Purchasing a property in Florida involves many steps such as selecting a realtor, finding the right property, negotiating the purchase and sale agreement, completing a mortgage loan application, and selecting a title company to handle the closing of the purchase. For many people this will be the biggest investment they will make in their entire lifetime. Although not as familiar as the other steps in the purchase process, the title and settlement step is one of the most important as it will have impacts beyond the closing on the property.
It is therefore critical to be well informed of who a buyer of a Florida property chooses to assist them with the title and settlement component of the transaction. There are many title and escrow companies in the State of Florida that have varying degrees of knowledge and experience, but most, if not all, claim that they can get a transaction closed in a “smooth” and “worry-free” manner. From our experience at Bales & Bales, P.A. in practicing real estate law and as acting as title and escrow agent in thousands of closings over the past 15 years, the truth is that not all Florida title and escrow companies are equal in their level of experience, knowledge, attention to detail, transaction coordination skills, and customer satisfaction. There are certain things a buyer of property in Florida should be aware of when choosing a Florida title and escrow company for their purchase which can make the difference between a smooth and worry-free closing and a closing filled with countless hours of unrest and unnecessary worry.
Below is a brief description of what a Florida title company does in a real estate purchase and what separates an average Florida title and escrow company from an exceptional Florida title and escrow company that is capable of providing outstanding and reliable service to a buyer.
Acts as the Escrow Agent. The Florida title company will act as the escrow agent in the real estate transaction. This role includes receiving and holding in escrow a buyer’s escrow deposits under the purchase and sale contract and later the buyer’s cash to close as well as lender’s loan proceeds which are sent to the Florida title company closer to the day of closing. The Florida title company will also receive into escrow and hold all required documents from the buyer, the seller and various third parties. One of the most important aspects of acting as the escrow agent is when to know that all conditions in the purchase and sale contract have been satisfied to that money and documents can be properly released from escrow. It is vital that a buyer of Florida property select a title company with a reputation for honesty and integrity as often times the title company will be holding large sums of the buyer’s money and will have to make critical decisions as to whether or not the transaction is ready to close. One advantage of choosing an attorney owned and operated Florida title company is that a Florida licensed attorney is held to certain high standards when acting in the capacity as escrow agent.
Reviews Status of Title to the Property. Although it may sound simple, the title review is one of the most important parts of a Florida real estate purchase. The title and escrow company will order a title search of the property and well as a municipal lien, open permit and code enforcement search of the property and then will review the searches and all of the publically recorded documents referenced in the searches to determine whether the title to the property is clean without any issues or whether there are issues with the title to the property that the seller will need to clear up prior to closing. Examples of issues revealed in the searches that the seller will need to take care of are mechanics liens, municipal liens, judgments, notices of commencement which have not been terminated and open and expired permits. All of these issues become the buyer’s problem following the closing if not handled properly by the Florida title company before closing. When issues do arise in the title and lien searches, an attorney owned and operated title and escrow company can be a buyer’s advantage as in many cases the buyer will receive the benefit of the attorney’s in-depth knowledge and years of experience without any additional cost to the buyer.
Acts as the Closing Agent. The title company also acts as the closing agent throughout the entire transaction. This means that the Florida title company must coordinate the transaction with various third parties including real estate brokers, surveyors, lenders, condominium and homeowner’s associations, mortgage and lien holders, sellers and seller’s attorneys, collect and provide all of the financial information for the buyer’s and seller’s closing costs, obtain third party payoff statements from mortgage holders, lien holders and municipalities, make sure that all required closing documents are properly signed and delivered into escrow, receive the required funds into escrow and following the closing make all of the payments on the closing statement, and record deeds, mortgages, affidavits and other closing documents. There are a lot of items the Florida title company must handle in order to ensure a successful closing and therefore it is important for a buyer of Florida property to select a title and escrow agent with in depth experience in coordinating all of these aspects of the transaction. Also, in many cases last minute items will surface no matter how smooth the transaction has been so it is important for a buyer to have a title and escrow company or attorney that is available during “after hours” to properly deal with such items so that the closing can take place in time without any issues.
Issues the Owner’s Title Insurance Policy After Closing. After the closing and the title to the property has been transferred to the buyer, the Florida title company will provide the buyer with an owner’s title insurance policy to protect the buyer from any undisclosed or undiscovered issues that could arise from the buyer’s purchase. Not all potential title issues can be readily discovered from a title search such as forged deeds in the prior chain of title so owner’s title insurance is necessary to provide adequate protection to a buyer. Owner’s title insurance is paid for by a one-time premium which is collected on the closing statement at the time of closing and it protects the buyer’s investment in the property for as long as the buyer owns the property. A Florida title company which is owned and operated by a licensed Florida real estate attorney with experience in reviewing and analyzing title documents and their impact on the title to the property is in an ideal position to issue an owner’s title insurance policy to a buyer of Florida real estate.