Closing/Settlement | Titles and Title Searches | Title Insurance | Post-closing

Closing/Settlement

What is closing?
What should we do to prepare for the settlement?
What do I need to bring to settlement?
How long will settlement take?
Who attends settlement?
Do I need to be present at settlement?
Who does Logan Square Abstract represent at settlement?
What happens at settlement?
What is a Settlement Statement?
What is pro-ration of property taxes?
What is pre-paid interest?
What is an Escrow?


What is closing?
Closing or 'settlement' is the process of completing a real estate transaction. During closing deeds, mortgages, leases or other required instruments are signed or delivered. Furthermore accounting between parties is made, monies disbursed and recording of all pertinent documents.

What should we do to prepare for the settlement?
That would depend on whether you are a buyer, seller or refinancing.

  • Buyer 
    Prior to settlement
    Power(s) of Attorney (if any) must be reviewed and approved by the mortgage and the titlecompany prior to settlement. The Original must be presented at settlement to be recorded with the mortgage
    You should review the title report. Pay particular attention to the mortgage(s), judgment(s), and tax liens listed on the report against you. If there is an mortgage, judgment or other lien shown on the report which you have paid or you were not aware of, contact us prior to settlement directly or through your agent or attorney.
  • You will need to provide at settlement:
    Proof of identity (Photo I.D.) must be presented at the time of settlement for each principal in the transaction.
    Social Security Number for each Buyer.
    Appropriate payment funds (see below).
    Insurance coverage (see below).
    Proof of Insurance, usually the original “Declaration Page” of your homeowner’s/fire insurance policy, together with a receipt for the premium (if not paid prior to settlement the insurance premium must be paid on the HUD-1 settlement sheet), is required when creating a mortgage. The declaration page(s) must contain the following:
    - Name of Insured (name of each owner listed on the deed).
    - Address of the property insured.
    - Inception date of the policy (not later than the date of settlement).
  • Seller
    Prior to settlement
    Power(s) of Attorney (if any) must be reviewed and approved by the title company prior to settlement.The Original must be presented at settlement to be recorded with the deed.
    You should review the title report. Pay particular attention to the mortgage(s), judgment(s), and tax liens listed on the report against you. If there is an mortgage, judgment or other lien shown on the report which you have paid or you were not aware of, contact us prior to settlement directly or through your agent or attorney.
    You will need to provide at settlement:
    Some items (e.g. tax receipts) can be ordered in advance by LSA as required.
    Proof of identity (Photo I.D.) for each principal in the transaction
    Social Security Number for each Seller
    Tax receipts and/or certifications for the years requested on the title report (Canceled checks or mortgage company escrow statements are not acceptable).
    Sewer and Water receipts and/or certifications if the service is provided by a municipal authority and is considered a “lienable item”.
    Termite, Mechanical (Heating, Electrical, etc.), Use and Occupancy, Septic, Well and Water Potability certifications as may be required under the Agreement of Sale, Mortgage Company Commitment or Applicable Law.
    Condominium (3407) or Homeowner Association (5407) Certificate if applicable.
  • Refinancing
    Prior to settlement
    Power(s) of Attorney (if any) must be reviewed and approved by the mortgage and the title company prior to settlement. The Original must be presented at settlement to be recorded with the mortgage
    You should review the title report. Pay particular attention to the mortgage(s), judgment(s), and tax liens listed on the report against you. If there is an mortgage, judgment or other lien shown on the report which you have paid or you were not aware of, contact us prior to settlement directly or through your agent or attorney.
    You will need to provide at settlement:
    Some items (e.g. tax receipts) can be ordered in advance by LSAas required.
    Proof of identity (Photo I.D.) at the time of settlement for each Borrower
    Social Security Number for each Borrower
    Tax receipts and/or certifications for the years requested on the title report. (Canceled checks or mortgage company escrow statements are not acceptable).
    Sewer and Water receipts and/or certifications if the service is provided by a municipal authority and is considered a “lienable item”.
    Termite, Mechanical (Heating, Electrical, etc.) Septic, Well and Water Potability certifications as may be required under the agreement of sale or by the Mortgage Lender.
    Condominium (3407) or Homeowner Association (5407) Certificate if applicable. 
    Insurance:
    Proof of Insurance, usually the original “Declaration Page” of your homeowner’s/fire insurance policy, together with a receipt for the premium (if not paid prior to settlement the insurance premium must be paid on the HUD-1 settlement sheet), is required when creating a mortgage. The declaration page(s) must contain the following:
    - Name of Insured (name of each owner listed on the deed).
    - Address of the property insured.
    - Inception date of the policy (not later than the date of settlement).
    - Expiration date of policy (must be a policy for at least 1 year).
    - The name and address of the mortgage company (loss payee clause).
    - Coverage must be in an amount at least equal to the mortgage amount.
    --------------------------------------------------------------------------------
    Funds
    Generally, personal checks are not an acceptable form of payment. Your funds should be in the form of a “bank check” (cashier, treasurer or certified) or checks issued by other title agents/companies in the Philadelphia Metropolitan area. 

