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Section 1 - Title Search & Title Insurance
Section 2 - STA Specific Settlement Procedures
Section 3 - General Closing Questions
Section 1
Title Search & Title Insurance

A. Title Search
What is a title?

When you purchase a home, you are really purchasing the property - which is the right to occupy and use the property. That legal right is usually documented in the form of a deed recorded at the local courthouse. A title may be contested based upon past actions and claims asserted by others. These types of claims can complicate your purchase of the property, challenge your ownership later on, and potentially cause you to lose money or the property.

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Why is transferring title to real estate different from transferring title to personal property, such as a car?

Real estate is permanent and can have many owners over the years, as well as rights to use the property. In order to transfer clear title to real property, it is first necessary to determine the rights outstanding on the property.

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What is a title search?

You've decided to purchase a home and hope to take possession as soon as possible. The terms have been agreed upon and all the financial arrangements have been made. There's one important detail remaining, before the transaction can close, a title search must be conducted.

The most accurate description of title is a bundle of rights in real property. A title search is the process of determining from the public record just what these rights are and who owns them.

A title search is a means of determining that the person who is selling the property really has the right to sell it and that the buyer is getting all the rights to the property (title) that he or she is paying for.

In most real estate transactions today, a title insurance policy is purchased to assure the buyer that he or she has purchased a valid title.

In those transactions where title insurance is involved, the title company must determine insurability of the title as part of the search process. This leads to the issuance of a title policy, which insures the existence or non-existence of rights to the property.

The title insurance company will, at its own expense, defend the title and will pay losses within the coverage of the policy if they occur.

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B. Title Insurance
Why do I need Title Insurance?

Title insurance is a one-time charge assessed at settlement that protects a homebuyer in the event that the property title, which proves ownership, is flawed. Problems with the title can include outstanding mortgages or liens; easements; inaccurate notary acknowledgements; and deeds, wills, or trusts that contain wrong names or improper vestings.

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Are there different types of title insurance?

Yes. There are three different types of Title Insurance. A Lender's Policy, Standard Owner's Policy and the Owner's Enhanced Policy. Lender's Coverage is required by all corporate lenders as a condition of the purchaser's loan. This covers only the lender for the amount of the loan they are making to a borrower. The Lender's Policy that the lender is provided with is the standard ALTA 1992 Loan Policy. It provides coverage to the Lender against such title encumbrances as fraud in connection with the execution of document, incorrect representation of the marital status of grantors, wills not properly probated, and many other circumstances that might jeopardize the Lender's security in the property.
The Standard ALTA 1992 Owner’s Policy protects you as the owner of real property against fraudulently executed documents, incorrect representations and improperly probated wills as well as any unsatisfied claims that may not appear in the County land records.
The Owner’s Enhanced Policy covers you, the owner, against all that is included in a standard ALTA 1992 policy but with additional and enhanced coverage. Subject to limitations, some of the benefits of an Enhanced Policy include:
  • Mechanic’s lien coverage is provided for work done prior to the date of your policy.
  • Zoning coverage is now provided, insuring that your land is properly zoned for a single-family residence.
  • Subdivision coverage is now provided in the event your land is a portion of an improperly created subdivision.
  • Coverage is provided if you, as the owner, are forced to remove an existing structure, other than a boundary wall or fence, due to a previous owner’s failure to obtain the necessary building permit.
  • Coverage is provided if an adjacent builder builds onto the homeowner’s property without permission.
  • Coverage is provided for forgeries affecting your ownership after the date that your title insurance policy is issued.
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If my title has been examined for defects, why do I need insurance?

There are many defects which even the most meticulous search of the land records will not uncover. For instance, it is impossible for an examiner to know whether the marital rights of all previous owners have been relinquished; whether all deeds, mortgages and judgments affecting the property have been properly indexed in the land records; whether all signatures are valid; or whether an unknown heir of a previous owner had a valid claim against the property. Without owner's title insurance you may have no avenue of recovery for these types of problems.

