Frequently Asked Questions
What is a title examination?
What is title insurance and why do I need it?
How should my name appear on the deed?
What is the difference between a General Warranty Deed, Special (Limited) Warranty Deed, and Quit Claim Deed?
What is a survey and why should I pay for one?
What is an easement?
If I have an easement over someone else’s property why do I need it?
If someone else has a properly recorded easement over my property, what are my obligations and rights with respect to that easement?
What is an escrow agent?
How do I know what the land surrounding my property will be used for?
I am a renter and I received court papers for a "mortgage foreclosure". What does this mean? Do I have to move?
I am a homeowner and I received court papers for a mortgage foreclosure. What does this mean? Do I have to move?
What is a tort?
What is the difference between Civil and Criminal Litigation?
Should I do a formal inspection of the unit prior to moving in and moving out?
What are the various types of mortgages?
1. What is a title examination?
A title examination is a study of the records related to the ownership history o the property and sometimes of other matters related to ownership interests in the property. An abstract of title is a collection of public records relating to the ownership of a parcel of real estate. During the examination a title examiner (a title company employee who often is a lawyer) examines the applicable title information to determine who owns the lands, whether there are any defects in or claims against the ownership and whether any action is needed to make sure the purchaser obtains good record title to the property at closing.
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2. What is title insurance and why do I need it?
A title insurance policy, simply put, insures the status of title in the name of the owner of the policy. Title insurance policies are issued by title insurance companies. The title company contracts with the insured person named in the policy to protect the title as insured against financial loss, as well as the cost of defending the title in court. The title company searches and examines documents related to the ownership of and items affecting the property. It provides a source of indemnification to the named insured if he or she is damaged by a negligent or bad title search or examination and also from hidden defects that would not be discovered in a title search. For instance, a title defect resulting from a forgery would not be revealed in a search or examination of the public records but would be covered by the title insurance policy.
Prior to issuance of the title insurance policy a title commitment will be prepared. You may or may not be afforded the opportunity to see this document prior to closing, but you should make every effort to review it prior to closing and to have your attorney (if you have one) review it as well. While there are many important parts to a title commitment, at a minimum you should be familiar with the following: (i) Schedule A identifies the type of policy being issued, the names of the parties and the legal description of your property; (ii) Schedule B contains a list of items that must be satisfied in order for the title company to issue the policy of insurance and also contains a list of title matters (called "exceptions") that will be excluded from coverage (such as statutory real estate taxes and easements for utilities servicing the property). If there are objectionable items in the commitment, you need to try to have them removed by the title insurance company before closing.
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3. How should my name appear on the deed?
Make sure you carefully identify all parties taking title, and how title is to be held. The following are examples of common manners in which title is held:Sole Owner. Under this approach, title is taken in the name of only one individual grantee and is freely transferable or subject to encumbrance by that grantee, subject to dower and/or homestead rights described below.
Example: John Doe, a single man, grantor, to Jane Smith (an unremarried widow), grantee.
Joint Ownership with Right of Survivorship. Title can be taken in multiple names under this approach. Any joint tenant can freely transfer his or her fractional interest in the property during his or her lifetime, and any such transfer will terminate the joint tenancy to the extent of the interest transferred. A joint tenant cannot transfer his or her interest by will since a joint/survivorship interest passes by law automatically to the surviving joint tenants on a joint tenant's death. A joint tenant can only encumber his or her proportionate interest in the property. Also, note that equal ownership shares is presumed unless the deed states otherwise (for example, if there are two grantees, each grantee will own a one-half interest).
A joint tenancy is created and exists only if four essential characteristics exist: (1) unity of joint ownership and control; (2) the interests held must be the same; (3) the interests must originate in the same instrument; and (4) the interests must commence at the same time. If all or any of these characteristics do not exist, the owners will own the property as tenants in common.
Example: John Doe, a single man, grantor, to Able Smith, Jane Baker and Charles Jones as joint tenants with right of survivorship.
Tenants by the Entireties. Title can be taken as tenants by the entireties only by a validly married husband and wife. If a transfer of this type is attempted but the grantees are not validly married, or if they become divorced, the title reverts to tenants in common. Neither tenant can transfer his or her interest to a third party or encumber the property without both parties joining in the deed or mortgage. Upon death of one party, the property automatically becomes the sole property of the survivor. This is a common form of ownership among married couples, except in community property states. In community property states, the husband and wife presumptively acquire the property as community property. In most of those states the spouses can hold as tenants in common or as joint tenants with right of survivorship.
Example: John Doe, a single man, grantor, to John Jones and Jane Jones, husband and wife.
