Each of the following sections provides frequently asked questions on the Title and Escrow industry as well as related issues. If you have a more specific question which is not covered here please feel free to contact us with any questions.   Your question will be directed to a professional in the relevant field and answered as soon as possible. Please note that the information contained herein is for informational purposes only. If you are currently involved in a real estate transaction please direct your questions to your real estate professional, title officer, or escrow officer.

Please note that the information contained herein is for informational purposes only. If you are currently involved in a real estate transaction please direct your questions to your real estate professional, title officer, or escrow officer.

Why do I need Title Insurance?

1. When You Invest in Real Estate...
2. The Ever-Changing Status Of Title
3. Protecting your Future
4. Title Insurance is your Investment Protection

What is an Escrow?

1. What is an Escrow?
2. Who May Hold Escrows?
3. Impartiality
4. Escrow Instructions
5. Who Does What in the Escrow Process?
6. Closing Escrow
7. Division of Charges
8. In Summary
9. It's Not Always Simple

More on Title Insurance:

1. What Risks Call for Title Insurance?
2. Doesn't the Sellers Deed Take Care of Giving Me Clear Title?
3. My Lender Has a Mortgage Title Insurance Policy on my Property. Why Isn't That Enough?
4. Is Title Insurance Expensive?
5. Is the Record the Record of Ownership Complete from First Owner to Present?
6. Are There Any Lawsuits or Claims Recorded Against The Property Itself?
7. Are There Suits or Judgments Filed against the Owner of the Property?
8. Are All Taxes and Special Assessments Paid?
9. Does Anyone Have Special Rights to the Property That Would Limit Ownership?
10. If the Seller is a Corporation, Is it in a Position to Sell the Property?
11. What is an Abstract? Doesn't it Tell About the Property?
12. Does all Examination of the Abstract Reveal all the Defects in the Title?
13. What Are Some of Hidden Risks?
14. Is There Any Way to be Protected Against These Risks?

Real Estate Brokers ~ Do I need one?

1. Its a New Day in Real Estate
2. Why it Pays to Use a Professional
3. When You Make the Sale
4. Trying to Sell by Yourself?

Why do I need Title Insurance?

WHEN YOU INVEST IN REAL ESTATE...

Chances are, the purchase of real estate is the largest single investment you will ever make. The loss of such an important investment would be catastrophic. It pays to be certain that the person selling the property has the ownership rights you think you're buying, but that's not always easy to determine.

An owner's rights to property - which often involve family and heirs - are sometimes obscure. There may be other parties (such as government agencies, lenders or private contractors) who also have rights to the property in the form of outstanding claims. How can you be sure you will be the true owner of the property you're buying? Simply purchase a Title policy.

THE EVER CHANGING STATUS OF TITLE

What is title insurance? Title insurance offers you information on the status of the title to land before you buy - and protection against claims that may affect the title after you buy. Here's how it works: Before your real estate transaction closes, the public records are searched to find all related official documents. These documents are then examined for their effect, and form the basis of the title insurance policy.

The examination reveals the current status of ownership and encumbrances. It shows the current record owner, based on a careful evaluation of all records. It also shows the current limitations on that owner's property rights, such as outstanding mortgages and utility easements. A buyer or lender knows that some of these limitations should be removed (by paying off and releasing a prior mortgage, for example), or they will continue to adversely affect the property after the closing.

PROTECTING YOUR FUTURE

If the status of title is cleared before you buy, why do you need title insurance? Because even after the most careful research, some title flaws - such as forgery, fraud or confusion due to similar names - may go undetected. These problems may surface at any time in the future.

Protection against future claims is provided by a title insurance policy which is issued after your transaction is complete. Policy terms and conditions determine the extent of coverage provided. This insurance policy insures the condition of title. Separate policies are usually issued to protect the owner's and the lender's interests.

It is in the lenders best interest to protect their investment. A loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist but not be known at the time of sale.

But this policy only protects the lender's interest. It does not protect you. That's why you need an owner's policy, which can be issued at the same time as the loan policy for a nominal one-time fee. By obtaining a separate owner's title insurance policy, protection continues for as long as you or your heirs own the insured interest, and without any additional fee.

TITLE INSURANCE IS YOUR INVESTMENT PROTECTION

Real estate investment demands the best possible protection. Remember, you need title insurance just as much as your lender. Ask for a Valley Land Title Company owner's policy - before you buy. Along with offering fast, accurate and complete title services, Valley Land Title Company stands behind its work. In the event of a claim against your property, Valley Land Title Company will protect you against loss resulting from any title risk covered by the policy (up to the policy amount); and costs, attorney's fees and expenses occurred from the loss.

What is an Escrow?

WHAT IS AN ESCROW?

An escrow is an arrangement in which a neutral third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller and distributes them according to the buyer's and seller's instructions.

