Title companies and real estate attorneys assist purchasers of properties by ensuring that all of the necessary components in a real estate transaction are appropriately and fully completed. It is the duty of a title company to coordinate a real estate purchase with numerous parties in interest, including the buyer, the seller, real estate agents, mortgage lenders, title insurance underwriters, municipal lien search companies, surveyors, homeowner’s associations, condominium associations and other third parties. During the course of the preparation of a purchase and sale contract for a buyer’s purchase of a property a buyer needs to determine which title company will act as the title and closing agent in the transaction. In Florida, real estate attorneys act in the same role as title companies do charging similar fees and costs and with the added benefit of having an experienced real estate attorney oversee each step in the closing process. After the purchase and sale contract is signed by all of the parties, it is delivered to the chosen title company or real estate attorney to review and to begin the title and closing process which consists of the following components:
1) Title Search: A title search of the property is ordered through a title insurance underwriter and is then reviewed in detail. The title search reflects many items regarding the status of the title to the property, including the current ownership of the property, if there are any outstanding mortgages encumbering the property and any restrictions and limitations in the public records which affect the status of the property’s title. The title company or attorney will thoroughly examine the title and will clear any liens or claims against the property so that the buyer will receive clear and marketable title to the property at closing.
2) Title Insurance Commitment and Policy: Based upon the results of the title search a title insurance commitment for the owner’s title insurance policy and, if applicable, the lender’s title insurance policy is prepared and issued to reflect both the owner’s and the lender’s coverage amounts and terms. There are two different types of title insurance policies. The owner’s title insurance policy insures the buyer’s ownership interest against any claims made against the title to the property after the closing and the lender’s title insurance policy insures the lender’s interest in the mortgage given by the buyer to the lender. It is highly recommended and common practice for all buyers to receive an owner’s title insurance policy which protects them against any unforeseen claims, title defects, fraud or hidden risks affecting the property following the closing. The title insurance policy not only provides coverage to a buyer for any potential financial losses but also for legal costs and expenses which may be incurred in order to clear any such unforeseen claims.
3) Municipal Lien Search: A municipal lien, code enforcement and open/expired permits search is also ordered through a lien search company and similar to the title search is then reviewed in detail. The municipal lien search reflects any outstanding governmental liens, code enforcement violations against the property which could potentially turn into liens and any building permits which affect the property and have either not been properly closed out or have expired without a final inspection of the property. The title company or attorney will thoroughly examine the municipal lien search report and will work with the seller and other interested parties to clear any open items contained in the municipal lien search report.
4) Property Taxes and Utilities: The title company or attorney will also review and verify with the local taxing authority that the real property taxes and non-ad valorem assessments have been paid and that nothing is outstanding. In addition, the account with the water and sewer provider and any governing homeowner’s or condominium association will be checked to confirm that all required payments have been paid up to date. On the settlement statement the amounts for taxes, association dues and other items will be prorated based on the applicable billing periods and the closing date.
5) Survey: A survey of the property is ordered from a surveying company to provide a drawing of the boundaries of the property and the location of all structures built on the property. The survey also verifies that the legal description of the property in the title insurance commitment matches with the actual legal description of the property as surveyed. The survey will also show if there are any encroachments from the property onto adjacent properties or if any structures on adjacent properties encroach upon the property being purchased. If the survey reflects any issues or problems with the property the buyer and all other interested parties will be notified so that corrective action can be taken.
6) Loan Documents: The title company or attorney will coordinate all matters with the mortgage lender in order to receive the loan documents from the lender prior to closing. Upon review of the mortgage lender’s loan documents, a final settlement statement is prepared and sent to all interested parties to review and approve prior to the closing. The settlement statement will contain all of the costs and expenses charged to the buyer and the seller for the purchase and sale of the property. Seller’s documents, including the deed, bill of sale, and various affidavits, will also be prepared and reviewed to make sure all of the requirements in the title commitment are fully complied with.
7) Closing: At the closing all documents which are required to be signed are reviewed with all interested parties. The closing process typically takes about 10 minutes for an all cash transaction and about one hour for a transaction involving mortgage lender financing. When all documents have been signed and the closing is finished, the title company or attorney will disburse all the monies collected at closing as reflected on the closing statement. Wire transfers will be sent to pay off and release any existing mortgages against the property and copies of the signed documents will be provided to the buyer, the seller and other interested parties.
8) Recording of Documents: The title company or attorney will also prepare and submit to the county recorder’s office all documents which are required to be recorded in the public records such as deeds and mortgages. It typically takes one to two weeks to receive the recorded documents back from the county recorder’s office after submission. Although, with electronic recording in most counties in Florida recorded documents can be obtained within a few days.
Bales & Bales, P.A. is a Coral Gables, Florida based law firm which handles real estate transactions and acts as title and settlement agent throughout the entire State of Florida. We have closed thousands of residential and commercial real estate transactions for our clients during our firm’s inception in 2005 and our number one goal is to protect our clients throughout all steps of their real estate purchases and to ensure that at the time of closing all of the pieces have been put in place for a smooth and pleasant closing experience. We are available to assist you with your next purchase or sale and to answer all questions you may have regarding the title and closing process. Please contact us with any questions.