Hartung Title Agency

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Information for Buyers/Borrowers

HOW THE TITLE AND ESCROW PROCESS WORKS

TITLE INSURANCE AND ITS IMPORTANCE IN YOUR TRANSACTION

WHAT YOU SHOULD KNOW ABOUT YOUR CLOSING (BUYERS/BORROWERS)

WAYS TO HOLD TITLE IN OHIO


HOW THE TITLE AND ESCROW PROCESS WORKS

Generally speaking, most title orders come to us via the lender or realtor of either the buyer/borrower or seller. As title agent, we will commence an examination of the title of the property and order the necessary information to complete the closing.  The lender will provide to us what's called "closing instructions" which we will review carefully.  If special conditions are required by the lender to close the loan, we will make sure the proper steps are taken to fulfill those obligations.

When these matters are completed and reviewed by our staff, we will notify the buyer, either directly or via the realtor or lender who placed the title order, to arrange a time to close the loan. We will also advise the buyer of any funds he or she may need to complete the transaction. The buyer must bring CERTIFIED or BANK CASHIER'S CHECKS made payable to [Hartung Title] or a WIRE for these funds.  In addition, the buyer must bring a valid, government-issued picture I.D. with him or her to closing for proper identification. We cannot close a transaction without this I.D.   Click on "directions" to find directions to our office for your closing.

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TITLE INSURANCE AND ITS IMPORTANCE IN YOUR TRANSACTION

Real estate title insurance, very simply, is an insured statement of the conditions of one's title or ownership rights to a certain piece of real estate. The policy guarantees that the property being purchased or mortgaged is free from undisclosed liens or rights and it guarantees additionally that any confusion as to rights of ownership will be resolved in favor of the party owning the real estate or the title insurance company will be liable for loss in value to the policyholder up to the policy limits.

A buyer purchasing real estate and closing with the settlement agent/ escrow company is normally obtaining an owners policy of title insurance as provided through the purchase contract.

For example, you decide to purchase a house in Ottawa or Erie Counties are obtaining a mortgage to help you finance the purchase from a bank or mortgage company. That institution will require an examination of the title to the property and have the party reviewing the title issue to them a lender's policy of title insurance insuring that the property is or will be owned by the purchaser and that there are no defects, liens or encumbrances on the property which would adversely affect the marketability of its mortgage.

The owner's policy of title insurance insures that the owner has good marketable title to the property free of any encumbrances or liens that would adversely affect the property, except those made known to the buyer, and insures to the owner that if any such liens, encumbrances, defects or other title problems become known the title insurer will defend the buyer's title to the property.

We recommend the purchase of the title insurance for some very simple reasons. First, the premium for purchase of the title insurance policy is a one-time charge. Since the purchaser is usually borrowing money to finance the purchase, the majority of the cost of the title insurance policy that the owner would receive has been paid through the premiums for the lender's policy which is required by the loan.

Even though the buyer may be asked to pay for the lender's title insurance protection, the lender's policy of title insurance does not protect the buyer and a claim can only be made if the lender suffers a financial loss because of a title defect that adversely affects a foreclosure of the buyer's mortgage. There have been many of defects in titles which could not be revealed by an examination of the public records. These defects usually arise at a time after the transaction has taken place and purchasers can suffer significant losses as a result of them. That is why owner's title insurance makes a great deal of sense. 

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WHAT YOU SHOULD KNOW ABOUT YOUR CLOSING (BUYERS/BORROWERS)

The following will likely be required by your lender on or before closing:

            1.         HOMEOWNER'S INSURANCE.  A homeowner fire and extended coverage insurance policy or binder for such insurance either in an amount at least equal to the total of all new mortgages on the property or 100% of the replacement cost most likely be required by your lender.

            2.        FLOOD INSURANCE.  If the premises is located within a specially designated federal flood hazard area, then flood insurance will be a mandatory requirement and you'll be required to purchase a flood insurance policy.  Your lender will notify you if this requirement pertains to you and your property before closing.

             3.        TITLE INSURANCE.  The lender usually requires that they be provided with a lender's title insurance policy (loan policy) to protect their interest in your property up to the amount of the mortgage.  While the premium for the loan policy is included in your closing costs, it does not protect you.  Your ownership interests are insured only by an owner's title insurance policy (owner's policy). While the lender's coverage under the loan policy decreases as the mortgage is paid down and terminates when the final payment is made, your owner's policy remains in effect for as long as you and your heirs own the property.  The owner's policy is available for a one-time premium and at a discounted rate if purchased simultaneously with the loan policy at the time of closing.

The owner's policy provides coverage for numerous matters which are not covered by the standard attorney's opinion of title and which are not discoverable by searching the land records.  Typical examples of such matters include forged documents, the incapacity of a grantor, undisclosed or missing heirs, missing signatures, mistakes in recording, unknown creditors and problems involving access to the land. 

             4.        MANNER IN WHICH TITLE WILL BE HELD.  Generally speaking, there are two ways to hold title in Ohio.  Please read the section below entitled "Ways to Hold Title in Ohio" to familiarize yourself with these concepts.

            5.         WATER, SEWER AND ELECTRICITY.  You should follow up with your sellers to make sure all parties are in agreement and fulfilling their obligations with regard to final water, sewer and electricity readings, if applicable.

            6.        OTHER REQUIREMENTS.  If the mortgage involves a condominium unit or a property that is not a one-to-four-family dwelling, you may be required to fulfill other requirements.

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WAYS TO HOLD TITLE IN OHIO

The following information is intended only to give a brief description of the two most common ways of holding title in Ohio and is not provided for the purpose of advising how to take title.  If further information is desired you should seek legal counsel from your attorney or retain an attorney for advice on these matters.

In order to properly prepare the mortgage documents we require information from you as to how you intend to take title to the real estate.  The two most common ways two or more persons may hold title to real estate are: (1) TENANTS IN COMMON, and (2) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (also known as "Survivorship Tenancy." )

Tenants in Common: Each owner has an undivided, fractional share of the property, the shares of which may be equal or unequal. Regardless of the size of an individual's share, each tenant in common enjoys full ownership of his or her share, and can sell, mortgage, use, or dispose of it as a full owner. On his or her death, the tenancy passes to heirs or to those named in the tenant-in-common's will. If partition is ordered, the property may be physically divided and a fee simple portion given to each tenant in common, or the property may be sold as a unit and the proceeds divided among the tenants in proportion to their respective shares.

Survivorship Tenancy: A survivorship tenancy is similar to tenancy in common, except that joint tenants have a right of survivorship. That is, when one joint tenant dies still owning his or her share, the share passes automatically to the surviving tenant(s). Thus, a survivorship tenancy cannot be transferred by will, as the nature of this form of ownership is that it automatically passes to the survivor(s). The right of survivorship also may be ended where, for example, all joint tenants transfer or convey their interest. In most states, the right of survivorship is automatically created when a joint tenancy is created. In Ohio, however, the right of survivorship must be specifically described in the document that creates it.

Source: The Law and You, (c) The Ohio State Bar Association and The Ohio State Bar Foundation. 

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