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Examples of Title Problems

This list shows why it is important to own title insurance. Although a thorough examination should identify all title problems reflected in public records, not all of these problems are apparent in public records. Any of the title problems listed here can make your title worthless (and yes, these things DO happen) - but an owner's title policy protects you from financial losses caused by title issues. Below is a list of "Hidden Title Problems" that a proper title search would not discover, but that title insurance would cover:

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Hidden Title Problems
  1. Someone has presented themself as the true owner of the land, but actually is not.
  2. There are forged title documents.
  3. There are people who claim to have "power of attorney" who don't really have the legal authority to act for another person.
  4. There are deeds delivered after the death of one of the people involved, without the pre-written consent of the deceased.
  5. It is discovered that a will isn't legally valid.
  6. A deed is to, or from, a defunct corporation.
  7. There are heirs missing or not disclosed in title documentation.
  8. Wills were misinterpreted.
  9. Deeds were made by people of unsound mind.
  10. Deeds were made by minors.
  11. Deeds were made by non-citizens.
  12. Erroneous reports were furnished by tax officials.
  13. Estates were executed with key people absent.
  14. There is an undisclosed divorce of a spouse who claims to be an heir.
  15. There is a spouse who is supposedly, but not legally, divorced from someone involved in the proceedings.
  16. Children were born or adopted after the date of a will that involved the property.
  17. Surviving children were omitted from a will that involved the property.
  18. Mistakes were made in recording legal documents.
  19. Title records were falsified.
  20. Creditors make claims against a property that was sold by heirs or other people named in a will.
  21. Deeds were made under duress as a last option to foreclosure.
  22. Easements (limited rights for other parties to use the land) exist that were not located by a survey.
  23. A deed incorrectly identifies public property as private property.
  24. There are errors in tax records.
  25. There are deeds from a bigamous couple.
  26. Representations on legal documents (e.g., Notary seals) are invalid or incorrect.
  27. The property was condemned, but there is no official record of the condemnation.
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Am I required to purchase title insurance?

Most lenders will require that you purchase a lender's tite insurance policy. This protects their investment in your property. You are not required to purchase an owner's policy; however, your one-time payment will protect your property for as long as you own it.

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If my lender requires that I purchase Lender's title coverage, then why do I need an Owner's title insurance policy?

Purchasers often ask why they need an Owner's title insurance policy when the Lender's policy should be enough. The Lender's Policy only protects the Lender, and only for the amount of the remaining loan balance and for the life of the loan. Consequently the policy expires when the loan is paid off. Conversely, the Owner's policy protects the Purchaser's interest in the property he received, and that coverage continues for his lifetime. This is important because lliability for title defects can survive through and even beyond the period of the Purchaser's ownership. Therefore, for a one-time premium paid at the time of settlement, the Purchaser is protected against prior title defects, or claims made against his title, even after he sells the property or pays off the loan. We strongly recommend that Purchasers obtain their own title insurance poilicy to protect themselves as Lenders do.

As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or benefical interest. The lender acquires title insurance protecting the lender's interest up to $80,000. But the purchaser's down payment of $20,000 is not covered.

What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title. The title insurance company pays the lender's loss and is entitled to take an assignment of the borrower's debt. The purchaser loses the down payment, other equity in the property that may have accumulated, and the property. To add insult to injury, the balance on the note is still due!

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Why do I need title insurance on a refinance?

Title insurance on a refinanced mortgage is usually offered at a reduced rate, and it assures your lender that you actually own the property. It insures that no one else has a preemptive position in front of the lender, and if someones does, it pays for the lender's losses.

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Do I need a new Owner's policy when I refinance?

No. A new owner's policy is not required when refinancing. If a new appriasal is performed and the property is worth more than it was when the owner's policy was issued, your current owner's policy can be updated. The new owner's policy can be issued for the current fair market value of the property and you only pay the difference in premium costs for the increase in coverage.

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Why does the lender have to have a new lender's title insurance policy everytime I do a transaction?

Lender's title insurance policies insure the lender's interest in the property up to the face amount of their loan. The policy is only applicable to the specific transaction, and it provides coverage for the mortgage lien and it protects against errors made in the title search connected with that transaction, as well as any pre-existing clouds on title. Therefore, each new lender will want a lender's policy that is specific to their transaction.

