Chapter 7

Title Examination and the Closing Process

Title Examination

the process of verifying the ownership rights being offered by the seller of a property marketable title insurable title title perfect of record

Title Search

Detailed examination of all public records that reveals the ownership history of a property

recording requirement Grantor / grantee indexes tax records search lien search

Other Title Issues

Title abstract Title Opinion Title insurance

paid for in full at the time the policy is issued

not transferable protects only against past

events that were in existence, but undiscovered at the time the policy was issued

Required by mortgage companies

Buyer pays

Title Case Study

Matt and Kristen Royston buy small commercial property & title insurance

2 small retail stores and a small customer parking lot

Assumption that parking lot provided adequate spaces for the building. Half of parking on adjoining property (with easement access).

Case Study – part II

After several months of ownership, neighbor told them he really owned part of the parking easement, and this property was included in his deed.

Roystons now in jeopardy of losing occupancy permit on their building because they could not provide the required parking spaces.

An error had been made in the boundary description of the easement.

Case Study – part III

Claim made on title insurance

Title company investigated Title Company bought

additional parking spaces from neighbor, adding the land to the Roystons' deed.

The couple now owned the additional spaces and the occupancy permit was valid.

Torrens System

System of land registration

Provides certificate Court proceedings Only 1 certificate per

property Optional in only 11 states

Still not used much. Cost of court proceedings Time of transfer

Title Closing

the final step in the process of transferring title from grantor to grantee

Buyer’s responsibilities before closing obtaining financing examining the title evidence having the property surveyed obtaining property insurance having the property inspected

Seller’s responsibilities before closing prepare the deed remove encumbrances cooperate with inspectors

Closing Costs

Costs generally paid by the buyer at the closing loan origination fee loan discount points appraisal fee credit report fee lender’s inspection fee mortgage insurance premium attorney fees hazard insurance premium recording fees for the mortgage courier fees

Costs generally paid by the seller at the closing real estate brokerage commission attorney fees documentary stamp taxes, where required recording fees for the satisfaction of the

seller’s mortgage

HUD Settlement Statement

Settlement statement shown in Figure 7.1 relates to the transaction between Williams and Howell.

The transaction amount is $189,000. The seller has an outstanding loan for

$113,245 that must be repaid. The buyer is borrowing $150,000 from his

lender. Both buyer and seller must pay certain

closing costs. After consideration of these costs and the

prorated taxes, the buyer must bring $37,243.28 to the closing and the seller will leave the closing with $58,548.96.

Figure 7.1

Figure 7.1 (continued)

Escrow Closing

Instead of conventional closing (where all parties present)

In some east coast states Most western states (incl.

Texas)

Parties sign separately Coordinated by escrow agent

(attorney/title company) Advantages

Easier to coordinate closing Buyer/seller assured title is

acceptable & money properly received before transaction complete.

End Chapter 7

Exam next Thursday (March 10th)

Chapters 2-7

Extra articles/class notes

Articles/PowerPoint on web http://www.uta.edu/faculty/

seththomas/

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