    Mortgage, Judgment or other Lien Payoffs must be in writing.
    Verbal payoffs are not acceptable
    Proceeds due you will be paid by check.
    When using your proceeds to purchase another property, our check is accepted by other title agents/companies in the Philadelphia Metropolitan area.
    If you are purchasing a property and closing out of the Philadelphia Metropolitan area, please advise us prior to settlement so we can arrange to have a “bank” check or wire the proceeds. We will not accept verbal instructions to wire funds, they must be in writing.

             This is a basic check-list other requirements may be set forth in the Title Report.

            

What do I need to bring to Settlement?

Each party needs to provide official photo-ID (e.g. drivers license, passport). If you are required to bring funds to the settlement they should be in the form of a cashiers, treasurers, teller's check, money order (made payable to Logan Square Abstract, LLC). 

How long will settlement take?
This depends very much on the case involved, but usually settlement will take about an hour for a sale and about 40 minutes for a refinance.

Who attends settlement?
With a sale the buyers, sellers and their respective attorneys and real estate agents will attend. Most lenders forward their documents and instructions to the title company without sending a representative. For a refinance, usually only our settlement officer and the borrowers need attend.

Do I need to be present at settlement?
We prefer you to attend personally. When this is impractical, it may be possible to prepare a 'power of attorney,' which will allow someone else to sign the documents on your behalf. The Power of Attorney document must be reviewed and approved by the title company (and lender if Power of Attorney for borrowing) prior to settlement and the original Power of Attorney will have to be recorded.

Who does Logan Square Abstract represent at settlement?
Logan Square Abstract, LLC does not represent any one party. The transaction has already been negotiated and we are there to ensure the terms are complied with to the extent they affect the insurability of title or are required by the lender. For a refinance, we explain your lender's documents to you and ensure their instructions are properly executed.

What happens at settlement? 
Logan Square Abstract completes the settlement in accordance with the terms and conditions of the Agreement of Sale and Mortgage Company instructions. We prepare the Settlement Statement, and make all of the disbursements in accordance therewith, and forward the executed documents to the appropriate parties.

What is a Settlement Statement?
This is a summary of the financial portion of the real estate transaction. The Settlement Statement will list the purchase price, loan amount and closing costs for both buyer and seller and show all pro-rations and sums to be disbursed by the title company to all parties.

What is pro-ration of property taxes?
This is the process of crediting either the buyer or seller for their share of real estate taxes either paid or owing as of the date of settlement.

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 interest adjustment to the 1st day of the following month. The first payment will then be due on the 1st day of the month following. For example if your settlement is on October 15 and your first monthly payment is due December 1, the lender will collect interest to cover the period from October 15 through October 31. The December 1 payment covers the accrued interest for the month of November. Interest adjustment is considered a settlement charge and will be disclosed on the HUD.

What is an Escrow?
An escrow is an arrangement with a third party, who holds funds and/or legal documents on behalf of the buyer or seller, and distributes them according to the instructions given by the buyer or seller. Often a buyer may be required, or elect, to escrow 1/12th of the annual taxes and insurance. The amount of tax escrow needed at the time of settlement is determined by the first mortgage payment date and the date by which the taxes may be paid at the discount rate.

Titles and Title Searches

What is a title?
Why is transferring title to real estate so unique?
What is a title search?
What kinds of problems can a title search reveal?
Are there any problems that a title search cannot reveal?
What are LSA's responsibilities in addition to conducting the title search?


What is a title?
A title is the owner's right(s) to possess and use a real property.

Why is transferring title to real estate so unique?
Unlike buying a car or television, land title is permanent. While the function of most other forms of insurance is to protect you against losses arising out of unforeseen future events, the primary purpose of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of past events. You need to know the marital status of the seller and whether there are lawsuits or judgments against a former owner. Various rights may have been acquired by others even if the land has never been built upon (e.g. mineral, air or utility rights). It is necessary to determine what rights are outstanding in order to transfer a clear title to a piece of real estate.

