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Definition: Clear Title
A title that is free of liens or legal questions as to ownership of the property.


TIP
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General Definitions

Here is a list of some commonly used terms you will hear in the next few weeks as you navigate your real estate purchase.

Closing Costs

Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

Clear Title

A title that is free of liens or legal questions as to ownership of the property.

Deed of Trust

The Deed of Trust is a lengthy document (approximately 7 to 12 pages) requiring the signature of all owners of the property for the purpose of granting a security interest. After closing, the Deed of Trust is recorded with a legal description as a lien among the land records and as a matter of public record for the purpose of securing the borrower's promise to repay on the Deed of Trust Note/Promissory Note. In addition to identifying the property owners, the loan amount and the term of the loan, the Deed of Trust generally describes matters that would constitute a default on the loan thereby giving the lender cause to commence a foreclosure proceeding against the property.

Earnest Money Deposit/Escrow

A deposit made by the potential home buyer to show that he or she is serious about buying the house, often the terms for refunding it to the buyer are negotiated before the contract is signed. Settlement companies are often hold the check, then on closing day apply the deposit to the home buyer's down payment.

Escrow Account


Once you close your purchase transaction, you may have an escrow account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principle and interest. The extra money is held in your escrow account for the payment of items like property taxes and homeowner’s insurance when they come due. The lender pays them with this "extra" money instead of you paying them yourself.


Examination of Title

The report on the title of a property from the public records or an abstract of the title.

HUD-1 Settlement Statement

This is the document which provides an itemized listing of the funds that are payable at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the "closing statement" or "settlement sheet." Settlement charges (closing costs) are categorized on the HUD-1 into seven series sections as follows:

  • 700 Series Line Items (Total Sales/Broker's Commission)
  • 800 Series Line Items (Items Payable In Connection With Loan)
  • 900 Series Line Items (Items Required By Lender To Be Paid In Advance)
  • 1000 Series Line Items (Reserves Deposited With Lender)
  • 1100 Series Line Items (Title Charges)
  • 1200 Series Line Items (Government Recording and Transfer Charges)
  • 1300 Series Line Items (Additional Settlement Charges)

Recording

The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Title

A legal document evidencing a person's right to or ownership of a property.

Title Insurance

Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes or "hidden hazards" over ownership of a property. -see below

Title Search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

Have some questions about your closing? Feel free to call us at 703-580-6668 or send us a question via email to info@usttl.com.

We publish our rates and fees on our web site, so you can always check there for an explanation of closing costs. Feel like we have left something out? Let us know what you think is missing and we will try to incorporate it into our site.

Why Title Insurance?

Why is Title Insurance a necessity? When a contract purchaser buys a home, the homeowner wants to be certain that the title to the land is clear. But even the most diligent search of the public records could fail to disclose a number of title defects. Just a few of the problems that can suddenly surface are:
 

  • a forged will or deed;

Example:The Refined Forger

The Carters were charmed by the elderly lady. Impeccably mannered, she explained that her country place had been vacant for some time, so she was letting it go at an irresistible price. The Carters leapt at the offer, only to find out later that they were victims of a classic forgery caper.

More cunning than charming, the old woman learned that the real owners of the country home were living in Europe. She forged a deed to the property and had it recorded in her own name. Her low asking price assured a quick sale. By the time the Carters where made aware of the scam, the little old lady was gone.

 

  • a title transfer by someone underage;
  • a married person conveying real estate without his or her spouse;

Example: John's Other Wife

John and Maxine were an ideal couple: pleasant, personable and respected among peers. They made quite an impression on Mr. and Mrs. Denton, who purchased their home. The Dentons were less then impressed, however, when they heard from John's real wife.

It seems that Maxine wasn't John's real wife which meant that the deed of ownership she signed was invalid. The Denton's did eventually meet John legitimate wife in a court of law when she claimed her legal right to the property.

  • fraudulent impersonations;
  • secret marriages;
  • undisclosed heirs;

Example:The Walking Corpse

The homeowner was a widow with seven sons. One of her offspring, the captain of a fishing vessel, has not been heard from for many years. Presumed lost at sea, he was declared legally dead.

When the widow passed away, her six remaining sons inherited and sold her home. The new homeowners were delighted with their new home until the long lost sea captain returned from the dead. The missing son who had decided to start a new life elsewhere, returned home to find the house had been sold. He promptly filed a claim against the new homeowner for his rightful share of the property.

  • invalid divorces; and
  • false affidavits.

Example: News Travels Slowly

A lady of means placed her home in the country up for sale. Before embarking on a cruise, she gave her lawyer power of attorney on the property. Weeks later, the Harper family decided to buy the country place. Its fertile land and picturesque setting were ideal for farming. Exercising his authority, the attorney signed the deed and sold the property to the Harpers.

Everything appeared proper except for one hitch: the woman died in a distant part of the world before the attorney signed over the property. When the lady's heirs discovered that they land had been sold after her death, they claimed they deed was invalid and the demanded the right to their property.

Without an owners title insurance policy, you may not be fully protected against errors in the public records, hidden defects not disclosed by the public records, or mistakes made during the examination of the title of your new property. As a result, you may be held fully accountable for any liens, judgments or claims brought against your new property. However, your owners title policy insures that if such an occasion arises, you will be defended, free of charge against all covered claims and paid up to the amount of the policy to settle valid claims.

 
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IMPORTANT: Don't Forget Your

  • Identification
  • Certified Funds
  • Check Book (For Wiring)
*If you are acting by Power of Attorney, please have the original signed copy at closing
Realtor Quote: "Keys, keys, keys...When selling a home bring all of your keys.  It makes entering a lot easier."