Tenants in Common. Estates held as tenants in common are freely transferable or subject to encumbrance (as to the transferring tenant’s own interest) by each tenant. There is no right of survivorship in the surviving tenants upon one tenant’s death. Also, note that equal percentage ownership is presumed unless the deed specifically states otherwise (for example, unless the deed states otherwise, if there are three grantees, each grantee will own a one-third interest). It is always best to state each co-owner’s percentage ownership interest in the deed to avoid any uncertainty or misunderstandings.
Example: John Doe, a single man, grantor, to Jane Smith and Tom Baker, in equal shares as tenants in common.
Title Conveyed in Trust for the Benefit of the Purchasers. Under this approach, legal (record) title is transferred to a trustee (for example, the grantee would be "John Doe, as trustee under agreement dated June 1, 2005"). Care should be taken in using this approach since there are more complex concerns involved.
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4. What is the difference between a General Warranty Deed, Special (Limited) Warranty Deed, and Quit Claim Deed?
Title will generally be transferred by a general warranty deed. A general warranty deed guarantees the grantor’s good title before and after the conveyance and contains covenants concerning the quality of title. The usual guarantees or warranties by the seller are: good title, freedom from encumbrance other than as specifically identified, and right of possession to the buyer as against all others. The warranty includes any claims arising prior to the grantor’s ownership.
A special warranty deed (sometimes referred to as a limited warranty deed) provides less extensive warranties than the grantee receives from a general warranty deed. Under a special warranty deed, the grantor warrants only against claims arising during the period in which the grantor held title, while under a general warranty deed the grantor warrants against all claims whenever arising, even if prior to the date the grantor himself or herself took title.
A quit-claim deed contains no warranties of any kind and conveys only the interest, if any, held by the grantor (for example, if the grantee actually had no interest to convey, the quitclaim deed would not vest any ownership in the grantee). The quit-claim deed does not convey after-acquired title and is not typically used for residential real estate transactions, except to correct errors.
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5. What is a survey and why should I pay for one?
A survey is a drawing of the property which should show any improvements to the property (such as buildings, driveways and the like), the boundary lines of the property, and any encroachments affecting the property (whether items encroaching on the property by third parties or encroachments by the property against a neighboring property). The surveyor may certify to many things, such as : (i) the improvements are all located within the boundary lines; (ii) which flood zone in which the property is located; (iii) whether the structures are in compliance with applicable laws; or (iv) whether the property has access to a public right or way. Encroachments on the property may include: (i) utilities (such as water, cable, electricity, and telephone lines); (ii) another party’s right to enter upon your property (such as a common drive way that the property may share with a neighboring property); or (iii) structures not being conveyed with the purchase of the property that are on the property and should not be (such as the fence of a neighboring property). If you are financing any portion of the purchase of the property, your lender will most likely require that a survey be obtained prior to closing. In some instances, if the current owner of the property has a recent survey of the property the lender will accept such survey (or perhaps a current recertification of the prior survey) and new survey costs may be avoided or at least minimized.
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6. What is an easement?
An easement is an interest in land owned by another person, such as the right to use or control the other person's land, or an area above or below it, for a specific limited purpose (such as to cross it for access to a public road or to share a common drive with a neighboring property). The land benefiting from an easement is called the dominant estate; the land burdened by an easement is called the servient estate. Unlike a lease or license, an easement may last forever, but it usually does not give the holder the right to exclusively possess, take from, improve, or sell the land. Some common easements may include: (i) a right-of-way; (ii) a right of entry; (iii) a right to the support of land and buildings; (iv) a right of light and air; or (v) a right to water. The owner of the servient estate is normally free to use his/her property as he/she chooses, provided that use does not impair the rights of the holder of the dominant estate.
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7. If I have an easement over someone else’s property why do I need it? You may have an easement over someone else’s property for several reasons. One of the most common reasons may be for access to a public right of way for a property which otherwise might be landlocked. Check your survey or ask your title company if you are unsure what any identified easement is for. Also, make sure that every easement benefiting your property over someone else’s property is reflected on Exhibit A to Schedule A of your title insurance policy. One of the items insured by an owner’s policy of title insurance is legal access to the insured property.
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8. If someone else has a properly recorded easement over my property, what are my obligations and rights with respect to that easement?
Your obligations to the party benefiting from the easement over the property you are purchasing depend on the written agreement creating the easement.
If the survey of the property reflects a path labeled “easement” but no document is of record creating the easement you will want to inquire as to where the surveyor obtained the information about this easement. If the unrecorded easement is shown on the survey the title company will likely list this unrecorded easement on your title policy as an exception to coverage, which means that if someone was to claim the right to use this easement your title insurance would not pay to resolve this issue.
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9. What is an escrow agent?
