We frequently get questions about title insurance and escrow, so we decided to place our customers most commonly asked questions below.
The purpose of title insurance is to eliminate risks and prevent losses caused by defects in the title arising out of events that occurred in the past. A title search is to verify the seller’s rights to transfer ownership, and to discover any claim or burdens on the property.
The premium for title insurance is based on the dollar amount of the transaction. In a buy/sell transaction, if an owner policy and a lender’s policy are issued at the same time, there is substantial savings.
The purpose of escrow is for a "neutral third party" who is the custodian of the funds and documents, to handle the disbursements of the funds and in a limited cpacity performs the clerical details for the settlement of the account between the parties.
Title companies are required by law to comply with what is known as the “Good Funds” law. This law outlines specific rules for the disbursement of funds. While a number of factors are involved, generally speaking in a purchase transaction we are able to disburse funds the next day. In a refinance situation, we must wait three days to allow for a borrower’s right to rescind his/her decision.
Call the applicable office and tell the receptionist that you would like to schedule a closing. They will contact you with the Closing Department who will the schedule an appointment that meets your needs.
In June of 2000, the laws for transferring water rights changed. The state of Utah mandated that only title companies, lawyers, or registered engineers/surveyors may prepare the necessary documents to transfer water rights. Depending upon circumstances, the transfer process can be fairly simple or very complex. We recommend that you contact us for specific information.
There are two types of legal descriptions: “lot and block” and “metes and bounds.” If your property is part of a subdivision, it will be a “lot and block” and will read something like, “Lot 3 of the Golden Harvest Subdivision.” On the original subdivision plat that was filed with the county recorder, the exact dimensions of your lot will be shown. If your property is a “metes and bounds” description, it will show latitude and longitude as a means of describing where it is located and the perimeter of your property.
It is standard for you to take possession when the documents are recorded. This can be changed by the Purchase contract or other closing documents. Review your purchase contract for date of possession or ask your realtor.
If the seller backs out before the transaction is completed, your money will be returned. We do not release any money to the Seller until they have signed all documents and we have recorded the Warranty Deed, which transfers the property to you.
A Real Estate Transaction is completed when the documents are recorded and the funds are disbursed. We will complete the transaction as quickly as possible. There are several factors that affect your closing. In order to complete a transaction the buyer and seller both need to sign all documents and the purchase funds need to be cleared through our bank. Any requirements listed on the Title Commitment will also need to be completed.
We will notify you as soon as the transaction is completed.
Title Insurance covers many issues the seller may not be aware of. This coverage includes issues such as forgery, liens, etc. These could be attached to the property without the seller’s knowledge or before the current seller owned the property. For more information see: What Does Title Insurance Cover?
A Right of Way or Easement is a right, granted to a third party, to cross your property. The right of way can be limited to a specific purpose such as a pipeline or for a road, or can be for general purposes. The recorded document granting the easement will include the location and size of the right of way easement.
For additional information about a specific right of way, review the document that grants the right of way.
The Owner’s Title Insurance Policy is issued when you purchase your property, and is in affect as long as you own the property. The one time fee is collected at closing.
The title insurance policy and the closing documents reference the specific property by legal description. Without a land survey the correct size or (acreage) is not known. The county does show acreage but it’s an estimate.
The county estimate assumes each section of ground is exactly 1 square mile and the lines run exactly North-South and East-West. Although this is the intention, the actual sections vary in size and orientation, due to the survey methods used in the early 1900’s.
Because the actual acreage is not known we do not add the estimate to the documents. Adding it would guarantee the buyer the estimated acreage is correct, and make the seller liable for that guarantee.
Construction of a new home raises special title problems for the lender and owner. You may think you are the first owner when constructing a home on a purchased lot.
However, there were most likely many prior owners of the unimproved land. A title search will uncover any existing liens, and a survey will determine the boundaries of the property being purchased.
In addition, builders occasionally fail to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property.
Again, lenders want to make sure the property has clear title. Purchasing owner’s title insurance will protect you against these potential problems and pay for any legal fees involved in defending a claim.
When you obtain a new loan, the lender will require title insurance. Even if you recently purchased your home, there are some problems that could arise with the title.
For instance, you may have incurred a mechanic’s lien from a contractor, who claims they were not paid, or you may have had a judgment placed on your house for unpaid taxes. The lender wants to make sure their interest will be secured and the title to the property is clear.
You will not need to purchase new owner’s title insurance when refinancing. Owner’s title insurance is purchased at a one-time fee and lasts as long as you own the property.
In order to issue title insurance, the title company must search public land records for matters affecting that title. Many search the “chain of title” back 50 years. Twenty-five percent of title searches find a title problem that is fixed before the insurance is issued.
Some examples of items that can cause a problem are: deeds, wills and trusts that contain improper information, outstanding judgments or tax liens against the property, and easements. Title companies fix the problems then issue the title insurance.
Occasionally, in spite of an exhaustive title search, hidden hazards can emerge after closing. Things such as mistakes in the public record, previously undisclosed heirs claiming to own the property, or forged deeds could cloud the title.
Owner’s title insurance offers financial protection against these by negotiating with third parties and paying claims and legal fees involved in defending the title.
For more information on reasons why you need title insurance, click here.
There are two basic types of title insurance: Lender’s title insurance, also called a Loan Policy, and Owner’s title insurance. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is based on the dollar amount of your loan. It protects the lender’s interests in the property should a problem with the title arise. The policy amount decreases each year and eventually disappears as the loan is paid off.
Owner’s title insurance is usually issued in the amount of the real estate purchase amount. It is purchased for a one-time fee at closing and lasts as long as you have and interest in the property. This may even be after the insured has sold the property.
Only Owner’s title insurance fully protects the buyers should a problem arise with the title that was not uncovered during the title search. Owner’s title insurance also pays for any legal fees involved in defending a claim to your title.
Utah is a non-disclosure state, which means you are not required to disclose the purchase price of your property. The wording put in the Warranty Deed protects the confidentiality of the purchase price.