Radiant New Horizon Homes.com

house CLOSING (and beyond...)

This page covers all the final steps in purchasing a property. The topics covered here are those not involving financing, inspections or homeowner's insurance. Any contingencies regarding these items are assumed to have been fulfilled for the purposes of this page. As a closing attorney is required and/or recommended to handle the closing items discussed on this page, the purpose of this page is to describe what these entail.

In addition, we go beyond the closing with tips to make (and keep) your new home Ideal !

TITLE SEARCH AND INSURANCE

Question: Why is a title search necessary ?

Answer: When a property is purchased, the buyer pays money in exchange for the property's title. Therefore it is in the best interests of the buyer (and the buyer's lender(s), if applicable) to make sure that the title is clear and marketable.

In the case of the buyer, it is to ensure that the property rights as stated by seller are correct. In the case of the lender, it is to ensure that the collateral on the mortgage is correct. This means that the title is 'free and clear' and 'marketable'. 'Free and clear' means the title is clear of other encumbrances such as mortgages or liens. 'Marketable' means the title must have an "unbroken chain of title" for at least 40 years. This means that in the last 40 years, there are no "breaks" ('defects') in the "chain", meaning any unverifieed conveyance, encumbrance or other interest. Any defects older than 40 years are no longer vaild. A marketable title, in addition to being free and clear from defects must also not depend on doubtful questions of law to validate, not expose buyer to potential litigation (or other threats) due to title issues and allow for the buyer to sell or mortgage the property at a later date.

An unmarketable title can still be transferred. However, the defects may limit or restrict ownership. Also, a buyer cannot be forced to accept an unmarketable title. Lastly, any questions regarding the marketability of the title must be addressed before acceptance of the deed. That is why a title search is necessary.

Question: Who can do a property search ?

Answer: Anyone can do a property search. However, it is highly recommended to have a closing attorney (or other experienced and qualified party) handle these as title searches are a complicated procedure involving both knowledge of what public records to examine and the legal implications of documents found.

Question: What is title insurance ?

Answer: Title insurance is a policy designed to cover losses in the event of defects not reported in the title search discovered after the closing/deed transfer of property.

Question: Is title insurance required ?

Answer: If a lender is involved, the answer is yes. This is because lenders are unwilling to rely solely on title searches and attorney opinions to ensure their collateral when granting mortgage loans. In a purchase, the lender will demand buyer purchased title insurance to protect them, the lender. However, the buyer will also have the option to purchase additional coverage to protect themselves.

Question: What does title insurance cover ?

Answer: Title insurance covers the following:

  1. Insures against anyone else making a claim that he or she is the owner of all or part of the property;
  2. Insures against liens or other encumbrances that were missed by the title search or misindexed by the town clerk;
  3. Can offer protection of ownership even where defects in title marketability exist (such as old unreleased mortgages);
  4. Insures a legal right of access (though this may be just by foot);
  5. Insures against violations of government regulations, but only those violations listed on the land records;
  6. Insures against the exercise of eminent domain in certain situations;
  7. Insures against fraudulent conveyances in the chain of title;
  8. Any defect in title that arises from the date of the policy (the closing date) and the date the deed and mortgage are recorded;
  9. For the Lender, it insures the enforceability of their lien created upon the title of the property by the mortgage;
  10. For the Lender, it insures the priority of their insured mortgage lien against other liens or encumbrances;
  11. For the Lender, it insures the priority of their mortgage lien against liens for services, labor or materials for work done on the property (in conjunction with an Owners Affidavit signed by the Seller);
  12. For the Lender, it insures the assignment and assignability of any mortgages that are assigned to and assumed by the Buyer;
  13. Pays attorneys fees and costs of defending title and the insured mortgages.

There is also available an expanded title insurance policy; which is a good idea for Buyers and may be necessary for the Lender in certain situations. In addition to the protections of a standard title insurance policy, the expanded title insurance policy also covers:

  1. Correcting or removing existing violations of restrictive covenants;
  2. The inability to obtain building permits due to existing violation of subdivision regulations;
  3. Removal of existing structures that were built without proper building permits;
  4. Removal of existing structures due to non-compliance with zoning laws;
  5. If the property cannot be used as a single family home due to zoning regulations;
  6. Removal of an existing structure that is then found to encroach upon the land of a neighbor;
  7. If a neighbor builds a structure that encroaches upon the property of the insured;
  8. For one to four family homes that have a valid certificate of occupancy and no recent boundary line changes, offers survey coverage even without a survey.