Why do you need to buy title insurance again even though you purchased a policy when you first bought your home and there is no change in ownership? It is because a separate policy is needed by the lender insuring the vaidity of your mortgage when it is made. For as long as you own the property your mortgage is valid, but it doesn't insure the new mortgage created when you refinance, and it doesn't provide protection against events that may have transpired between the time you purchased the property and when it is refinanced.

For example, you may have taken out a second mortage on the home that could threaten the priority of the new lender's mortgage. There could be legal judgements against you or a mechanics lien against the property by a supplier who wasn't paid for home improvements.

Lenders also insist on a new title policy, because many mortgages are packaged as securities and sold to investors in the secondary mortgage market. Title insurance is the only practical way to provide the assurance investors demand and to ensure that the mortgages backing these securities are valid and enforceable.

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Why do I need insurance on a brand new home?

Even if your home itself hasn't had previous owners, the land that it stands on has. Your policy insures you as the owner of a specific piece of property. It clarifies the property rights and insures that your builder hasn't used it as collateral on another loan, that there are no unidentified easements affecting your property and that no problems will surface to hurt you later.

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You choose your title insurance company.

When it comes to title insurance, you have the right to choose whatever company you'd like. Although many people just rely on their attorney, mortgage lender or real estate agent to pick a title insurance company for them, ultimately the decision is yours.

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Do all title companies charge the same fees for their services?

Fees may vary from company to company. All reputable companies will supply you with a good faith estimate of their fees and the cost of the insurance prior to settlement.

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Do title companies charge different rates for title insurance?

Title insurance rates are set by state insurance commissions and are based on the purchase price of your property (owner's policy) and the loan amount (lender's policy).

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Title insurance is a one-time cost.

You don't pay monthly or annual premiums to keep your title insurance - you pay it just one time, typically at closing. Then you are covered for as long as you own your home.

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Section 2
STA Specific Settlement Procedures
What happens at closing?

You will meet with a closing agent who will review with you a series of documents that have been prepared by your lender and provided to the closing agent the day of or before your closing. Many of the documents are non-binding notices and disclosures, which can be quickly reviewed and signed. But a few are key and legally binding. At STA these documents will be presented to you at the beginning of the process for your careful review.

Here is a list of these documents.
  • HUD-1 Settlement Statement
  • Note
  • Deed
  • Sales/Broker Commission
  • Items Payable in Connection with Loan/Fees/Points, Reports, etc.
  • Reserves deposited with Lender/Escrows
  • Title Fees & Costs
  • Government Recording and Transfer Charges
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What should I bring to settlement?

A valid photo ID, your checkbook for any overages, cashiers check in the amount of your Good Fairth Estimate and your paid Homeowner's Insurance invoice.

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How many days in advance do I need to set up my closing?

By submitting all of the necessary information for closing, STA can close your transaction at your convenience, but at least a few days are necessary for STA to order and receive a title abstract and payoff information from existing lenders.

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Who makes the appointment for a Refinance closing?

Normally the lender will contact STA to make the appointment. Since the lender prepares the loan package and most of the closing documents, the lender has a better idea of when closing can happen.

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How much money do I bring if a final HUD-1 settlement statement is not available prior to closing?

You should bring a cashier's check for the amount listed on the Good Faith Estimate provided by your mortgage loan officer. If the Good Faith is an overestimate, we will provide you a refund at settlement. If the Good Fairth is an underestimate, in most cases we will accept your personal check for the difference.

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Can I have my closing funds wired to your account? Do you have wiring instructions?

STA will accept wired funds. These funds MUST be received by STA prior to closing. The closing cannot be finalized until all funds are received, which could conceivably delay delivery of the keys to your new home. We suggest that you arrange to have funds wired for arrival at STA the day before closing. Please note that wired funds coming from someone other than a bank (such as a brokerage account) often require up to three (3) days prior notice to ensure that the wire gets sent out. Also, most companies that wire funds for you will require written authorization before sending the wire out. Be sure to contact your bank or brokerage well ahead of time to make the necessary arrangements.

