What is closing?
Closing or 'settlement' is the process of completing a real estate
transaction. During closing deeds, mortgages, leases or other
required instruments are signed or delivered. Furthermore accounting
between parties is made, monies disbursed and recording of all
pertinent documents.
What do I
need to bring to settlement?
Each party needs to provide official photo-ID (e.g. drivers license,
passport). If you are required to bring funds to the settlement
they should be in the form of a cashiers, treasurers, teller's
check, money order, or certified personal check (made payable
to Pennsylvania Land Transfer or to yourself). Only small amounts
of cash are acceptable.
How long will
settlement take?
This depends very much on the case involved, but usually settlement
will take about an hour for a sale and about 40 minutes for a
refinance.
Who attends
settlement?
With a sale the buyers, sellers and their respective attorneys
and real estate agents will attend. Most lenders forward their
documents and instructions to the title company without sending
a representative. For a refinance, usually only our settlement
officer and the borrowers need attend.
Do I need
to be present at settlement?
We prefer you to attend personally. When this is impractical,
it may be possible to prepare a 'power of attorney,' which will
allow someone else to sign the documents on your behalf. The Power
of Attorney document must be reviewed and approved by the title
company (and lender if Power of Attorney for borrowing) prior
to settlement and the original Power of Attorney will have to
be recorded.
Who does PLT
represent at settlement?
Pennsylvania Land Transfer does not represent any one party. The
transaction has already been negotiated and we are there to ensure
the terms are complied with to the extent they affect the insurability
of title or are required by the lender. For a refinance, we explain
your lender's documents to you and ensure their instructions are
properly executed.
What happens
at settlement?
In a nutshell, PLT completes the settlement in accordance with
the terms and conditions of the Agreement of Sale and Mortgage
Company instructions. We prepare the final HUD-1 (settlement sheet),
and make all of the disbursements in accordance therewith, and
forward the executed documents to the appropriate parties.
What is a
HUD Settlement Statement (HUD-1)?
This is a summary of the financial portion of the real estate
transaction. The HUD will list the purchase price, loan amount
and closing costs for both buyer and seller and show all pro-rations
and sums to be disbursed by the title company to all parties.
What is pro-ration
of property taxes?
This is the process of crediting either the buyer or seller for
their share of real estate taxes either paid or owing as of the
date of settlement.
What is pre-paid
interest
This is interest due from the date of a loan closing to the first
day of the following month. Most loans require payments to be
due on the first day of the month. Each monthly payment reflects
the principal and interest due on the loan for the previous month.
A loan closing on the 20th day of the month will require interest
adjustment to the 1st day of the following month. The first payment
will then be due on the 1st day of the month following. For example
if your settlement is on October 15 and your first monthly payment
is due December 1, the lender will collect interest to cover the
period from October 15 through October 31. The December 1 payment
covers the accrued interest for the month of November. Interest
adjustment is considered a settlement charge and will be disclosed
on the HUD.
What is an Escrow?
An escrow is an arrangement with a third party, who holds funds
and/or legal documents on behalf of the buyer or seller, and distributes
them according to the instructions given by the buyer or seller.
Often a buyer may be required, or elect, to escrow 1/12th of the
annual taxes and insurance. The amount of tax escrow needed at
the time of settlement is determined by the first mortgage payment
date and the date by which the taxes may be paid at the discount
rate.
What is a
title?
A title is the owner's right(s) to possess and use a real property.
Why is transferring
title to real estate so unique?
Unlike buying a car or television, land title is permanent. While
the function of most other forms of insurance is to protect you
against losses arising out of unforeseen future events, the
primary purpose of title insurance is to eliminate risks and prevent
losses caused by defects in title arising out of past events.
You need to know the marital status of the seller and whether
there are lawsuits or judgments against a former owner. Various
rights may have been acquired by others even if the land has never
been built upon (e.g. mineral, air or utility rights). It is necessary
to determine what rights are outstanding in order to transfer
a clear title to a piece of real estate.
