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What
is the HUD-1 Settlement Statement?
What if I am unable to be physically
present at the closing?
What will the title company do
if a title defect is discovered?
What information will Shamrock
Title, LLC require from me?
How will you handle the payoff
of my current mortgages on the property?
When and how will I receive the
proceeds from my sale?
If I am the buyer, how will I
know how much money to bring to closing?
What’s in a Title Search?
What is the Chain of Title?
What is a Tax Search?
What is a Judgment and Name
Search?
What is a Title Commitment?
How may a purchaser(s) hold
title in Virginia?
What is the
HUD-1 Settlement Statement?
The HUD-1 Settlement Statement is a standard form that shows all
charges imposed on buyers and sellers in connection with the settlement.
In essence, it reflects the various aspects of the financial transaction
between the seller, the buyer and the lender. Your settlement agent
will explain this document to the parties at the settlement table.
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What if I
am unable to be physically present at the closing?
If you are unable to be present at closing, you should so advise
your agent and Shamrock Title, LLC as soon as you are aware of this
fact. We can then arrange for a power of attorney to be prepared
at a nominal cost.
Although an existing general power
of attorney can sometimes be insured, a special power of attorney
(one which expressly authorizes the transactions being insured)
is strongly preferred. The document must be properly executed and
notarized. The power of attorney must be recorded to allow the transaction
relying on its authority to be insured.
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What will
the title company do if a title defect is discovered?
Sometimes when a title search is performed, a title defect may be
discovered. An example of a defect in title would be an unreleased
deed of trust. When a lender receives a loan payoff, it is legally
required to release the existing liens from the property. Many lenders,
however, do not release these liens in a timely fashion. When a
title search is performed by Shamrock Title, LLC, the loan may still
appear as a lien on the property.
There are several different methods that Shamrock Title, LLC may
use to eliminate the problem. Typically, we will inform the parties
and their real estate agents only if they may possess information
that may be helpful in resolving the issue. Fortunately, Shamrock
Title, LLC is able to resolve virtually all title defect issues
prior to the actual closing.
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What information
will Shamrock Title, LLC require from me?
Both buyers and sellers will be asked to complete information sheets
that will provide us with all required information. On the day of
closing, all parties must produce photo identification (such as
a driver’s license). This requirement is a product of federal
law.
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How will
you handle the payoff of my current mortgages on the property?
The first step in the process is for you to tell us how many loans
are on the property and to identify the lenders. Either you or your
real estate agent will provide us with this information by completing
the seller information sheet. Because many lenders require some
amount of time in order to process our request for the payoff, it
is critical that you provide us with this information at your earliest
opportunity.
Once we receive your payoff information
we will formulate the payoff for inclusion on your HUD-1 settlement
statement. Please note that we add additional interest to the payoff
that we receive. We take this step because many lenders will refuse
a payoff that is short. We eliminate this possibility by providing
a cushion in the payoff figure. This may result in you receiving
a refund from your lender.
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When and how will I receive the proceeds
from my sale?
Under Virginia law, the title company is required to record documents
(i.e. Deed, Deed of Trust) prior to disbursing the proceeds from
your sale. Typically, you will receive your sales proceeds several
days after closing.
Most sellers request that we wire
the proceeds from our account to their account. To facilitate the
transfer, you must provide us with your account information. In
the normal case, the seller will give us a deposit slip or a voided
check. We do not charge for this service.
If you want us to transfer all or
a part of your sales proceeds to another title company (if you are
purchasing another property) then we will require that you complete
an assignment of funds.
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If I am the
buyer, how will I know how much money to bring to closing?
On the HUD-1 settlement statement, the Buyer’s bottom line
will be reflected. This bottom line figure will represent charges
from a number of sources, including the title company, vendors and
most notably your lender.
The funds that the Buyer will bring to the closing must be in the
form of a certified or cashiers check. Because your lender's figures
may not be available to us until the day of closing, please check
with Shamrock Title, LLC shortly before closing to determine the
proper amount of the check.
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What’s
in a Title Search?
You’ve decided to purchase a home and hope to take possession
as soon as possible. The terms have been agreed upon and all the
financial arrangements have been made. But there’s one important
detail remaining. Before the transaction can close, a title search
must be made.
The most accurate description of
title is a bundle of rights in real property. A title search is
the process of determining from the public record just what these
rights are and who owns them.
A title search is a means of determining
that the person who is selling the property really has the right
to sell it, and that the buyer is getting all the rights to the
property (title) that he or she is paying for.
