When does Title Processing begin?
Title processing begins after a purchase agreement (also known as a sales contract) is signed by both the buyer and the seller.
Opening Escrow
An escrow account (also known as file number) is opened after the contract is signed. This account holds the buyer’s earnest money deposit until the closing.
What is a Property Title?
A property title is a legal document that establishes the ownership of a property. It includes details about the property and its ownership history, any liens or encumbrances, and legal rights associated with the property. .
Steps in Property Title Processing
Title Search
Verifies the legal owner of the property and ensures there are no disputes or claims (such as liens, unpaid taxes, or legal judgments) against the property.
The search is of public records to trace the history of the property’s ownership (chain of title) and identify any encumbrances or issues.
Outcome: If the title search reveals problems (e.g., unresolved liens or ownership disputes), these must be resolved before the transaction can proceed.
Title Report / Title Commitment
After the title search, the title company issues a title report or title commitment that outlines the findings. This includes the legal description of the property, any easements, restrictions, and potential issues. The title commitment is a promise to insure the title conditions are satisfied before a title insurance policy is issued.
The buyer and seller review the title report to ensure all parties are aware of the property’s status and any potential concerns.
Title Searches are good for one year.
Municipal Lien Search
A municipal lien search is an important step in the real estate due diligence process when buying a property. It involves checking for any outstanding financial obligations such as unpaid property taxes (which is also on the title commitment), code violations, open or expired permits, unpaid utility bills and special assessments that might be owed to the local government or municipality for city’s special projects such as road improvements, sewage system upgrades, etc.
Municipal Lien search reports are good for 90 days.
HOA Estoppel Letters
If the property has an HOA then an HOA estoppel letter is required. An estoppel letter is a legally binding document provided by the homeowners association that outlines the current financial status of a property within the association. It certifies any outstanding fees, dues, or assessments that the seller owes to the HO as well as any association violations.
It ensures that the buyer is aware of any outstanding financial obligations before purchasing the property. It protects the buyer from inheriting the seller’s debts to the HOA.
In some instances some HOAs charge a fee to process the transfer of the property to the new owner and may have a capital contribution which is a one-time fee required from the new owner when joining the HOA.
Fees and unpaid debt must be paid by the seller and buyer (according to the estoppel letter) at closing and they will be disclosed in the settlement (closing) statement.
HOA Estoppel Letters are good for 30 days.
Closing
The buyer conducts a final walkthrough of the property, usually within 24 hours of closing, to ensure that the property is in the same condition as when the offer was made and that any agreed-upon repairs have been completed.
During closing, the buyer and seller sign all necessary documents. More often then not th seller pre-signs their conveyance documents and the buyer signs the day of the closing.
The conveyance documents include the warranty deed, which transfers ownership of the property.
The title company ensures that the deed is properly executed, and it is then recorded in the public records, officially transferring ownership to the buyer.
Post-Closing
Recording: The deed and other relevant documents are recorded in the county recorder’s office to make the title transfer a matter of public record.
Once the deed is recorded, the title company issues the final title insurance policy to the buyer and the lender (if applicable).
Final Documentation: The buyer receives a copy of the recorded deed and the title insurance policy.
Moving In
The buyer takes possession of the property, which may be immediately after closing or at a later agreed-upon date (with a post occupancy agreement).
Secure your new home
Change the Locks.
Install a Security System.
Check and Replace Smoke and Carbon Monoxide Detectors.
Reprogram Garage Door Openers.
Transfer Utilities such as electricity, water, gas, internet, cable, etc.) into your name. Ensure that these
Find the schedule for trash and recycling Services. Local waste management service to set up trash and recycling collection.
Mortgage Payments
If the buyer has a mortgage, they will be informed of when and how to make their first mortgage payment.
Homestead Exemption*** Check the Homestead tab to get an in depth explanation. .
Important Considerations
- Working with Professionals: It is essential to work with a reputable title company or real estate attorney to navigate the complexities of title processing.
- Understanding Title Issues: Be aware that some title issues can take time to resolve, potentially delaying closing. Early identification and action are key.
- Title Insurance: While not legally required, title insurance provides crucial protection for both the buyer and lender.