jane A. Smith, a single woman, as joint tenants with rights of survivorship
Note: In order to establish the Joint tenancy, the Statutory Warranty Deed may need to contain verbiage that the Grantees/buyers understand they are purchasing as Joint Tenants with rights of survivorship. Parties should consult their attorney for information pertaining to joint tenancy.
Purchased by a Trust:
– John A. Smith, Trustee of the John A. Smith Family Trust dated January 1, 2010
Purchased by a Limited Liability Company:
– Smith and Company, LLC, a Washington Limited Liability Company
Purchased by a Limited or General Partnership:
– Smith and Sons, LP, a Washington State Limited Partnership
– Smith and Sons, a General Partnership
Closing (also referred to as “settlement” or “escrow” in many parts of the country) is the process whereby an impartial third party, such as an attorney, an escrow company or a title company, is entrusted with the job of seeing the transfer of ownership from the seller to the buyer and takes place according to the terms of the written contract agreed upon by all parties involved. The closing agent keeps or holds any funds or documents safely until all the details have been finalized and disburse them to the proper parties at the proper time. At the actual time of the closing, all the parties sign their appropriate documents. The seller will be asked to provide clear title to the property and the buyer will be asked to provide the funds needed to close the sale. If there is a mortgage or loan involved, the closing of the mortgage also takes place at this time.
Anyone who is involved in the transaction may “open escrow”. Generally, the real estate agent takes the initiative and opens escrow. In “for-sale-by-owner” transactions, in which no agent is involved, either the buyer or the seller or both may open escrow.
If any party needs to extend the closing date of the escrow, all parties must sign and agree to an
Addendum or Extension to the original purchase agreement contract. Be careful the extension does not interfere with the lender’s obligation for a closing date.
When a loan is applied for, a Loan Estimate is generated by the lender. This gives an “estimate” of closing costs. At signing, the parties review a copy of the Closing Disclosure. This is the actual final statement of the settlement fees to be incurred at closing. Closing Disclosure will list various fees, depending on the transaction such as: sales commission, loan origination fee, loan discount points, appraisal fee, credit report fee, assumption fee, any prepaid interest, mortgage insurance premium, first year’s homeowner’s insurance premium, mortgage insurance escrow account, if any, recording fees, transfer tax, property survey fee, termite report fee, any homeowner’s association fees, and any other fees specific to the particular purchase. If there is no loan, the closing agent will give the buyer a settlement or closing statement to review prior to closing.