Whether you’re purchasing a new or existing home, or refinancing, title insurance protects you against any problems affecting the title to your home.
There are two types of title insurance: the owner’s policy and the lender’s policy. The owner’s policy protects your property rights as the homebuyer, whereas the lender’s policy insures the financial investment of the bank or lender. If someone else claims ownership of your property or a lien on your property, title insurance typically defends you legally and financially.
Here are some examples of things that may affect title:
Liens against the property that serve as security for the payment of an obligation, such as mortgage liens, judgment liens for unpaid court judgments, federal tax liens, state and local liens for failure to pay real estate taxes or assessments, mechanic’s liens to secure payment for property improvements, liens for recovery of child support payments and so on.
Easements which are rights granted to a third party to use a part of your property for a specific purpose. An example is an easement to a utility company to have power lines running along the back of your property.
Building or use restrictions contained in recorded plats, agreements or deeds.
Claims arising out of bankruptcy or decedent’s estates.
These are just some of the many reasons why getting owner’s title insurance is crucial when buying or refinancing a home.
When you refinance, you are obtaining a new loan even if you stay with your original lender. Lenders will usually require a new title search and lender’s policy to protect their investment in the property. A new owner’s policy is not necessary at this time as the one you received when you purchased the property is good for as long as you or your family own the property.
Owner’s title insurance is a one-time fee based on the value of your home. In Texas, rates are based on the sales price of the property and set by the Texas Department of Insurance. You can calculate title insurance premium rates using the insurance calculator found on our website. With a home being one of the largest investments you’ll ever make, it’s clear why getting owner’s title insurance is a smart option.
The T-47 affidavit is a document used in Texas residential real estate transactions that accompanies an existing survey. This video with Republic Title’s Janet Allen and Scott Rooker covers the following key points when a T-47 affidavit is provided:
i. Date of survey in paragraph 4
ii. Construction projects on adjoining properties predating title
Get owner’s title insurance and buy your home with confidence
Your long home-buying journey is almost over. You found the home you love, the seller agreed to your offer and now it’s time for closing. Of course, there’s a lot to think about right now, and the last thing you want is something to go wrong. So make sure you work with an experienced closing agent to help ensure the details come together and everything runs smoothly.
As soon as the seller accepts your offer, the behind-the-scenes work begins. You can expect closing to happen within 30 to 90 days.
1. Select a Closing Agent
If you are working with a real estate agent, with your permission, he or she may place an order with a closing agent/title company as soon as your sales contract is accepted.
Most homebuyers rely on their real estate agent to select a closing agent—someone they work with regularly and know to be professional, reliable and efficient. However, you can choose your own closing agent if you wish. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.
2. Contract + Earnest Money Delivery
Once your contract has been signed by all parties it is then delivered to the closing agent/title company of your choice. The closing agent reviews the contract for completeness. The agent will also deposit your earnest money into an escrow account, where the funds will remain until closing.
3. Title Search is Conducted
Once the title company receives your contract, the title company conducts a search of the public records. This should identify any issues with the title such as liens against the property, utility easements, and so on. After the title search is complete, the title company will provide you with a title commitment.
4. Title Insurance
There are two kinds of title insurance coverage: a Lender’s policy, which covers the lender for the amount of the mortgage loan; and an Owner’s policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the bank or lender will typically require that you purchase a Lender’s policy. However, it only protects the lender.
It is always recommended that you obtain an Owner’s policy to insure your investment. The Seller generally pays for the Owner’s policy and the Buyer generally pays for the lender’s title policy.
5. Obtain a Closing Disclosure
Your lender or the closing agent will provide a Closing Disclosure to you at least three days prior to closing that will show all of the charges and credits and what amount you have to bring to closing. Please note that any amount over $1,499.99 must be sent to the closing agent by wire transfer or cashiers check.
If you or your lender makes certain significant changes between the time the Closing Disclosure form is given to you and the closing, you must be provided a new form and an additional three-business-day waiting period after receipt of the new form. This applies if the creditor:
Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)
Changes the loan product
Adds a prepayment penalty to the loan
If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.
6. The Finish Line: Prepare for Closing
As closing day approaches, the closing agent orders any updated information that may be required. Once the closing agent confirms with the lender and the seller, he or she will set a final date, time and location of the closing.
On closing day, all of the behind-the-scenes work is complete. While you’ve been busy packing, ordering utilities and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order.
This is a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.
You’re a real estate agent, so you know that buying a home can be overwhelming for many of your clients. Homebuyers can easily feel confused and frustrated by the mounds of paperwork they have to sign. Plus, all the fees associated with closing can sometimes be a surprise even to an experienced buyer.
Owner’s title insurance is one of those items often misunderstood by homebuyers at closing, yet its value is tremendous. As an important advisor to your clients, you are in the position to help them understand the value of owner’s title insurance and the dangers that can be incurred without it.
What is title insurance?
Owner’s title insurance is a policy that protects homebuyers’ property rights. For the same reasons that the bank requires a lender’s insurance policy, a homebuyer obtains owner’s title insurance to protect their legal claims to the property.