People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller's requirements, including receipt of the purchase price, are met. Both rely on the escrow holder to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.

An escrow is convenient for the buyer and seller because both can move forward separately and simultaneously in providing inspections, reports, loan commitments and funds, deeds, and many other items, using the escrow holder as the central depositing point. If the instructions from all parties to an escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions on their behalf without further consultation. This saves much time and facilitates the close of a transaction.

WHO MAY HOLD ESCROW?

The escrow holder may be any neutral third party (although some states require that certain escrow holders be licensed).

There are two important reasons for selecting an established, independent escrow firm, an attorney, or an escrow officer with a bank, S & L or title company. One is that real estate transactions require a tremendous amount of technical experience and knowledge to handle smoothly. The other is that the escrow holder will generally be responsible for safeguarding and properly distributing the purchase price.

Escrow officers with established firms, like Valley Land Title, Edinburg, are experienced and trained in real estate procedures, title insurance, taxes, deeds and insurance.

IMPARTIALITY

An escrow officer must remain completely impartial throughout the escrow process. He or she will usually adopt a courteous but rather formal manner when dealing with parties to the escrow, keeping conversations to the matters at hand in the escrow. This formal behavior is meant for the benefit of all concerned, since the escrow officer must follow the instructions of both parties without bias.

ESCROW INSTRUCTIONS

Escrow instructions are written documents, signed by the parties giving them, which direct the escrow officer in the specific steps to be completed so the escrow can be closed.

Typical instructions would include the following:

1. The method by which the escrow holder is to receive and hold the purchase price to be paid by the buyer.
   
2. The conditions under which a lapse of time or breach of purchase contract provision will terminate the escrow without a closing.
   
3. The instruction and authorization to the escrow holder to disburse funds for recording fees, title insurance policy, real estate commissions, and any other closing costs incurred through escrow.
   
4. Instructions as to the proration of insurance and taxes.
   
5. Instruction to the escrow holder on the payment of prior liens and charges against the property and distribution of the net sale proceeds.

Since the escrow holder can only follow the instructions as stated and may not exceed them, it is extremely important that the instructions be stated clearly and be complete in all details.

WHO DOES WHAT IN THE ESCROW PROCESS?

The Seller

1. Deposits the executed deed to the buyer with the escrow holder.
   
2. Deposits evidence of pest inspection and any required repair work.
   
3. Deposits other required documents such as tax receipts, addresses of mortgage holders, insurance policies, equipment warranties or home warranty contracts, etc.

The Buyer

1. Deposits the funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder.
   
2. Deposits funds sufficient for home and title insurance.
   
3. Arranges for any borrowed funds to be delivered to the escrow holder.
   
4. Deposits any deed of trust or mortgages necessary to secure loans.
   
5. Approves any inspection reports, title insurance commitments, etc. called for by the purchase and sale agreements.
   
6. Fulfills any other conditions specified in the escrow instructions.

The Lender (If Applicable)

1. Deposits proceeds of the loan to the purchaser.
   
2. Directs the escrow holder on the conditions under which the loan funds may be used.

The Escrow Holder

1. Opens the order for title insurance.
   
2. Obtains approvals from the buyer on title insurance report, pest and other inspections.
   
3. Receives funds from the buyer and/or any lender.
   
4. Prorates insurance, taxes, rents, etc.
   
5. Disburses funds for title insurance, recordation fees, real estate commissions, lien clearance, etc.
   
6. Prepares a final statement for each party, indicating amounts to be disbursed for services and any further amounts necessary to close escrow.
   
7. Records deed and loan documents, delivers the deed to the buyer, loan documents to the lender and funds to the seller, closing the escrow.

CLOSING THE ESCROW

Once all the terms and conditions of the instructions of both parties have been fulfilled, and all closing conditions satisfied, the escrow is closed. The safe and accurate transfer of property and money has been accomplished.

DIVISION OF CHARGES

The method of dividing the charges for the services performed through escrow or as a result of escrow varies from place to place. The fees and service charges to be divided might include, for example, the title insurance policy premium, escrow fee, any transfer taxes, recording fees, and cost in connection with any loan obtained. Unless there is some special agreement between the buyer and seller as to how these charges are to be paid, local custom will generally be followed in drafting the instructions to the escrow holder as to how they are to be divided.

IN SUMMARY

The escrow process was developed to help facilitate the sale or purchase of your home. The escrow holder accomplishes this by: Acting as the impartial "stakeholder", or repository of documents and funds. Processing and coordinating the flow of documents and funds. Keeping all parties informed of progress on the escrow. Responding to the lender's requirements. Securing a title insurance policy. Obtaining approvals of reports and documents from the parties as required. Prorating and adjusting insurance, taxes, rents, etc. Recording the deed and loan documents. Maintaining security and accountability of monies owed and owing.