Question: What does title insurance not cover ?

Answer: Title insurance does not cover the following:

  1. Government regulations for which a violation was not recorded on the land records;
  2. Rights of eminent domain where a notice of exercise was not recorded on the land records;
  3. Defects, liens or encumbrances that:
    1. were created or agreed to by the insured;
    2. known by the insured but not disclosed to the title insurance company;
    3. that do not result in any loss to the insured;
    4. were created or attached after the date of the policy;
    5. resulting from the Buyer’s lack of “bona fide purchaser” status.
  4. For the Lender, enforceability issues created by the Lender’s inability to meet Connecticut business practices requirements;
  5. For the Lender, enforceability issues created by the Lender’s lack of compliance with consumer protection or truth in lending laws;
  6. Any liens for services, labor or materials for work performed after the date of policy and not paid for by mortgage proceeds;
  7. Any claim arising from bankruptcy or other creditors’ rights laws.

Question: Where can title insurance be obtained ?

Answer: In Connecticut, real estate closing attorneys double as title insurance agents and will secure and prepare the policy in behalf of the buyer and/or lender.

CLOSING ATTORNEYS

You are free to use any closing attorney(s) you choose. However, we recommend the services of the...

LAW OFFICES OF BRIAN M. YARD, LLC

FINAL WALKTHTOUGH

A final walkthrough should be done before the closing day. This is important to ensure that the property condition has not changed since the acceptance of any inspections and/or any agreed upon repairs have been completed. Any discrepancies here could require additional negotiations and possibly a delay in the closing. Taking an hour for one last inspection is a good investment in your time. After all, you don’t want to spend the first weeks in your new home cleaning up or making unexpected repairs.

In a final walkthrough, it is recommended that the following things be done:

  • Check the exterior of the home, especially if there have been strong wind or rain storms since your last visit.
  • Turn all light fixtures on and off.
  • Make sure the seller hasn’t removed any fixtures, such as chandeliers, that he or she agreed to leave behind (typically there is an inclusion/exclusion disclosure detailing this).
  • Check all major appliances.
  • Turn heat and/or air conditioning on and off.
  • Turn on water faucets; check for leaks under sinks.
  • Test the garage door openers.
  • Flush all toilets.
  • Open and close all windows and doors.
  • Do a visual spot-check of ceilings, walls and floors.
  • Turn on the garbage disposal and exhaust fans.
  • Check the status of any agreed-upon repairs.
  • Check screens and storm windows. If they’ve been stored, make sure you know where they are and that they’re in good shape.
  • Look in storage areas to make sure no trash or unwanted items remain. Old paint cans or hazardous materials are often left behind by the seller.
  • Do a quick check of the grounds. Some sellers have dug up and taken plants (even small trees or bushes) with them.

SETTLEMENT: THE DAY OF CLOSING

The day of closing is known as the "settlement" and is when all the finalization of the purchase and sale of the property is completed.

The closing is done at a location agreed upon by all parties. Where this is varies per local area custom but closings are typically held at a closing attorney's office, a title company, an escrow company or a lender's office. In Connecticut, all closings must be done by closing attorneys.

A closing typically lasts 30-90 minutes and involve documents such as a HUD-1 Settlement Closing Disclosure form itemizing all buyer's final costs, credits and charges plus a promissory note, loan estimate and execution of title insurance policy (if applicable).

Any document errors, money issues, title issues or inspection/final walkthrough issues must be corrected prior to commencement of settlement. Any uncorrected errors and/or issues may delay settlement.

After the closing, the buyer takes possession of the property and the newly transferred deed is recorded. The buyer gets the keys. CONTACT US for more information regarding closings.

AND BEYOND...

AFTER THE MOVE - YOUR IDEAL HOME

Now that you have moved into your new home, here are some tips on how to make and keep your new home ...

IDEAL ...