There are many parties to a real estate purchase transaction, including the lender, title agent, buyer’s agent, listing agent, seller, buyer, and more. Each of us work together with a common goal in mind: to help the seller sell their home and the buyer purchase their home. All of us are responsible for making sure our piece of the pie is completed in a timely manner so we can all bring our pieces together at the end. But what does the title agent need to get our part finished? In this article, I will explain what is needed for a title agent to clear title, when those pieces are needed, and why communication is the underlying factor of whether or not the transaction will be completed on time….for all parties involved.
Step One: The purchase contract, title order, surveys, and commission
The first step for title is getting the real estate purchase contract and title order from the lender. The contract is the most important thing needed to begin title. The contract will tell us the property address so we can order an abstract (the chain of title), the parties to the contract, and any factors that will change our processing. The contract includes specifics such as: seller contributions, tax breaks available (i.e: First Time Homebuyer), front foot fees, and addendums. All of this information will help us get a better understanding of how to process the file and the sooner we get it, the faster we can close.
We also advise the buyer on whether or not they would like a survey done at their property in the form of a location drawing. For some buyers, a survey is a must! For others, they prefer to skip this amenity. Whichever the buyers choose, we have a form that needs to be signed describing their preference. Surveys can take up to two weeks to get back, depending on the county and this is for a location drawing. Boundary surveys can take much longer. This is why it is important for the title agent to communicate with the buyer as soon as possible on whether or not a survey is needed and to have the form filled out accordingly.
Title agents will also ask about agent commissions. We need to know the percentage of commission that is going to the listing agent and buyer’s agent, as well as their broker fees. These numbers will allow us to write up pre-CD’s, ALTA estimates, and final numbers when we get closer to settlement. It is best to ask for this information off the bat, that way there are no surprises as everyone progresses through the transaction.
Step Two: Clearing Title, Collecting Invoices, and Scheduling Closing
This step is where a lot of the behind-the-scenes action is! As a title agent, we are diligently collecting and asking for information that is required to clear title. Some examples of information that may be needed are: social security numbers to verify judgments, LLC documents if the buyer is purchasing the property in an LLC, HOA fees, borrower’s authorization to order payoffs, addendums for repairs (addendums in general!), and verification of property taxes. On the title end, we want to make sure of a few things:
-Title is clear
-All invoices are collected (HOI, HOA, Termite, Inspection, etc) and put on the ALTA/CD
-We have all title fees, insurance, invoices, and prorated taxes for the lender to disclose on the CD
-The deed is written and ready to go
-all seller help and repairs are accounted for
The next thing to do is to schedule settlement. We will coordinate with the Buyer’s Agent, lender, and listing agent to determine the time, location, and date of closing. Once we have all agreed upon these factors, we will schedule closing with one of our settlement agents. Part of this process includes letting the buyer know how to bring funds to settlement and how much to bring. During this process, we will be organizing the closing package to prepare for settlement and making sure all wires are received in advance.
Once we are all set to go, settlement will commence, documents will be signed and notarized, keys will be transferred, hands will be shook, smiles will break out, and commissions will be given out (if they haven’t already been wired!).
Step Three: Post Closing, Recordation, and Policy
While most people thing the transaction stops there, it doesn’t for a title agent. We are responsible for getting documents back to the lender for their records, recording the deed of trust and deed, and issuing the title policy.
The funding documents will be sent to the lender straightaway via email. The deed of trust and deed will be sent to the county/city for recording and once we receive the recorded documents back, we will issue the title policy. The Title policy may take up to a month or more to get to the buyer, depending on the speed of the county/city for recording. If you are worried about your title insurance, have no fear! The title commitment (which is in the package that was signed at settlement), is sufficient for title insurance until the policy can be issued. That is why it exists!
Now that we understand the most general explanation of the title process, it is important to understand why communication is key. If there are any delays in getting documents to each other, delays in clearing up a question, or delays in communication at all, then the transaction will ultimately be delayed as well. It is everyone’s responsibility and privilege to help our buyers and sellers. We owe it to them to be at the top of our game and all of this starts and ends with clear, quick, and concise communication.
As always, please feel free to contact me! I love listening to all feedback.
Advantage Title Company