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Chapter 7

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.

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Chapter 7

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  1. Chapter 7 Title Examination and the Closing Process

  2. 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

  3. 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

  4. 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

  5. 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).

  6. 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.

  7. 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.

  8. 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

  9. 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

  10. 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

  11. 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.

  12. Figure 7.1

  13. Figure 7.1 (continued)

  14. 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.

  15. 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/ • Scantron required

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