Resources For Realtors

What is a Title Commitment and how do I read it? After a title search is done looking for defects in the property’s chain of history that might lead to future problems, a “Title Commitment” is issued informing that the title company has committed to insuring the property. The buyer has several days to talk to their title company or their agent if they have questions or they find anything unacceptable on the title commitment. The Title Commitment is divided into three (3) sections:

Schedule A is like the cover page. It lists the:
• Effective date of the insurance policy
• Dollar Amount of the Policy
• Names of the insureds (New Owner and/or Lender)
• Name of the Seller of the Property
• Identification of the land being insured.

Schedule B-1 includes the Requirements. The Requirements are what must be done before the title insurance can be issued and property can close. If any of the Requirements can’t be met, there may be a delay or cancellation of the sale. Some of the Requirements may be recording of a new deed, releases of various liens, tax payments, copy of trust paperwork, or proof of identify, payoff of mortgages, liens, judgments, Home Equity Lines (HELOC).

Schedule B-2 includes the Exceptions. Exceptions are what the title company will not cover against (including certain exceptions that are standard, like water or mineral rights.) If the problem is listed in Schedule B, the title insurance policy will not cover against it (nor pay attorney or court fees regarding the problem.) If the buyer protests some Exception, the title company may be convinced to insure over it (with an endorsement) or obtain a release, or other document to eliminate the exception. Some examples of Exceptions are interests in the land that can only be found at inspection, easements, and tax assessments for new construction. The buyer, however, should read the Exceptions section carefully as there may be a limited time to make any objections before the title insurance is issued and the closing is completed.

Make sure all of your clients are protected
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.

Enduring value
The good news is that owner’s title insurance protects homebuyers financially, as long as they or their heirs* own the home. For a low, one-time fee (average of 0.5% of purchase price), homebuyers can rest assured, knowing they are protected from inheriting existing debts or claims to their property.

State regulations and CFPB
Each state government regulates its own title insurance costs. 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. The party that pays for the owner’s title insurance policy varies from state to state, and sometimes even within a state. For more information about title insurance, or to find a company approved to issue an owner’s policy, please direct your homebuyer clients to www.homeclosing101.org.

Free resources for Realtors®
Together, real estate agents, land title insurance professionals and other stakeholders involved in real estate transactions can protect homebuyers and provide them with the peace of mind they deserve during the home closing process.

For more information about title insurance, and to get free resources for real estate agents, visit www.alta.org/realtor.

Buying a home is an exciting and emotional time for many people. To help you buy your home with more confidence, make sure you get owner’s title insurance. Here’s why it’s so important for you.

1. Protects Your Largest Investment
A home is probably the single largest investment you’ll make in your life. You insure everything else that’s valuable to you—your life, car, personal property, health, pets, jewelry, etc.—so why not your largest investment? For a one-time fee, owner’s title insurance protects your property rights for as long as you or your heirs* own the home.

2. Reduces Your Risk
If you’re buying a home, there are many hidden issues that may pop up after purchasing it. Getting an owner’s title insurance policy protects you from legal title discrepancies. Don’t think it will happen to you? Think again. Here are just some of the many situations that you’ll be protected from if you have owner’s title insurance. Unforeseeable title claims, such as:

• Forgery: making a false document
- For example, the seller misrepresents the identity of the person selling 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 causes confusion in ownership rights.
• Unexpected title claims, such as:
- Outstanding mortgages and judgments, or liens against the property because the seller didn’t pay required taxes.
- Pending legal action against the property that could affect your ownership.
- An unknown heir of a previous owner who is claiming ownership of the property

3. You Can’t Beat the Value
Owner’s title insurance is a one-time fee that’s very low relative to the value it provides. It typically costs around 0.5% of a home’s purchase price.

4. Covers Your Heirs*
As long as you or your heirs* own your home, owner’s title insurance protects your property rights.

5. Nothing Compares
Home insurance and warranties protect only the inside of the home. Getting owner’s title insurance ensures your family’s property rights stay protected.

6. 8 in 10 Homebuyers Agree
Each year, more than 80% of America’s homebuyers choose to get owner’s title insurance.

7. Peace of Mind
If you’re buying a home, owner’s title insurance lets you rest assured, with the knowledge that you won’t be stuck with certain existing debts or legal problems once you’ve closed on your new home.

More Homebuyer Tips & Information
The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

Real estate (or “real property”) is a special class of property, and as such it receives special treatment. It is the only class of property that routinely has long-range claims that may exist across multiple generations of ownership. It is also the only class of property that regularly has the rights of ownership divvied up between multiple parties. Because of these and other characteristics of real estate, multiple types of real estate deeds have been developed. Which type you give or receive as a seller or purchaser of real estate can have large effects on the value of the deed and property, so it is important to know the difference between them. While there are more types of deeds, these cover the basics:

General Warranty Deed
A general warranty deed is a promise from the grantor that they own the property absolutely and are granting that ownership to the grantee, and that there are no encumbrances (easements, restrictions, liens, etc.) other than the ones expressly listed in the deed. Furthermore, the grantor of a general warranty deed guarantees the grantee that they will defend the grantee against any claims that someone brings against the deed. The grantor of a general warranty deed creates a broad and perpetual liability upon themselves to indemnify the grantee against any title problems that arise.

Limited (or Special) Warranty Deed
This deed warrants only that the grantor has not created any encumbrances during their ownership period other than those that are explicitly listed in the deed. Thus, the grantee receives no guarantees about what might have happened to encumber the land prior to the grantor’s ownership period. The grantor is only indemnifying the grantee against any claims that may arise from the period of the grantor’s ownership of the property.

Quitclaim Deed
This deed is exactly what it sounds like – the grantor simply gives up any claim they have in the grantee’s favor. The grantor does not warrant that they have any ownership of the property, they do not warrant that there are no encumbrances; they simply let the grantee have any interest they may have in the property. As a means for transferring ownership of property, quitclaim deeds have very limited value, but they can be useful in clearing up title issues, removing encumbrances, etc.

Trustee Deed
This deed is used by trustees of trusts or administrators of estates to transfer title to property without incurring any liability for warranties on themselves. As with other deeds, a title search is necessary to determine the quality of the title that is conveyed by a trustee deed. As the new owner of your real estate, how should your title as owner appear on the Deed? There are options and your choice can have far-reaching consequences. It may even control where you want your property to go after you die. Here are the basic types:

Sole Ownership
Title is held solely in one person’s name, thus no one else is shown as sharing an ownership interest except for the named titleholder.

Tenants by the Entireties
For spouses who are currently married, the property can be titled in both of their names and held as a tenants by the entireties. This is one of the best forms of asset protection from outside creditors because the property is not divisible by creditors to satisfy the obligation of only one
debtor spouse.

Joint Tenancy with Rights of Survivorship (JTWROS)
Means you hold title with someone else equally (i.e. 50%/50% for two people, 1/3, 1/3, 1/3 for three people etc...) and when one of you dies the entire interest passes to the remaining surviving joint tenant(s) rather than to the heirs of the one who died. Note however, that if a co-owner conveys their interest to a 3rd party, the property loses its survivorship status as to that portion and defaults to being held as tenancy in common.

Tenancy In Common
Several parties can own the property in whatever different percentages they want. Any party can sell their interest to anyone without notice to the other. And upon the death of one of the people on the title, their interest goes to their own estate to be distributed according to their will or to their heirs through probate.