An escrow agent is typically a third party designated to hold an item (usually funds, but sometimes certain documents, such as a deed and/or mortgages) for a certain time or until the occurrence of a condition, at which time the escrow agent is to hand over the item to another party. Typically the escrow agent will be your title company, and the funds and documents that they are holding include any deposits you made under the contract to purchase the property, as well as the deed and their mortgage instruments.
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10. How do I know what the land surrounding my property will be used for?
Typically the seller does not guarantee what the area surrounding the property that you are purchasing will be used for. You should contact the property appraiser or tax collector for the county in which the property is located and determine who owns the surrounding land prior to purchasing the property (the title company can also find this out, and if a survey is obtained the surveyor will identify the owners of any immediately adjacent parcels). While this may not provide information on recent conveyances or land that is under contract for sale, it is a good starting point. Also, ask the neighboring property owners if they know of plans to develop land surrounding your property. You may also wish to confirm the zoning of surrounding property so that you know what kinds of uses might be made in the future, although zoning can be changed.
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11. I am a renter and I received court papers for a "mortgage foreclosure". What does this mean? Do I have to move?
Most likely it means the owner of the property, who is probably your landlord, isn’t making the mortgage payments. You may have to move, but not right away. The most important thing to know is that the foreclosure does not immediately change your relationship with your landlord. In other words, you still have to pay rent or risk being evicted. If the owner doesn't stop the foreclosure, you may eventually be forced to move, even if you have a written lease. It will take 3 to 6 months, perhaps a year or even longer, for the foreclosure to go through.
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You should file a written response to the foreclosure complaint (which you should mail to the court and to the attorney representing the plaintiff), saying you are a tenant and that you want to be notified of what happens in the foreclosure case. If the foreclosure does go through, you should get a copy of the court order setting the date for the public sale. About 10 days after the public sale, the clerk of court will issue a Certificate of Title saying who the new owner is. The new owner can immediately get a Writ of Possession immediately and have the sheriff throw you out on as little as 24 hours’ notice. If you have a lease and you are current on your rent and other lease obligations, the new owner may agree to accept your lease and allow you to remain in the property.
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12. I am a homeowner and I received court papers for a mortgage foreclosure. What does this mean? Do I have to move?
If the bank or mortgage company has started a foreclosure suit against you, you will be served court papers by the sheriff or by a process server. You should receive a summons (a notice from the court which tells you that a case has been filed and how long you have to respond to the complaint), a complaint, and possibly an order to show cause. These papers come with a deadline (usually specifically provided in the summons)! So, as soon as you get them, read them. Try to talk with an attorney about them so you can get some advice about what to do. If you delay in responding or do not show up in court, an order of default may be entered against you. This would be like automatically losing the case. The next piece of paper you could receive might be a notice to leave your house after the foreclosure sale is completed.
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13. What is a tort?
A tort is a private or civil wrong or injury (other than breach of contract) for which a court of law may provide a remedy through a lawsuit for damages (compensation). When a person violates his/her duty to others created under general (or statutory) law, one seeks damages or equity.
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14. What is the difference between Civil and Criminal Litigation?
The main difference between civil and criminal litigation is the form of punishment. In criminal law, the party found guilty of an offense would be incarcerated or put in jail, fined by the government, or sentenced to the death penalty. In civil law, the guilty party would have to reimburse the other party for the damages or losses caused. Civil litigation is usually filed when a tort has been committed.
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15. Should I do a formal inspection of the unit prior to moving in and out?
Where a refundable deposit is based upon the condition of the property, it is a good idea (and is often required by state law) for the landlord to provide documentation of the condition of the rental unit when the tenant is moving in. Upon move out, the tenant is entitled to the full deposit refund or an explanation to why the full deposit was not refunded. As such, inspection documentation for moving out helps both parties prevent disputes about any deductions for repairs to items. Sometimes tenants take photographs of the unit upon departure as evidence of the condition of the unit and/or particular items upon moving out.
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16. What are the various types of mortgages?
There are many mortgage types that help provide financing options for home buyers. The most common ones the homebuyers choose are, but not limited to:
(1) Conventional: With a conventional mortgage, the lender obtains a lien or defeasible legal title to the property in return for the payment of the amount of money lent.
(2) FHA mortgage: An FHA mortgage is a conventional mortgage which is insured in whole or in part by the Federal Housing Authority.
(3) Purchase money mortgage: A purchase money mortgage is one that is given to secure the loan which is used to buy the property. A first (senior) mortgage on the property has priority over any second or subsequent (junior) mortgages on the property; the senior lender has a more secure interest in the event of a default since the senior obligations are paid first in the event of foreclosure and sale.
(4) Adjustable rate mortgages: An adjustable rate mortgage (often called an "ARM") offers a fixed initial interest rate and a fixed initial monthly payment. After the initial period is over, the rate and term of the mortgage can be modified at predetermined times under the agreement to reflect the current market mortgage rates.
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