Your closing day is one of the most important days of your life. It is the day you purchase your new home. At closing, you will invest your savings into a building and a piece of land of your own. You will pay the seller of the home with money that you likely borrowed from a bank or other lender. You will likely sign a promissory note, promising to pay a lot of money to your mortgage lender, perhaps over the next 30 years of your life. Your lender will take security, or a “mortgage”, on your property in the event you default on your promise to pay.
At closing, you will sign a lot of papers in less than one hour’s time. And, of course, you will also be paying “closing costs”, which usually include appraisal fees, termite inspection fees, surveyor fees, recording fees, title examination fees, closing fees and title insurance premiums.
At the closing, you will meet all sorts of people. First of all, the seller or his or her lawyer will probably be there to collect the money you are paying for the real estate. The real estate agents are there to offer assistance and to collect their commission. And, an officer of your mortgage lender may also be there. The closing and escrow agent will also be there to systematically present the papers that will require your signature – an essential service, which you are paying for, of course.
The signing of papers goes very quickly since it is a rather routine procedure for everyone, but you. Even if you had time to read every word of what you sign, chances are you would have a hard time understanding it as it is very technical. In fact, most of the language in the documents you will sign is predetermined, non-negotiable legalese. When the closing is over, and everyone has shaken hands and wished each other well, do you know what you signed? We can be of assistance in explaining those documents to you, protecting your interests, making sure the documents are the “standard” documents that you believe them to be. Further, you still don’t have any written evidence that says you own this valuable house, free and clear of defects and title problems. Your lender is secure because you bought a title insurance policy saying that the lender will be paid if your title is defective. BUT YOU ARE NOT COVERED UNDER THAT POLICY! What many people don’t realize is that the title insurance policy they have paid for does not cover them. It only covers the lender. The lender requires it to give you the loan. To protect yourself you will need an Owner’s Policy of Title Insurance. We can give you advice and counsel concerning the cost and benefits of an Owner’s Policy of Title Insurance.
Problems with a title can limit your use and enjoyment of your real estate, as well as bring financial loss. Title trouble can also threaten the security interest your mortgage lender holds in the property. Protection against hazards of a title is available through a unique coverage known as title insurance. Unlike other kinds of insurance that focus on possible future events and charge an annual premium, title insurance is purchased for a one-time payment and is a safeguard against loss arising from hazards and defects already existing in the title.
Owner’s title insurance ordinarily is issued in the amount of the real estate purchase price and lasts as long as the insured – or your heirs – have an interest in the covered property. This may even be after you have sold your property. In spite of all the expertise and dedication that go into a search and examination of the title to try to protect the lender in a closing transaction, hidden hazards can emerge after completion of a real estate purchase transaction, causing an unpleasant and costly surprise. Some examples including the following:
Title insurance offers financial protection against these and other hidden hazards through negotiation by the title insurer with third parties, payment for defending against an attack of a title as insured, and payment of claims.
Let Alan Kappers or Steven Swick of Dungan & LeFevre walk you through the closing process. If you have any further questions about how we can help you with your real estate closing needs, please contact us.