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Do I need Certified Funds? Who should I make the check payable to?

No, certified funds are not necessary. A cashiers check or bank check is sufficient. You should make the check payable to yourself and sign it over to STA at Settlement. This way if for some reason you don't settle, you will still have access to your own funds.

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My last statement says that I owe $245,768.98. Why are you collecting $247,045.56 for my loan payoff?

The mortgage lender collects interest on its loan until it RECEIVES the payoff check. If you close on Thursday, record on Friday, and then overnight the payoff on Friday evening, the BEST case scenario is that it is received the following Tuesday. Because of weekends, holidays and unforeseen delays, STA calculates interest on the payoff through the 7th day after settlement (10 days on a refinancing because of the three day right of rescission). If the amount collected exceeds the amount due on the day the lender receives the check, they will refund the excess interest along with any escrowed funds.

A special note on FHA loans: FHA loans do NOT carry per diem interest. This means that if you close on the 30th of December, and your payoff is received on the 5th of January (impacted by the weekends and/or holidays) then you have to pay ALL of January's interest, not a pro-rated amount. If you close after the 25th day of the month and you have an FHA payoff, you can expect to pay extra interest on the entire next month.

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Can I use a power of attorney (POA) for my closing?

YES, but you should review the following carefully:
  • Any POA must be reviewed and pre-approved by (i) STA and, IF you are the purchaser, (ii) by your lender(s).
  • The review of the POA should be done as soon as possible in case the existing POA is not acceptable, prompting the need for a new POA to be drafted and circulated prior to closing.
  • The pre-approved ORIGINAL POA MUST be delivered to STA at or before closing, as we must present the original POA at the courthouse for recordation.
  • A Special POA for the specific transaction is normally required in order to satisfy the title company insuring the transaction.
  • If a General POA is pre-approved by STA for the transaction, we must collect and keep the ORIGINAL POA to be recorded at the courthouse. The original will be returned to you after recording at the courthouse, which may take a few weeks.
  • Please be sure that STA has contact information for the person who will sign for you and be sure that person will attend closing. Also, it is wise to give STA and the person signing for you a phone and fax number to reach you during closing for any last minute issues.
  • If you are the seller, be sure your agent or the person signing for you has the keys, garage door openers, any money due from you, etc., to deliver at closing.
  • If you are the purchaser, be sure you make arrangements to have your purchase money delivered to STA at or before closing.
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How long will settlement last?

Our settlements typically last about one hour.

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How do we get our proceeds?

Once we have verified that all necessary title documents have been recorded, proceeds can be mailed or picked up in check form. We do not issue certified checks. If the payee wishes to have the funds immediately available, we recommend a wire transfer. (STA does not charge to send wires.)

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Can you wire my proceeds to my bank, money market or stock account? If so, what do you need?

If STA is given written wire instructions, we will wire funds to your account for no additional fee; we cannot accept verbal wire instructions. Normally your funds will be wired to your bank within two business days after your closing. Please note that many banks do not actually credit your account with these funds until the day after the bank receives the wire. If we are to wire directly into a regular bank checking account, your wire information is normally shown on the face of your checks. If we are to wire to a brokerage or similar account, the wire instructions are more detailed and should be supplied by your brokerage firm. Normally, such institutions will fax their wire information with your account name and account number directly to STA, upon your request.

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Why can't the sales proceeds or the commission check be disbursed at the table?

State statutes prohibit us from disbursing funds from the transaction until after all title documents (deeds or deeds of trust) have been recorded in the appropriate Circuit Court Clerk's Office. Recordation is not accomplished until such time as the settlement is complete, in other words, until all required funds are received by STA for the transaction, and all documents are executed by the parties according to the lender's instructions. Once settlement is complete, the title documents will be sent for recordation. We are not permitted to disburse funds until it has been verified that the documents have been properly recorded. The recordation process can be time consuming, and depending upon the jurisdiction and the circumstances recordation can take anywhere from a few hours to a few days.

