Closing Agents/Attorneys & The Closing Process: What You Should Know
Your application to your lender for a home mortgage loan leads you inevitably to the closing attorney's office. You undoubtedly have questions as to what the role of the closing attorney is, what tasks the closing attorney will perform and what will take place at the closing. First, understand that the closing attorney represents the interests of the lender. However, if your loan transaction is a common Fannie Mae/Freddie Mac/FHA transaction the loan documentation and the promises and obligations you are asked to make are uniform throughout the state and in most instances throughout the country. Therefore, your interests are protected by the uniformity of the documents you will be asked to sign and their regulation by state and federal agencies.
Our firm makes every effort to assist borrowers in the mortgage loan transaction. Sometimes issues arise regarding the record title to a borrower's property. If there are title issues or issues involving inaccuracies, we endeavor to satisfy the borrower and keep them informed of all relevant issues. When possible, we seek to resolve title issues and disputes as reasonably as possible.
The fees quoted to you by your lender include a variety of items. Those which involve our office may include the following and are standard transactional items for representing the lender in residential loan transactions:
Legal Fee - May include any or all of the following: obtaining a title examination from title examiners at the various Registry of Deeds, title review, obtaining municipal lien information & survey information, loan document preparation, title certification, communications with borrowers, sellers, broker, etc., conducting closing, payoff of all liens and sundry other matters relating to the loan closing.
Title Abstract - A review of the title to property.
Mortgage Survey Plan ( if required )- Sometimes referred to as a plot plan, this is a tape measure survey of the land to be mortgaged to determine that it was not in violation of zoning when constructed and that no buildings or improvements encroach upon the property or over its lot lines.
Municipal Lien Information - Obtained from the city or town where the property lies including all outstanding tax and utility liens.
Title Insurance - The lender requires a loan policy of title insurance for the loan amount in order to protect their interests from issues relating to the title to the property that could not be determined from an examination of the record of the title.
Recording Costs/Courier & Certified Copy Fees - These include the cost to courier the mortgage payoff and loan documentation for safe and timely delivery, to record the mortgage and other transactional documents and obtaining Registry certified copies that may be required in certain transactions.
This is a list of some of the items that you may be asked to pay in a normal residential loan transaction. In the case of a no point/no closing cost transaction your lender will pay these costs. This explanation should serve as a brief overview of the items described above. For a further explanation please contact your lender or our office.
The mortgage loan closing process may sometimes seem complicated and confusing. However, you will find that a few minutes of simple explanation can almost always relieve any anxiety or confusion about the process. We look forward to seeing you at your closing.
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Why Title Insurance
The question is often asked by Buyers as to why they should require title insurance for any real estate they purchase. For Buyers of residential property their purchase often represents their largest and most important investment, a home. For a modest one-time premium paid at closing, Buyers obtain the security that hey are now covered for the rest of their lives against any claim against their title to their property that arose prior to their purchase. Examples of such issues include forgery in a deed in the chain of title, missing or omitted heirs in prior deeds, and easements across property that are not mentioned in current deeds.
For Buyers of commercial or investment property obtaining an owners policy of title insurance is simply part of a sound business practice.
A related second question is whether an attorney's title opinion protects a Buyer from all the types of claims covered by title insurance. The answer simply is "no." An owner's policy of title insurance provides coverage against claims and encumbrances against title that may arise regardless of whether or not the title to the property was correctly searched pursuant to Maine State Bar Association Standards. In an increasingly technology-driven age most title examinations are done over the internet. Errors in data entry result in name index errors and incomplete or erroneous title exam results. Undischarged mortgages or liens go unnoticed resulting in claims against title. These and many other bases for claims are covered by owner's title insurance policies.
Finally, at such time as an owner desires to sell their property, providing a copy of an owner's title insurance policy to their broker for disclosure to prospective purchasers simply helps to effectively market their property.
For any further questions as to real estate and/or title insurance please contact Scott Ladd at (207) 582-3650 or at jsladd@farrislaw.com.
No Title Too Small
January 2012
I recently met with a client who owns some property up north with a couple of his brothers. He had contacted me with the intent of having me prepare a deed and a simple settlement statement with which to buy out his brothers' interest in their land. I asked whether the client would like for me to search the title to the property he was buying. The client (we'll call him "Jim") stated that his father had owned the property for some time prior to gifting it to his sons a couple of years ago. I replied that he was about to pay his brothers for the property and that $300 spent on a title search was a small expense in relation to the thousands of dollars he was about to pay. Jim agreed and I conducted a title examination of the property.
The following week I completed the title examination for Jim and gave him a call. It turned out that he and his brothers did not have good, clear title to their property. There was a deed into Jim's father decades ago from the widow of a former co-owner of the property with Jim's father. The widow had conveyed whatever interest she had acquired from her deceased husband, however, it was not clear whether or not there were any children or other parties who also may have had an interest in her husband's estate. Making resolution of this issue more difficult, there is no evidence that the late husband's estate was probated in the county where the property is located.
The lesson learned from Jim's situation is that no title to real estate is too simple to have searched by a knowledgeable attorney or title company. The title search fee paid to Farris Law and Black Bear Title is small in relation to the knowledge that Jim now possesses as to the quality of title to the property. Jim is now utilizing this information to reconsider whether or not to buy out his brothers' interest and at what price.
Should you be interested in purchasing any real estate, borrowing money secured by real estate, or have any other real estate related issues, do not hesitate to contact Scott Ladd at Farris Law (582-3650 or jsladd@farrislaw.com).
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