Once you or your realtor gets the sales contract to the lender and our firm, we conduct a title search. This is one of the most important parts of the closing process. Briefly, we search the official land records in the office of the Chancery Clerk in the county where the land is located. This helps us confirm who actually owns the land, find any restrictive covenants that may apply to it, and identify any easements or rights that help or impact the property. We search the title history for at least 30 years to be sure a clean “chain of title” is in place leading to the current owner. We also check the other records to be sure there are no judgments or liens that are attached to the property or its owners. If the property is being sold out of an estate, we also examine the court records to be sure who has authority to sign the dee and closing documents. The final part of the title search includes reviewing the property tax records to make sure they are current and so that you and your lender will know how that amount for budgeting purposes.
Once the title search is done, we prepare a “Preliminary Title Opinion” or “Title Commitment” and, depending on the type of loan, have Chicago Title Insurance issue a Title Binder for title insurance on it. Title Insurance is kind of like homeowners insurance – if something happens to the title to the property where someone else is claiming they own it or there is a defect in the title, this insurance covers the cost of defending and protecting the title, up to the amount owed to the bank. The premium is one-time and paid at the time of purchase. Some lenders require lenders Title Insurance for the loan amount, which only protects the lender, while Owner’s Title Insurance is also available to protect the owner.
One of the main tasks for our firm is timely gathering accurate and complete information from a variety of sources, and assembling it for closing, including things such as:
- Homeowners insurance policies and premiums
- Homeowners Association Dues (which are collected and/or prorated at closing)
- Termite reports, home inspections, other costs to be collected at closing
- Home warranty information
- Realtor commission information
- Property taxes
Prior to closing, the lender transmits a loan package to our office. We review the documents, incorporate the legal description, property tax information, homeowner’s insurance information, and various terms and details as needed to ensure the documents are fully complete and accurate. The lender then reviews and approves them, and we are authorized to close.
The Closing Disclosure Form (“CD”) is where all funds and information about the closing are summarized in one document. This final CD Form is occasionally different (hopefully only slightly) from the preliminary CD Form, when the property taxes or insurance premiums are slightly different than estimated. You will be provided a copy of the CD to review at least three business days before the actual closing.
You are informed of the amount of money to bring to closing (which must be either “certified funds” such as a cashier’s check or wired funds).