What is a title search?
A title search determines from the public record what the rights to a property are and who owns them. Documents searched include court records, property and name indices. The sellers right to transfer ownership is verified, along with and claims, defects or other rights that may affect the property.

What kinds of problems can a title search reveal?
Some examples are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions on the land.

Are there any problems that a title search cannot reveal?
Fraud, mental incompetence, and clerical errors are examples of the hidden history that a title search may not reveal. Title insurance is needed to protect against such defects coming to light after you have purchased your home.

What are LSA's responsibilities in addition to conducting the title search?
In addition to correcting any minor title problems (i.e. taxes owing), Pennsylvania Land Transfer will work with your lender and provide them with a copy of the Title Commitment and the amount of the annual property taxes as well as ensuring their detailed closing instructions are followed to the letter. We will also ensure the seller's tax payments are up to date.

Title Insurance

What is title insurance?
How does title insurance protect me and my investment?
How much could I lose if a claim is filed against my property?
What does title insurance protect against?
What doesn't title insurance protect against?
Isn't a deed proof of ownership?
Would an abstract show property limitations and restrictions?
The property I want to purchase had a title search done within the past year. Do I need another one?
What are the different types of title insurance?
Do I need both types of coverage?
How much does title insurance cost?
How long does coverage last?


What is title insurance?
Title insurance is a contract to indemnify against losses arising through defects in the title to real estate.

How does title insurance protect me and my investment?
The insurer is obliged to defend you against the claims of others, regardless of the validity of the claim. Your insurance pays all court costs and related fees, in accordance with the terms of the policy, in addition to any actual loss up to the policy amount.

How much could I lose if a claim is filed against my property?
It all depends upon the claim. At worst you could lose the entire property and still be liable for the balance of your mortgage. Even the smallest claims cost time and money and you may have to pay for a legal defense.

What does title insurance protect against?
Some of the most common problems coved include:
· Unfiled or unpaid liens
· Descriptions apparently but not actually adequate.
· Mistakes in recording legal documents
· Fraudulent deeds, mortgages, etc.
· Undisclosed or missing heirs.
· Deeds by persons of unsound mind

What doesn't title insurance protect against?
In general: actions of the government and items an informed purchaser should know about, such as who is in possession of the property, or an object such as a utility pole in the middle of the yard. Exceptions include specific easements, restrictions, boundary lines and acreage, encroachments visible upon the ground, etc.

Isn't a deed proof of ownership?
No. A deed is simply a document transferring the right of ownership, whatever that right may be. For example, the property may have changed hands many times since the deed was issued. In addition, liens and claims outstanding against the title won't be shown on a deed.

Would an abstract show property limitations and restrictions?
Only if the public records reveal all such limitations and/or restrictions. Title insurance can protect you against any hidden history that may reappear.

The property I want to purchase had a title search done within the past year. Do I need another one?
Yes - a lot can happen in a year. New easements may have been granted by the current owner or the property may have been mortgaged or had other liens filed against it.

What are the different types of title insurance?
There is a Lenders Policy and an Owners Policy. The lenders policy is usually a condition of the loan and protects the mortgage lender's security interest in the property up to the value of the policy. The owner's policy covers the purchase price of the property and protects the interest of the real estate owner. When purchasing a property, where you are also creating a mortgage, the Owner's & Lender's Policies are issued simultaneously. The title premium is based on the greater of the purchase price or the mortgage amount.

Do I need both types of coverage?
Yes. A mortgage policy would only pay the balance of a mortgage if there was a loss. There would be no equity protection to the owner without a separate policy.

How much does title insurance cost?
Title insurance is regulated by the state, and is dependent on the purchase price or mortgage amount. In either case it is a one time fee of a small fraction of the insured amount. To find out your exact premium, use our handy rate calculator.

How long does coverage last?
You are covered for as long as you or your heirs own the property, and beyond. Even though the property may be sold, you may still have a legal obligation by virtue of the warranties in the deed conveying the property. The policy insuring you is still in effect.

Post-closing

What happens after settlement?
After settlement, the buyer's and seller's job is over. However, Logan Square Abstract,LLC. has a lot more work to do including:
· Audit the settlement sheet and review all documents
· Comply with the lender's written instructions in returning their paperwork
· Record the deed, mortgage and other documents with the appropriate County
· Disburse funds as appropriate
· Issue the title insurance policy and any endorsements required