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When can I take possession of my new home?

In most cases, the purchaser takes possession of the property on the day of closing after all documents have been executed and recorded and all funds have been disbursed.

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When will I receive the keys to my new home?

Your realtor or builder will see to it that you receive your keys on the day of closing unless other specific arrangements have been agreed upon.

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Who can I call if I have other questions?

Call any of STA's conveniently located offices throughout Virginia. Our expert staff will be happy to assist you.

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Section 3
General Closing Questions
What does a title company do?

A title company oversees the interests of all parties, consisting of buyers, sellers, lenders, real estate agents and coordinates the transfer of money and property at the time of closing. Prior to settlement the title company will research the ownership history of the property (which is called the title search) to determine that the title is free of any liens or claims. At the settlement table, the title company collects and distributes funds from the transaction, transfers ownership of the property, and issues title insurance.

What are the functions performed and services provided by the closing agent?

It is customary for the closing agent to receive a "title order" from a real estate agent, a loan officer, a purchaser, or a refinancing owner in preparation of a closing. The closing agent will then order a title search, a location survey (if required), payoff statements, and real estate tax information in preparation of closing. Within a few weeks prior to closing, the closing agent will schedule a closing date with the lender and the parties involved, as well as, clear title and issue title insurance commitments to the respective parties. The day before closing or on the day of closing, the lender will provide final loan instructions to the closing agent along with the lender documentation. Upon receipt of these items, the closing agent will prepare the final HUD-I Settlement Statement and conduct closing with the parties. Generally, the actual closing involves an explanation of the documentation by the closing agent and the acquiring of signatures which takes approximately one hour. In some cases, there may be subsequent adjustments to the HUD-I Settlement Statement or other documentation that will require a longer closing time. At the time of closing or shortly thereafter, the lender will remit funds to the closing agent's escrow account for disbursement.

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Who does the settlement company represent?

The closing agent represents all parties in a transaction: the buyer, seller and lender. In essence, the agent represents the process and/or transaction and ensures that all elements and terms are met.

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What factors should I consider in choosing a closing agent?

While the functions performed and services provided by the closing agent include those matters previously described, the most important role played by the closing agent is the issuance of the title insurance policy. Without the closing agent's ability to issue a title insurance policy, your transaction could not proceed to closing. Ultimately, the most vital function of the closing agent is issuing a title insurance policy, and since title insurance policies are all substantively equal, the closing agent is simply providing a commodity necessary to complete the transaction.

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Who chooses the settlement company?

The person refinancing or purchasing a property selects the closing agent. Sometimes homebuilders or lenders suggest an affiliated firm and offer to pay associated fees for using that company. But it's always a matter of choice.

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What happens and when?

Once the title order is placed with any of our offices, a title abstract is ordered as well as a location survey where required. The title company coordinates between the borrower/purchaser, the lender and realtor or builders involved in the transaction. The title company obtains mortgage payoff amounts as well as all pertinent tax, water and homeowners association figures. We prepare the title insurance commitment, the deed, settlement sheet and in many cases loan documents. We conduct the closing, collect and disburse all funds to the appropriate parties, record all necessary documents including deeds, mortgages and mortgage releases in the appropriate jurisdictions. Once all documents have been recorded in the County, a final title policy is issued.

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What documents are needed for a settlement?

We'll let you know the specifics for your closing but in most instances you'll need to provide:

For a Sale:
  • Payoff information
  • Funds required at closing
  • Buyers must provide a copy of the sales contract and related written materials for a refinance:
  • A copy of your owner's title policy if you have purchased the property in the last 10 years (with a copy issued in the past 10 years, STA can save you costs for lender's title insurance required by your new lender).
  • The most recent tax and water bills
  • Your survey and a statement for your existing mortgage(s) that will be paid
  • Copies of statements from which proceeds will be used to pay.
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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, closing costs for both buyer and seller and show all pro-rations and sums to be disbursed by the title company to all parties.

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What fees and costs should I expect to pay the closing agent?

