It is the ownership of a piece of property, meaning
the right to exclude others, occupy and possess it, and sell it.
It is a contract purchased by an owner, called an
owner’s policy, to guarantee good title; a contract purchased
by a mortgage lender is called a mortgagee policy, and guarantees
the mortgage is a lien on the property. The policy pays for costs
to remove clouds and defects caused by forgery, fraud, lawsuits,
unrecorded easements, and missing heirs.
It is a right to sell a piece of property to pay
a debt if the debt is unpaid or in default. Normally, the debt is
from a mortgage, construction work, a judgment, or an IRS lien.
A lien has priority to the property based on when it is recorded
at the courthouse. If there is more than one lien, the one recorded
first is a first lien and the next one recorded is a second lien,
etc. A mortgage title policy normally insures that the mortgage
is a first lien on a property and therefore entitled to sell the
property to pay its mortgage, if unpaid, before any other lien holders
can sell the property.
do we need a title policy when we refinance our house if we just
got one last year when we bought the house?
You need an owner’s title policy to guarantee
that no new liens have been recorded against the house in the past
year (for IRS, judgments, home improvements, second mortgages).
You need a new mortgage policy because the new mortgage lender wants
to be named as the first lien holder and to have the old mortgagee
removed from the title.
In a sale of real estate, it is the event when the seller signs
a deed of the property and delivers the deed and keys to the buyer
in return for the money agreed in the purchase price. Normally,
the buyer also signs a mortgage (and note) to a lender to obtain
part of the purchase price. A closing for a refinance is where the
property owner signs a new mortgage (and note) to a lender to pay
off and satisfy the previous mortgage. A “settlement”
is a synonym for the word “closing” and is the preferred
term in some parts of the United States.
i am a buyer, should i bring cash, check, or a cashier’s check
to my closing, or should i wire money? who do i wire the money to
or make the check payable to?
You should bring a cashier’s check payable
to the closing agent (normally the title company) in the amount
of the “Cash to Close” figure furnished to you by your
representative and processor at the title company. A bank wire to
the title company is also acceptable and requires you to have the
“Wire Instructions” from the title company. Personal
checks, except for nominal amounts (under $200.00), are unacceptable
at closing because the title company must pay out immediate funds
to clear all mortgages and liens off the property, and must pay
all broker and recording costs. Personal checks take several days
before they become clear funds.