When a Realtor tells me they have a ratified purchase contract, it always make me smile. That means a Realtor has entrusted Stewart Title to handle their transaction and get their clients to closing. There are many things that happen between the day of contract ratification to closing. The lender has their job, the home inspector, appraiser, and the many items asked of the “soon to be” home buyer. The one role where many people are unsure of what happens behind the scenes is the Title Company. Ask most homeowners where they signed their closing documents and many don’t remember, let alone understand what this Title Insurance policy is all about.
When a there is a ratified purchase contract sent to Stewart Title, what happens next? What is the role of the Title Company, that ends with a homeowner signing documents?
Conducting the Title Search
Once we receive the ratified purchase contract, the transaction processor (Escrow Officer) opens the order and assigns a file number. We then give the file to our Title examiners to conduct a Title Search. This search goes back 60 years to review the chain of title (every time title transferred) to ensure that there are no liens, judgements, or defective recordings against the property currently or at any time.
We see properties with Title issues more than we would like, and it partly has to do with the housing crash around 2008 and the many small Settlement Companies that were in business back then and no longer operate today. Sloppy Title work and post closing led to a lot of errors and Title issues missed. Once the Title search is complete, and all is clear, we move to the next steps. If there are Title issues against the seller, they need are reconciled before or at closing (paid off). If they are not against the current seller, we work to get these liens or judgments removed so the new buyer takes ownership of the home with clear Title.
Working with the Lender
In most cases, a buyer is obtaining a mortgage. That means they are approved for financing, so the Lender and Title Company need to communicate as to where each is in the process. Also, the fees we are each charging for our services have to be disclosed. The Title Company can order the payoff from the existing lender if the buyer is selling a home and needs to pay off the old mortgage. This “payoff” is then given to the new mortgage lender. As closing nears, the Title Company gets the final “CD” (Closing Disclosure) from the lender to ensure the final numbers are correct, then the lender sends the closing documents to the Title Company.
Underwriting–Title Commitment and Issuing the Title Policy
After we have conducted the Title Search and continue to communicate with the lender, we have our Title Underwriters review the final search, issue a Title Commitment and finally a Title Insurance Policy. As a reminder, we sell insurance, so underwriting policies is important. The “Title Commitment” states that IF Schedule’s A-D on the commitment meets our requirements, then we will issue a final Title Policy that is financially backed by Stewart Title. I wrote a blog on this specific topic last year…and it can be read here.
Once the commitment requirements are met, and the Title is clear…we are almost home free!
Coordinating the Closing
At this point we coordinate the closing with the lender (if there is a loan) and decide where the sellers and buyers are going to sign their documents. We prefer that the parties come to our office, but as the nature of our business, we do travel for settlements. I would say that over 50% of our closings occur outside of our office.
Once we have the closing set up, the lender then emails us the final buyer documents. The buyer signs their documents with one our closers. A closer is an attorney, current Stewart Title employee who does closings, or a notary. Our closers go over the Closing Disclosure, and Loan Estimate sheet, and the other lender documents to make sure the buyer(s) fully understand the figures and the pages they are signing.
Once the documents are signed and notarized, we then record the Deed with the county, which makes the buyers, official homeowners. A misconception with becoming a homeowner, is that it occurs the moment the documents are signed. No. If the signing occurs outside our office, we need the signed documents back so we can do a final review, then we record the deed. This may take an extra day to occur is some cases.
Boom! We are at the end! Official homeowners! As you can see, there are many moving pieces to the work of a Title Company. Many of our transactions take hard work to get to closing.
Why Close at Stewart Title?
Once we get a ratified purchase contract, we spring into action and try to create a great customer experience. Also, as the 3rd largest Title Insurance underwriter in the US, your Title Policies are financially backed by us. If you are a Realtor and need a new Title Company partner, give Stewart Title a shot…you won’t be disappointed.
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