How it protects your clients
Say, for example, your client recently purchased a new home from a builder, but the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property. Without owner’s title insurance, your client would be responsible for paying this existing debt—meaning they’d be paying the roofer out of pocket instead of purchasing something nice for their new home, like new living room furniture. This is just one example of how owner’s title insurance protects homebuyers’ from various significant risks. With owner’s title insurance, your client would be protected from certain legal or financial responsibilities.
The good news is that owner’s title insurance protects homebuyers, as long as they or their heirs* own the home. For a low, one-time fee, homebuyers can know they are protected from inheriting existing debts or claims to their property.
State regulations and CFPB
In Texas, title insurance is regulated by the Texas Department of Insurance. In addition, the Consumer Financial Protection Bureau (CFPB) regulates closing and settlement practices which can impact title insurance. Keep in mind that title insurance industry practices vary due to differences in state laws and local real estate customs.
Free resources for Realtors®
Together, real estate agents, land title insurance professionals and other stakeholders involved in real estate transactions can provide homebuyers with the protection they deserve during the home closing process. For more resources relating to title insurance and the homebuying process, visit: www.republictitle.com/residential-resources
*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.
Broadly speaking, eClosings fall along a continuum that include three basic types – hybrid, in-person, and remote online. These methods incorporate varying amounts of the eClosing elements. In today’s blog, Dennis Pospisil, Senior Vice President/Digital Settlement and Signing Services, breaks down the different types of eClosings.
Hybrid eClosing “Hybrid” (“procedural” documents only closing) – At the low-end of the spectrum is the Hybrid or procedural documents only eClosing. This “entry-level” eClosing only involves electronic documents that do not need to be notarized or recorded, such as loan disclosures and settlement statements. The remainder of the closing takes place in a traditional manner.
All parties appear in person at the closing table, but some documents are signed electronically and some, typically collateral, notarized, and witnessed loan documents are wet signed. For documents that are electronically signed, generally one electronic signature is applied across all documents. Hybrid eClosings are the most popular and most widely used type of eClosing.
In-Person eClosing In-person – The middle-tier approach to eClosing involves electronically recording electronic documents with electronic signatures and electronic notarizations. The closing takes place in-person utilizing a shared computer or tablet.
All parties appear in person either at the settlement agent’s office or in the presence of a mobile notary, and all documents are both signed and notarized electronically. Very few closings are full eClosings because a large percentage of lenders are not ready to have the note electronically signed.
Remote Online eClosing Remote Online eClosing (“RON”) is a new, technology-driven notarial process that allows the signer to appear before the notary over a live audio-video feed when executing digital documents.
Click here if you would like more information on our digital settlement services.
For most of us, a home is the largest investment we’ll make in our lives. To buy with confidence, get owner’s title insurance. It’s the smart way to protect your property from legal claims. To help you understand how owner’s title insurance works, here are answers to common questions.
What is title?
Title is your right to own or use your property. Title also establishes any limitations on those rights.
What is a title search?
A title search is an early step in the homebuying process to uncover issues that could limit your rights to the property. After the title search is complete, the title company can provide a title insurance commitment and then, after any requirements are met and closing occurs, a title policy.
What is title insurance?
If you’re buying a home, title insurance is a policy that protects your investment and property rights.
There are two different types of title insurance: an owner’s policy and a lender’s policy.
An owner’s policy is the best way to protect your property rights. Either the buyer or seller may pay for this policy. Ask your title professional how it’s handled in your area.
A lender’s policy is usually required by the lender and only protects the lender’s financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title professional how it’s handled in your area.
Why should I purchase owner’s title insurance?
Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of, or liens on, your property. For a one-time fee, you and your heirs* receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.
What does owner’s title insurance cover?
Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.
Title issues include unknown:
Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
Pending legal action against the property that could affect you
Unknown heir of a previous owner who is claiming ownership of the property
Unforeseeable title claims include:
Forgery: making a false document
For example, the seller misrepresents the identity of the person who sold the property.
Fraud: deception to achieve unfair gain
For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
Clerical error: inconsistent paperwork and historical records
For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.
What does owner’s title insurance cost?
The one-time payment for owner’s title insurance is low relative to the value of your home. In Texas, rates are based on the sales price of the property and are set by the Texas Department of Insurance. You can calculate title insurance premium rates using the insurance calculator found on our website.
How long am I covered?
Your owner’s insurance policy lasts for as long as you or your heirs* own your property. Your life will change over time, but your protection never will.
What happens at closing?
Closing is the final step in executing the homebuying transaction and involves signing the documents that allows the creation of your new loan (if applicable), and transfer of ownership to occur. Upon completion of the closing and funding process, you get the keys to your home!
*This offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.
Buying or selling a home is one of the most important undertakings of a lifetime. When buying or selling a home, there are many real estate terms that may be unfamiliar to you. Check out this list of commonly used terms that you may find helpful during the process.
AIR: Adjustable Interest Rate
AMORTIZATION SCHEDULE: A schedule showing the principal and interest payments throughout the life of the loan.
APPRAISED VALUE: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.