Variable Fees and Costs - Both the types and amounts of these fees and costs will vary widely among closing agents and attorneys and include such items as:
  • A settlement/closing fee
  • A title search/abstract fee
  • A title insurance premium
  • A title insurance binder fee
  • A location survey fee
  • A courier/overnight fee
  • A notary fee
  • A document preparation fee, etc.
Non-Variable Costs - These costs include the transfer and recordation taxes charged by the State of Virginia and the respective county along with the costs charged by the county clerk's office for recording of the Deed, Deed of Trust (Mortgage), and other documents which require recordation. Unless otherwise negotiated in the sales contract, the standard purchase transaction will require that the purchaser(s) pay the Deed Tax ($2.50 per $1,000.00 of purchase price) and the Trust Tax ($2.50 per $1,000.00 of loan amount) . In a residential refinance transaction that does not include a transfer of ownership, only the Trust Tax will be charged based on the new loan amount. If the new lender is the same lender that is being paid off at closing, the borrower will only be required to pay the Trust Tax on the difference between the new loan amount and the amount of the existing loan being paid off at closing.

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Can't closings be simplified with the use of computers?

The process is more accurate, timely and secure than ever thanks to advanced technologies. At STA we offer digital preparation, delivery and storage of closing documents. Our advanced document management system is accurate, flexible, efficient and immediate. We also are capable of handling high-volume electronic documentation. Alas, at the end of the day it is still necessary to meet for about an hour to review and sign the documents.

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Is a title examination sufficient without the need for title insurance?

No. A title examination is only as good as the land records. Should a filing error happen, if someone perpetrates a fraud, if an estate is mishandled, a title examination would not expose those problems. The title insurance protects you, even thought the title examination did not and could not disclose the problem.

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Am I required to purchase title insurance?

Most lenders will require that you purchase a lender's title Insurance policy. This protects their investments in your property. You are not required to purchase an owner's policy; however, your one-time payment will protect your property for as long as you own it.

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Do title companies charge different rates for title insurance policies?

Title Insurance rates are set by state insurance commissions and are based on the purchase price of your property (owner's policy) and the loan amount (lender's policy).

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What is a construction loan title insurance policy?

A construction loan consists of short term financing of real estate construction. Construction loans are generally disbursed in installments as the construction on the property progresses. A construction loan is used to finance the costs of building a new structure on real property. It is a high-risk loan. The most important risk to the title insurer is the risk that the priority of the construction loan's mortgage will be lost to mechanics' liens.

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What other types of insurance will I need?

Your lender will require that you purchase homeowner's or hazard insurance, which protects you and the lender from loss in the event that the house is damaged or destroyed, such as by fire. Generally, coverage must be equal to at least the replacement costs of the property. Most home buyers purchase a homeowner's package of insurance that includes coverage for personal liability (which covers you if someone is injured on your property), personal property coverage (which covers loss and damage to personal property due to theft and other events), and dwelling coverage (which covers you for fire, theft, water damage and other hazards to your actual house). If you live near a body of water, you may also want to get flood insurance as part of your homeowner's protection. Lenders typically want the first year's premium to be paid at or before closing. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in a reserve called an escrow account, paying your insurance premiums when due each year out of the account. We encourage you to discuss any questions about required or recommended insurance with your lender. STA's subsidiary, STA Insurance Services, LLC offers homeowner's insurance, and will work with STA to make sure that all of your required insurance is in place before closing.

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Why do I need a location survey?

Location surveys are necessary on all financed purchases. The title company must order the survey through a licensed Surveyor in advance of the settlement to make sure there are no discrepancies or structures on the property which appear to encroach over building restriction lines, property lines, or drainage and utility easements. Boundary surveys are much more involved, more time consuming and much more expensive. They are not required by banks unless the property is being rezoned or subdivided, or there's a boundary problem.

If you are refinancing a loan and have a prior location survey, and have not changed anything or added any improvements, then the old survey is sufficient as long as you sign an affidavit at closing. Even if you can't find your survey, we can still insure the title to the lender if you sign the affidavit. However, some lenders may require that you have a new survey. In that case, we will contact you about ordering one.