The search process will be undertaken
by the title company. In most real estate transactions today a title
insurance policy is purchased to assure the buyer that he or she
has purchased a valid title.
In those transactions where title
insurance is involved, the title company must determine insurability
of the title as part of the search process. This leads to the issuance
of a title policy, which insures the existence or non-existence
of rights to the property.
The title insurance company will,
at its own expense, defend the title and will pay losses within
the coverage of the policy if they occur.
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What is the
Chain of Title?
This is simply a history of the ownership of a particular piece
of property, telling who bought it and sold it, and when. The information
may be derived from public records or obtained from title plants
privately owned and maintained by title companies. There are great
varieties of such plants- index cards, punch cards, tract books,
even sophisticated computerized plants. However, they all contain
essentially the same information from which the history of the title
may be secured.
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What is
a Tax Search?
This is a search to determine the present status of general real
estate taxes against the property. The tax search will reveal if
taxes are current or whether any taxes are past due and unpaid from
previous years. In addition, the tax search will indicate the existence
of any special assessments against the land and, if so, whether
or not these assessments are current or past due.
A due and unpaid tax or special assessment
is a prior lien or claim on the property above all others. If a
buyer purchases property with unpaid and past due taxes or assessments
against it, he or she is likely to find a government body placing
the property up for sale to pay those taxes or assessments. A tax
search reveals the status of the taxes. Title insurance protects
the buyer against loss from unpaid and past due taxes and assessments.
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What is
a Judgment and Name Search?
One of the most important parts of the title search is to determine
if there are any unsatisfied judgments against the seller or previous
owners which were in existence while they owned the title. A judgment
is a general lien against the debtor’s real estate and constitutes
security for any money owed under the judgment. The real estate
can be sold to satisfy the judgment.
It is extremely important to be sure
that a title is not subject to judgments against the seller or previous
owners. Title insurance provides this protection. A judgment against
a person named Smith may affect the title of a seller named Smith,
depending on whether or not they are the same person. All possible
variations of the name must be examined.
For example, the name Smith might
be spelled Schmidt, Schmid, Schmidtt, Schmidz, Schmied, Schmiedt,
Smid, Smythe, and so on. The name Nichols can be spelled 73 different
ways from Nichols to Nychals. The task is to determine which of
these applies to the owner in question. First names have to be checked,
too. There are 25 foreign forms of John, including Johann, Jehan,
Hans, Shaun, Gudi, and Efom.
Rights established by judgment decrees,
unpaid federal income taxes, and mechanic’s liens all may
be prior claims on property, ahead of the buyer’s or lender’s
rights. If a judgment is discovered that constitutes a defect in
the title, it is pointed out and the seller must then eliminate
it before the title of the new buyer can be insured free and clear
of that judgment.
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What is
a Title Commitment?
When these searches have been completed, the title company issues
a commitment to insure, stating the conditions under which it will
insure the title. The buyer and seller and the mortgage lender can
proceed with the closing of the transaction after clearing up any
defects in the title which may have been uncovered by the search
and examination.
The mortgage lender is as concerned
as the buyer about the quality of the title because the property
is to be security for the new mortgage loan. The mortgage lender
requires assurance that it has a valid first (or another acceptable
priority) mortgage lien on the property. This is not only common
sense, but generally is a legal requirement of regulated mortgage
lenders.
The lender’s title insurance,
however, doesn’t protect the new buyer of the property. Although
the land is the same, the interest of the buyer and interest of
the lender are very different. The provisions of a lender’s
title insurance policy are very different from those of a buyer’s
policy, so the buyer should obtain his own policy, often issued
simultaneously with the lender’s policy.
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How
may a purchaser(s) hold title in Virginia?
In Virginia there are four ways to hold title: individually,
as tenants by the entirety, as tenants in common and as joint tenants.
Tenants by the entirety is a form of ownership reserved exclusively
for married couples. It has an automatic right of survivorship which
means that the property would pass to the surviving spouse without
the necessity of any other act. This form of ownership is not subject
to judgment liens against just one of the spouses with the exception
of certain debts owed to the federal government.
Joint tenancy, also has a right of
survivorship and can be used by any two or more individuals, regardless
of marital status. A judgment docketed against one joint tenant
will reach their interest in the property.
Tenancy in common can be used by
any two or more individuals. It does not have an automatic right
of survivorship and upon the death of one tenant in common their
interest in the property passes through the estate. A judgment against
one tenant in common will reach their interest in the property.
Finally, an individual may purchase
property in his or her own name.
The foregoing is a summary
only and any further, more detailed questions should be directed
to an attorney who is licensed to practice in the State of Virginia.
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