CD/CLOSING DISCLOSURE: This form is a statement of final loan terms and closing costs. Sometimes referred to as ICD or Integrated Closing Disclosure.
COMMITMENT: The document by which a title insurer discloses to all parties connected with a particular real estate transaction all the liens, defects, and burdens and obligations that affect the subject property.
CREDIT REPORT: A report on the past ability of a loan applicant to pay installment payments.
DOCUMENT PREPARATION FEE: A charge by an attorney for preparing legal documents for transaction.
ESCROW FEE: A fee charged by the title company to service the transaction, to escrow monies, and cover documents. Usually split between buyer and seller.
ESCROW ACCOUNT: Funds held by the lender for payment of taxes and insurance when due. Usually does not include maintenance fees.
HOA ASSESSMENT FEES: Charged by the homeowner’s association as set out in subdivision restrictions.
HOMEOWNER’S INSURANCE: Protects the property and contents in case of loss; must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.
INSPECTIONS: An examination of property for various reasons such as termite inspections; to see if required repairs need to be made before funds are received, etc.
INTEREST: Money paid regularly at a particular rate for the use of money lent.
LOAN TITLE POLICY: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.
ORIGINATION FEE: A fee the buyer pays the lender to originate a new loan.
OWNER’S TITLE POLICY: Insures that the buyer has title to the property, that there are no other claims as to ownership. Among other matters, it also insures access to the property, the right to occupy the property, good and indefeasible title, and that there are not other types of specific liens against the property.
POINT: 1% of the loan amount.
PREPAIDS: Items to be paid by the buyer in advance of the first scheduled payment of the loan (Homeowner’s Insurance Premium, Mortgage Insurance Premium, Prepaid Interest, Property Taxes and a maximum of three additional items).
PREPAYMENT PENALTY: Charged by the lender for premature payment of a loan balance.
PRIVATE MORTGAGE INSURANCE: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).
REALTOR FEES: An amount paid to the REALTOR® as compensation for their services. RECORDING FEES: Charged by the County Clerk to record documents in the public records. RESPA: Real Estate Settlement Procedures Act.
RESTRICTIONS: Certain limitations or conditions related to the future use of the property put on the property by a prior owner. These restrictions stay with the property until they expire or are amended as per certain procedures set forth in the restrictions.
SURVEY: Confirms lot size and any encroachments or restriction violations.
TAX CERTIFICATES: Certificates issued by taxing authorities showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected at closing.
TAX PRORATION: Means that the payment of the taxes for the year of sale are divided between the Buyer and Seller, usually based on the amount of time the Seller owned the property during that year. Prorations, and how they are calculated, are typically addressed in the Contract of Sale.
TIL: Truth in Lending.
TIP: Total Interest Percentage; the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount.
TOTAL OF PAYMENTS: Total amount paid after all payments of principal, interest, mortgage insurance and loan costs are scheduled.
A Commitment is a document the title company provides to all parties connected with a particular real estate transaction. It discloses the title of record to the property as well as all the liens, defects, burdens and obligations that affect the subject properties. It is comprised of four schedules.
Schedules A, B, C and D are as follows:
Actual Facts Is the Who, What, Where and How Much section of the Commitment. You will see the names of the buyer, record owner (seller), a legal description of the property, the sales price and the name of the lender, if applicable. It is a good idea to double check this information with the contract.
Buyer Notification This section lists the general and specific exceptions to the property. It will list items such as survey matters, taxes, easements, setback lines and a variety of other items that will not be covered by the title policy. It is important to review and discuss any questions you have with your title company.
Clear in Order to Close These items must be resolved in order to transfer title to the new owner. They might include such things as a mortgage that will be paid off at closing, liens for home improvements or unpaid taxes. All items shown on Schedule C should be discussed and resolved before the closing.
Disclosure This section outlines the ownership of the title company and all the parties who will share in any part of the insurance premium collected to issue the policy. It includes underwriters, title agents and attorneys.
This information is not to be substituted as legal advice and is descriptive only. If you have any concerns about any portion of your title commitment or any portion of Schedule A,B,C, or D, please contact your attorney.
For a PDF version of the ABCs of the Title Commitment, click here.
Remote Online eClosing (“RON”) is a new, technology-driven notarial process that allows the signer to appear before the notary over a live audio-video feed when executing digital documents.
Step 1 Identity Verification
RON uses the latest identity verification technologies to make notarizations more secure. A. Signer passes a knowledge-based identity quiz B. Signer submits ID for review C. Third-party software performs forensic test on ID
Step 2 Audio-Video Conference
The notary and signer talk to each other over a webcam in real-time and observe the necessary digital documents.
Step 3 “Tamper-Sealed” Documents
The notary adds a “tamper-seal” to date/time-stamp the notarized documents. The seal will indicate whether any of the documents are altered in the future. The signer downloads a PDF of the completed, digitally signed and digitally notarized, document.
Step 4 Audit Trail and Notary Records
Like with traditional notarizations, the notary keeps a journal logging the basic details of the notarization. The journal can be kept in a secure digital format that includes a video of the notarial act, which can be used to prove who actually digitally signed the document.
Click here if you would like more information on our digital settlement services.