The answers to many questions buyers have about surveys can be found here, including the process of preparing a survey, and the standards and procedures that must be followed. A guide to understanding how to read a survey is also included in this informational packet.
Title insurance is important because it protects you from liabilities that may arise from prior liens or issues with the property from previous owners, thus allowing you to use the property as you wish and sell it or secure loans with it. Without title insurance, you may be responsible for claims against your property due to errors in public records or title defects. With an owner’s title insurance policy, you are covered against claims and compensated up to the amount of the policy to settle claims.
A title search can uncover liens such as unpaid property taxes, unsatisfied mortgages, judgments against buyers/sellers and any restrictions limiting the use of the parcel of land. However, there are other title defects that do not show up such as fraud, clerical errors, etc., which can also jeopardize your legal ownership.
The cost varies based on the property value. However, you only pay once for the coverage which continues as long as you own the property. If you die, the coverage continues for your heirs. Also, if you sell your property and give warranties of title to the buyer, the coverage would continue. The cost of the policy also varies based on whether you select the ALTA standard policy or the Eagle enhanced policy. The ALTA standard coverage addresses (but is not limited to): forgery and impersonation; lack of competency or legal authority of a party; inaccurate deeds; undisclosed (but recorded) prior liens; undisclosed (but recorded) easement or use restrictions; erroneous or inadequate legal descriptions; and deed not properly recorded. The Eagle policy covers all of this plus (but is not limited to): claims for adverse possession; deed to land with buildings encroaching on another’s property based on an incorrect survey; mechanic’s or estate tax liens; pre-existing violations; post-policy forgery; and post-policy construction by a neighbor onto insured land.
Compare Standard ALTA Insurance with The Second Generation Eagle Protection Owner’s Policy (PDF)
Effective October 3, 2015, the Closing Disclosure Form (CDF) is the new form used by settlement agents to disclose to the borrower the actual terms and costs of the transaction in relation to the estimated terms and costs outlined on the Loan Estimate Form. The CDF combines and replaces the existing HUD-1 and final TIL (Truth In Lending) disclosure, and therefore not only breaks down all charges associated with the transaction, but also outlines the terms of the loan clearly for the borrower.
The TILA-RESPA rule (the rule finalized by the CFPB with new, integrated mortgage disclosures Under the Truth In Lending Act and the Real Estate Settlement Procedures Act) and accompanying forms apply to most closed-end consumer credit transactions secured by real property. They do not apply to loans made by a person or entity that is not considered a creditor or to the following types of loans:
- Home Equity Lines of Credit (HELOC’s)
- Reverse Mortgages
- Loans secured by a mobile home or dwelling that is not attached to real property
The TILA-RESPA rule imposes a three-business-day waiting period for the consumer to review the CDF. Therefore, the creditor is responsible for providing the CDF to the consumer no later than three business days before consummation. If the form needs to be corrected for one of the following reasons, a new form must be delivered and a new three-business-day waiting period will begin:
- Change to the loan’s APR (Annual Percentage Rate)
- Change to the loan product
- Addition of a prepayment penalty
If there are any other types of changes to the form, the creditor must ensure that the consumer receives the corrected form at or before consummation.
- Page 1 – Discloses general information related to the transaction, such as the property address, borrower and seller names, sales price, and loan amount. Also breaks down the loan terms, projected payments and costs at closing.
- Page 2 – Itemizes all Loan Costs and Other Costs, breaking them down into sections for Origination Charges, Services Borrower Did Not Shop For, Services Borrower Did Shop For, Taxes & Government Fees, Prepaids, Escrow Charges, and Other Charges. If the total number of line items exceeds the amount it can accommodate on one page, this will show as pages 2a and 2b.
- Page 3 – Breaks down the Calculating Cash to Close and compares charges to the amounts provided on the Loan Estimate. This also shows the Summaries of Transactions, which is a breakdown of all borrower and seller debits and credits.
- Page 4 – Discloses additional loan information such as escrowed and non-escrowed property costs, late payment charges, information about partial payments, and the Adjustable Payment and Adjustable Interest Rate tables, if applicable.
- Page 5 – Shows loan calculations, such as the finance charge and the APR, as well as any other loan disclosures that are applicable. Also includes Contact Information for the Lender, Mortgage Broker, Real Estate Brokers, and Settlement Agents.