IT'S NOT ALWAYS SIMPLE

The examples and explanations given here are designed to acquaint you with the escrow process and are based on relatively simple escrows. Every escrow is unique and most are more complex than explained here. If you have questions about the escrow process, we suggest you contact us at Valley Land Title Co or an attorney to obtain detailed advice and further explanation.

More on Title Insurance

WHAT RISKS CALL FOR TITLE INSURANCE PROTECTION?

Real estate has such great value and is so basic a form of wealth that many special laws have been enacted for its protection. As a result, the owner of land has exceedingly strong rights... and so do the family and heirs of the owner.

However, others may have "rights" in the property as well. There are mortgage and leaseholder rights, liens due to unpaid taxes...lien claims to those whom the owner owes money...mining, oil or air rights...and many others. Anyone who has such a claim is, in a limited way, a part-owner. He or she cannot ordinarily be deprived of their interest except by having the claim settled or released. As a new owner you may know nothing about these risks, but you are still vulnerable to such claims on your property. That's why you need an insurance policy from Valley Land Title Company.

DOESN'T THE SELLER'S DEED TAKE CARE OF GIVING ME CLEAR TITLE?

Not at all. A "deed" is merely an instrument whereby a seller transfers his or her right of ownership, whatever it may be, to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine what rights, liens or claims may be outstanding against your title.

MY LENDER HAS A MORTGAGE TITLE INSURANCE POLICY ON MY PROPERTY. WHY ISN'T THAT ENOUGH?

Any person or financial institution that lends money on real estate wants that investment protected. Valley Land Title Company provides mortgage title insurance policies to assure the lender that the mortgage is a valid first lien protected against hidden as well as known defects in the title as insured. Such a policy affords the only way a lender can be certain about the title which may be acquired in the event of a foreclosure.

A mortgage title insurance policy protects only the lender's interest in the property, not the current owner's. That's why Valley Land Title Company provides owner's title insurance policies: to protect the owner's interest in a piece of property should a claim arise. Purchasing your owner's title insurance policy at the same time that the lender orders the mortgage title insurance policy can result in savings to you.

IS TITLE INSURANCE EXPENSIVE?

The cost of title insurance on any piece of property is very small when compared with the benefit and security it gives. And, there are no annual payments to keep the policy in force. The original premium is your only cost as long as you or your heirs own the property!

IS THE RECORD OF OWNERSHIP COMPLETE FROM THE FIRST OWNER TO PRESENT?

Most properties purchased have had a number of different owners over the years. The continuous record of all those transactions is called the "Chain of Title," and like any other chain, it is no stronger than its weakest link. Anything wrong with the title of the previous owner may very well affect your title, too.

ARE THERE ANY LAWSUITS OR CLAIMS RECORDED AGAINST THE PROPERTY ITSELF?

If the former owner had a new sink installed and failed to pay the bill, the plumber may file a Mechanic's Lien claim. This stands as a claim on the property which you are, as the new owner, may have to pay in order to clear your title. Similarly, there may be suits pending affecting the property, foreclosures or bankruptcy actions, or any number of claims or legal involvements which may cloud the title until they are properly settled or removed.

ARE THERE ANY SUITS OR JUDGMENTS FILED AGAINST THE OWNER OF THE PROPERTY?

If a person is sued and a judgment is rendered against that person, any real estate he or she owns may become security for the debt. This means that he or she cannot sell that real estate and deliver a clear title until the judgment is paid, released or otherwise satisfactorily disposed of. Further, other suits filed against the owner or real estate, even though not yet decided, may prevent the sale of the property.

ARE ALL TAXES AND SPECIAL ASSESSMENTS PAID?

Unpaid real estate taxes are a first lien on any real property. If there has been a tax sale or forfeiture or any other objection or protest, it means that there are complications standing in the way of a clear title.

DOES ANYONE HAVE SPECIAL RIGHTS TO THE PROPERTY THAT WOULD LIMIT OWNERSHIP?

Many such things are possible. The right-of-way for a road or power line, an easement for a driveway, air rights, sub-surface rights, are examples of rights which may have been sold or granted to someone else by a former owner. If so, there may be restrictions on your use of the land.

IF THE SELLER IS A CORPORATION, IS IT IN A POSITION TO SELL THE PROPERTY?

You may buy a piece of property in good faith from a corporation, only to have the validity of the sale challenged by a stockholder who claims it was not properly authorized by the Board of Directors, or that the company was not empowered under its charter or bylaws to sell the land at all. There are further complications possible if the company is in receivership, or if the firm is being dissolved.

WHAT IS AN ABSTRACT? DOESN'T IT TELL ABOUT THE PROPERTY?

An abstract, which is used in some parts of the country, is a history of the title to property as revealed by the public records. Deeds, mortgages, other instruments and legal proceedings which have affected property through the years are all included in the abstract.

