For a real estate contract to be enforceable, it must be in writing. Contracts for real estate are typically called Purchase and Sale Agreements. This contract sets out the specific terms of the sale of a property, including the names of the buyers and sellers, the sales price, the location of the property, and a closing date. The Purchase and Sale Agreement is a legally binding contract that outlines the rights and responsibilities of both parties. It is useful to have an experienced attorney review your Purchase and Sale Agreement before you sign, to make sure your interests and rights are fairly represented and you are aware of your obligations.

The title search is the process for determining whether the property you are buying is really owned by the seller, whether there are any mortgages or other liens against the property, or if there are any restrictions on the property that may affect your use and enjoyment of the property. The search is conducted by searching records at the County Recorder’s office in the county where the property is located. The records pertaining to the property are reviewed by us to make sure that the property is as represented in the Purchase and Sale Agreement.

Title insurance protects the homeowner or the lender from problematic events that occurred in the past, before the policy is issued, and affect the title to the home. Title insurance is an insured statement of the condition of your title or ownership rights to the property you are buying. Title insurance guarantees that you own the property that you purchase. There are two forms of title insurance: a lender’s title insurance policy and a homeowner’s title insurance policy.

Title insurance for lenders is usually required by the lending institution prior to making the loan to finance the purchase of the premises. This protects just the lender and its investment in your property. The lender’s policy will not protect you or your equity in the property, and if there is a problem it will not pay your legal expenses.

Title insurance for homeowners protects you, the property owner, from title defects that could significantly affect your interests in the property and your ability to own or sell it. If a title issue occurs that is covered by your title insurance policy, the insurance company hires an attorney and pays for the costs of the defense, even if the lawsuit has no merit. If you have a loss as a result of the suit, the insurance policy will cover your losses up to the value of the policy, which is usually the purchase price of the property. Title insurance is important because is protects you from potential title problems, which may not be uncovered by even the most thorough title examination. These problems may not be uncovered until months or years after a property is sold, and can lead to delayed closings, costly lawsuits, or even the loss of property. Potential problems with title that  could affect your ownership of property include undischarged prior mortgages or unpaid taxes, mechanics liens, clerical errors in public records, forged deeds, improper legal description, undisclosed or missing heirs, or false representation of the true owner of the property.

Title insurance is important even when a thorough title search has been done. A title search is only as good as the records kept by your county. If a problem does not appear in its records, or it appears before the cut-off date established by your search, you, not the title company, are at risk and are liable for the defects in title. The homeowner’s title insurance policy protects you from these defects, even if a thorough title search has been performed. For example, a title search rarely uncovers forged documents, or documents signed by an unauthorized person. There can also be mortgages, easements or liens on a property that are improperly indexed or entered in the county records. These costly problems would not be found during a thorough title search, but would be covered by a homeowner’s title insurance policy.

A mortgage is a written document that creates a lien on real estate as security for the payment of a debt. It is recorded at the County Recorder’s Office and is not removed from your title until the lender is paid in full. Although a mortgage is traditionally given to a mortgage lender, it can also be given to a private individual who lends money. The mortgage is usually accompanied by a promissory note that sets out in detail the terms of the loan. The note will contain such terms as the interest rate, monthly payments, due dates and default provisions. Unlike the mortgage, the promissory note is not recorded with the County.

At closing, the parties to the transaction meet at the closing attorney’s office to complete the terms agreed to in the Purchase and Sale Agreement. Closings are pre-scheduled in advance for a time and place convenient for everyone involved. The day before closing,  the lender will send us final closing instructions, including schedules of fees paid and due, and other amounts to be paid at the closing. From these instructions, we will prepare a settlement statement, which is a financial summary of the entire transaction, drafted in advance for your review. We're always available to answer your questions about the closing, line items or other information on your settlement statement. The following transactions typically occur at closing:

Marketable Title

Immediately before closing or as close to as possible, the seller must prove clear ownership of the property. This is done by the completion of a satisfactory title search.

Delivery of Deed

The deed delivering title to the property must be prepared and executed by the seller to transfer his interest in the property to the buyer.

Financing

All the paperwork for any financing needed to purchase the property must be completed and accompanied by the deposit or delivery of any cash required to be paid at the closing. If a mortgage loan is used, the money will be wired by the lender into an escrow account held by the closing attorney. After the delivery of the deed by the seller, the closing attorney will present the seller with a check for any balance due (minus amounts for taxes, mortgages, or other amounts due on the property). The adjustments will be detailed as line items on your settlement statement.

Settlement Statement

The Settlement Statement (often referred to as the "HUD") is a summary of the financial transaction including the purchase price with adjustments, mortgage money, taxes, closing expenses and similar items. Prorations will be made on the date of closing for items such as property taxes, homeowner’s insurance, and homeowner’s association dues and fees. The Settlement Statement is an important record of the real estate transaction for documenting tax basis and deductible expenses.

Title Insurance

In order to protect the new homeowner’s interest in the property, title insurance will be ready to take effect upon the completion of the closing.

Recording

To protect the buyer, the new deed will be recorded with the county by the closing attorney as soon as possible following the closing.

Delivery of the Deed

The delivery of the deed from the seller to the buyer signals the completion of the sale and the end of the relationship per the purchase and sale agreement.