What is a
title search?
A title search determines from the public record what the rights
to a property are and who owns them. Documents searched include
court records, property and name indices. The sellers right to
transfer ownership is verified, along with and claims, defects
or other rights that may affect the property.
What kinds
of problems can a title search reveal?
Some examples are unpaid taxes, unsatisfied mortgages, judgments
against the seller and restrictions on the land.
Are there
any problems that a title search cannot reveal?
Fraud, mental incompetence, and clerical errors are examples of
the hidden history that a title search may not reveal. Title insurance
is needed to protect against such defects coming to light after
you have purchased your home.
What are PLT's
responsibilities in addition to conducting the title search?
In addition to correcting any minor title problems (i.e. taxes
owing), Pennsylvania Land Transfer will work with your lender
and provide them with a copy of the Title Commitment and the amount
of the annual property taxes as well as ensuring their detailed
closing instructions are followed to the letter. We will also
ensure the sellers tax payments are up to date.
What is title
insurance?
Title insurance is a contract to indemnify against losses arising
through defects in the title to real estate.
How does title
insurance protect me and my investment?
The insurer is obliged to defend you against the claims of others,
regardless of the validity of the claim. Your insurance pays all
court costs and related fees, in accordance with the terms of
the policy, in addition to any actual loss up to the policy amount.
How much could
I lose if a claim is filed against my property?
It all depends upon the claim. At worst you could lose the entire
property and still be liable for the balance of your mortgage.
Even the smallest claims cost time and money and you may have
to pay for a legal defense.
What does
title insurance protect against?
Some of the most common problems coved include:
· Unfiled or unpaid liens
· Descriptions apparently but not actually adequate.
· Mistakes in recording legal documents
· Fraudulent deeds, mortgages, etc.
· Undisclosed or missing heirs.
· Deeds by persons of unsound mind
What doesn't
title insurance protect against?
In general: actions of the government and items an informed purchaser
should know about, such as who is in possession of the property,
or an object such as a utility pole in the middle of the yard.
Exceptions include specific easements, restrictions, boundary
lines and acreage, encroachments visible upon the ground, etc.
Isn't a deed
proof of ownership?
No. A deed is simply a document transferring the right of ownership,
whatever that right may be. For example, the property may have
changed hands many times since the deed was issued. In addition,
liens and claims outstanding against the title won't be shown
on a deed.
Would an abstract
show property limitations and restrictions?
Only if the public records reveal all such limitations and/or
restrictions. Title insurance can protect you against any hidden
history that may reappear.
The property
I want to purchase had a title search done within the past year.
Do I need another one?
Yes - a lot can happen in a year. New easements may have been
granted by the current owner or the property may have been mortgaged
or had other liens filed against it.
What are the
different types of title insurance?
There is a Lenders Policy and an Owners Policy. The lenders policy
is usually a condition of the loan and protects the mortgage lender's
security interest in the property up to the value of the policy.
The owner's policy covers the purchase price of the property and
protects the interest of the real estate owner. When purchasing
a property, where you are also creating a mortgage, the Owner's
& Lender's Policies are issued simultaneously. The title premium
is based on the greater of the purchase price or the mortgage
amount.
Do I need
both types of coverage?
Yes. A mortgage policy would only pay the balance of a mortgage
if there was a loss. There would be no equity protection to the
owner without a separate policy.
How much does
title insurance cost?
Title insurance is regulated by the state, and is dependent on
the purchase price or mortgage amount. In either case it is a
one time fee of a small fraction of the insured amount. If you
have owned the house for less than 10 years you will receive an
additional discount. To find out your exact premium, use
our handy rate calculator.
How long does
coverage last?
You are covered for as long as you or your heirs own the property,
and beyond. Even though the property may be sold, you may still
have a legal obligation by virtue of the warranties in the deed
conveying the property. The policy insuring you is still in effect.