If something is revealed in the abstract which might stand in the way of a clear title, it is up to the owner and the owner's attorney to clear it. If they cannot do this, it must be accepted as a limitation on your right of ownership. Also, it is frequent for matters which seriously affect the title to be omitted in an abstract, because they are not shown in the public records.

DOES AN EXAMINATION OF THE ABSTRACT REVEAL ALL DEFECTS IN THE TITLE?

It may not ... simply because the public records, from which an abstract is made, may not show everything which affects the title. For example: statements in the record may be incorrect or may fail to show important facts. There may be fraudulent or improperly executed documents on the record. Facts revealed in the abstract may be interpreted incorrectly. There may even be ordinary clerical mistakes which could seriously endanger the title.

Even after all these possible hazards are eliminated, there still remain some of the most serious sources of risk ... hazards which by their very nature simply cannot be uncovered.

WHAT ARE SOME OF THESE HIDDEN RISKS?

Some of the most serious risks which are not revealed by the records or by an examination of the abstract but are covered by a Title policy are:

1. Marital status of owner incorrectly given
2. Undisclosed heirs
3. Mentally incompetent or minor grantors
4. Fraud and forgery
5. Defective deeds
6. Confusion due to similar or identical names
7. Errors in records or clerical work

IS THERE ANY WAY TO BE PROTECTED AGAINST THESE RISKS?

Yes, with a Title insurance policy. Under the terms of a Title policy, you are protected against risks and insured against loss. If your title as insured is ever attacked, Valley Land Title Company stands ready to defend it in two ways:

1. If it is necessary to enter a legal defense of your rights under the policy in any suit or proceeding adversely affecting the title as insured, Valley Land Title Company employs legal counsel to take such action for you ... completely at the company's expense.
2. If a loss is sustained, you are protected up to the full amount of your policy, which usually is equal to the full purchase price you paid for the property.

Real Estate Brokers ~ Do I need one?

IT'S A NEW DAY IN REAL ESTATE

It's always a good market in real estate - when you know what you're doing. Structuring transactions, arranging financing, and finding the right buyers are some of the keys to success. And no one knows more about the trends in today's market than your local real estate broker or agent.

Real estate has become a very complicated business. Selling (or buying) a home can be one of the most important financial transactions of your life. That's why it pays to work with a professional who specializes in this field - a licensed real estate agent.

Becoming a licensed broker or agent requires thorough training and examination. Several states in the U.S. require continuing education in real estate for license renewal.

WHY IT PAYS TO USE A PROFESSIONAL

When you use a real estate agent, you get the benefit of professional expertise from the moment you consider selling your home. Your agent will help you establish a fair market value based on his or her daily dealings in your neighborhood, and arrange financing terms that make it easier to obtain a quick sale in today's market - helping you receive the equity in your home.

If you wish to participate in financing the purchase of your property, your real estate agent can structure a workable plan that helps reduce risk from unusual terms - and give you an estimate of the anticipated yield from carrying a property-secured financing plan.

Real estate agents are professionals at marketing properties - that's their job. They can choose the media - and the message - that brings interested prospects to your home. They'll interview and qualify buyers for you. And they'll use their sales skills and negotiating techniques to help you receive the best possible return on your sale.

Every brokerage office has a steady stream of prospects that no individual can match. National referral networks and multiple listing services also help to reach buyers from out of town - or out of state. And many corporate relocation clients may be working with a broker before a move is made.

When you work with real estate agents, they'll follow up with other agents who have shown your property - and offer constructive comments on repairs, financing arrangements, or re-evaluating your list price.

An agreement between buyer and seller is just the beginning of a final transaction. From that point on, your real estate agent can handle the details and paperwork necessary to make it complete; from building and termite reports to fire insurance and closing arrangements, where required, with the escrow company, title company or closing attorney.

As an expert in real estate, your agent will give you advance estimates of your closing costs and net proceeds from the sale, and will also keep you informed of the details to assure a smooth and timely closing.

WHEN YOU MAKE THE SALE

A vital part of any sale is title insurance. Lenders usually require a loan policy to protect their interests, and buyers need an owner's policy to protect their equity. Be sure to ask your real estate agent for a Title policy from Valley Land Title Company.

TRYING TO SELL BY YOURSELF?

If you are thinking about selling your home by yourself, you need to know the answers to the questions below. If you don't, you might find yourself losing money-and time-that a professional real estate agent could have saved for you.

1. What is my home worth in today's market?
2. How long will it take to sell?
3. Where should I advertise? When? How much should I spend?
4. How do I know if my prospects are financially qualified?
5. What kind of financing can I arrange for the sale?
6. What kind of terms will attract the right buyer?
7. Do I really understand all of the paperwork and details necessary to successfully close the sale?
8. Should I talk to a real estate agent first - and see how professional experience can help me?

  

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