Northern Michigan Real Estate

TITLE INSURANCE

 TITLE INSURANCE IS THE ULTIMATE PROPERTY PROTECTION.  IN REAL ESTATE, "TITLE" MEANS A RIGHT TO OWNERSHIP.  THE TITLE INSURANCE PROFESSIONAL YOU WORK WITH IS VERY IMPORTANT TO THE SALES TRANSACTION.  IF YOU HAVE CLEAR TITLE TO A HOUSE OR PROPERTY, IT MEANS THAT YOU OWN IT FREE AND CLEAR.  THE DOCUMENT STATING YOUR RIGHT TO A PROPERTY IS ALSO CALLED A TITLE.

 TITLE HAZARDS

Various kinds of claims can exist to "Cloud" a title.  Some examples are:

·  Long lost relatives or heirs could show up with a claim that supersedes yours.

· Sometimes fraud, such as forgery, is involved on recorded documents.

·  Liens due to foreclosures (nonpayment of loans to the original lender).

·  Easements (right to use of the land for other purposes like utilities, etc.).

·  IRS tax liens from the previous owner.

 Keeping it safe: When buying a property, the best way to protect your investment is to obtain the services of a reputable title company to do a thorough title search, and insure you against the chance of some lien or claim being overlooked.

 Seller's Proof: It is general practice in a real estate transaction for the "Seller" to purchase the title insurance policy covering the new owner. The understanding is that the seller is proving to the new buyer that the property has clear and marketable title. The buyer receives an owner's title policy from the title insurance company at the close of escrow to insure his interests. The buyer is generally required by the lender to provide an additional policy of title insurance covering the lender's interest in the property for the amount of the loan he or she is taking out on the property. This is generally paid for by the new buyer and provided to the lender at the close of escrow.

 Title Claims: In the unlikely event that an unforeseen claim to a title shows up after transfers, your title insurance policy reimburses you for all losses covered by your policy and may also provide legal support to defend your rights.

 

 ESCROW 

You may have already heard phrases such as "The house fell out of escrow," or "We're waiting for escrow to close." So just what is escrow anyway? And what does it mean to a home buyer or seller?

 Simply stated, escrow is the involvement of an impartial third party in a real estate transaction. This neutral third party acts as an intermediary between the buyer and seller, and also collects and  remits funds as instructed. Generally, this means that when you buy a home, you do not pay the seller directly. Instead, you deposit funds with the escrow company that are then remitted to the seller on your behalf. The basic concept of escrow is to ensure that both the buyer and the seller are protected during any real property transaction. Not only is "Escrow" the concept of a third party receiving and disbursing funds, but it also includes other valuable transaction services. In order to facilitate the transfer of property from one owner to another, the best escrow companies will:

 · Determine the legal ownership and status of the property through a "Title Search."

· Request a beneficiary's statement if a debt is to be assumed by the buyer.

· Confirm that the buyer is qualified and meets the lender's requirements.

· Confirm property meets requirements imposed by lender and/or buyer.

· Prorate all related financial matters (e.g., taxes, insurance) involved in the ownership transfer.

· Ensure all legal documentation is complete, including recordation of the deed.

· Comply with time limits imposed in instructions.

· Close escrow when all instructions (buyers, seller's and lender's) have been fulfilled.

· Disburse funds as instructed, including all related fees (title fees, commission, payoffs, etc.)

· Prepare final statement for all concerned parties.

 Escrow operations are licensed by the State of Arizona, and their records are open to inspection by the Insurance Commissioner and the State Banking Department.  Thus, the state helps ensure that escrow companies are properly managed and truly act as impartial parties to any real property transaction.   No changes may be made to the purchase contract without the consent of the parties to the transaction. 

 Finally, all escrows have clearly defined time limits. If, for some reason, all terms of the purchase contract cannot be carried out by the end of the time limit, all parties involved are entitled to the return of documents, fees, funds and other related materials, as prescribed by the contract. They also may mutually agree to extend the time period by amending the purchase contract.

 The term "Escrow" has come to mean "Neutral Protection" for the seller, the lender and the buyer. All parties involved in the transfer of real property are impartially protected during the transaction and are serviced by professionals intent on ensuring a smooth, trouble-free sale.

 Escrow is an indispensable necessity in today's marketplace. If you need further explanations during the process, always consult your escrow officer. The escrow officers are, indeed, a neutral third party, and their job is to make sure all sale conditions are met quickly and efficiently.