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Do I have to get a new survey on my property when refinancing? Why?

You only have to get a new survey on the property if improvements have been made since the last survey was completed. A new survey must be provided after improvements have been made on the property to reflect a new footprint of the property and to properly insure your investment and your lender's collateral.

Unlike refinances, all purchases require a new survey.

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Should I schedule my closing before the end of the year for tax reasons?

If you have the opportunity to schedule your closing on either side of New Year's Day, you should carefully consider your individual financial and tax situation. If you schedule it on or before December 31, and you pay your points and prepay your first mortgage payment, you may be able to deduct all of these costs on your tax return for the year of the closing. As always, consult with your tax or accounting professional.

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Can the seller credit the buyer for home inspection items?

Some lenders will allow credits for home inspection items, but in most cases the lender will want to simply give a closing credit for the amount of the item(s). For a lender to allow credits for specific home inspection items is somewhat inconsistent with the lender's appraisal which generally states that the home is in good condition and good repair.

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What if the seller credit exceeds the amount of closing costs?

When it comes to seller credits, different lenders will allow different credits to be shown, but lenders will generally not allow seller credits that exceed the amount of closing costs.

Why can't 'pre-paids' be a part of the seller credit on all loans?

Some lenders allow 'pre-paids' and some do not; we advise you to check with your lender directly. In general, even lenders who allow them will only allow them up to the dollar amount of closing costs, not over.

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What are the Seller(s) costs?

The costs to the seller(s) are deducted from the proceeds of the sale. Examples of the costs are as provided in the Contract of Sale, transfer tax, commission, mortgage payoffs, etc.

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What are the Purchaser(s) responsibilities and costs?

The purchaser(s) are responsible for delivering to the closing a cashiers or certified check and policy for homeowners insurance. The costs associated with the buyer include the recording of closing documents, mortgage closing costs and the balance of sale between buyer and seller. The balance of sale costs is itemized in the Closing Statement prepared by STA Title & Escrow, Inc. The mortgage costs must be obtained from the purchaser(s) mortgage company.

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Closing protection letters: What are they and why do lenders request them?

Many lenders routinely request closing protection letters. A closing protection letter, sometimes referred to as an insured closing letter, is a document issued by title insurance underwriters that sets forth an underwriter's responsibility for negligence, fraud and errors in closings performed by agents and approved attorneys. It indemnifies the Lender against loss or damage arising from a breach of certain fiduciary duties owed by the closing agent to the parties to the transaction. This document is necessary because the agency /principal relationship between an underwriter and a policy issuing agent or approved attorney is limited to the issuance of a policy and does not extend to escrow functions.

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What is pro-ration of property taxes?

This is the process of charging either the buyer or seller for their share of real estate taxes owed on the property for their respective time of ownership. Taxes are said to be "pro-rated" back or forward to the due date of the property taxes.

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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 an interest adjustment through the 1st day of the following month. The first payment will then be due on the 1st day of the month following. Interest adjustment is considered a settlement charge and will be disclosed on the HUD.

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Why can't the sales proceess or the commission check be disbursed at the table?

State statutes prohibit us from disbursing funds from the transaction until after all title documents (deeds or deeds of trust) have been recorded in the local Land Records. Recordation is not accomplished until such time as the settlement is complete, in other words, until all required funds are received by STA for the transaction, and all documents are executed by the parties according to the lender's instructions. Once settlement is complete, the title documents will be sent for recordation, and upon verification, we are permitted to disburse funds. The recordation process can be time consuming, and it varies from jurisdiction to jurisdiction. Additionally, the recordation of documents from settlements conducted at the end of the month or during the holidays may take significantly longer due to volume.

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What funds are considered "available funds"?

Cash, received wired funds, and a cashier's check or certified check that is issued to STA Title & Escrow, Inc. are considered "available funds" on the day of deposit.

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What are the most common hindrances to a closing happening on time?

The most common hindrances to a closing happening on time are no updated survey, no homeowner's hazard insurance, and no pest inspection. These must be executed or purchased prior to closing so that all information is accurate and the property can be insured without any abnormal exceptions.

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