What is a closing?

At a closing, which is sometimes also called a settlement, a buyer and seller complete a real estate transaction. During a closing, deeds, mortgages, and other documents are signed and delivered, and money is disbursed (distributed) according to the terms of the sale.

What is a settlement?

In some regions, a real estate closing is called a settlement. The two terms are interchangeable. As in a closing, during a settlement the buyer, seller, and lenders sign and exchange deeds, mortgages, other documents, and money according to the terms of the sale.

What happens at a closing?

Your realtor, lender, or title agent can walk you through the details for your particular sale, but in general, these transactions take a similar format. The buyer, seller, lenders, and any other associated agents or representatives meet at a scheduled time. 

All parties sign required paperwork and deeds and mortgages are exchanged. All funds are disbursed, including down payments, closing costs, title insurance, and any other required fees. 

What is a closing disclosure?

A closing disclosure is an official document certifying the details of your mortgage, including monthly fees, and closing costs.

Why can’t I bring a check to the closing?

By law, a closing agent cannot disburse (distribute) funds of $10,000 or more unless they are in the form of an unconditional and irrevocable wire. This statute, which went into effect July 1, 2009, ensures that all parties are protected in the transaction.

You can obtain a wire for your closing directly from your bank. Be sure to allow time to obtain the wire before your scheduled closing.

What is a loan policy?

A loan policy is a form of title insurance that protects the lender against the risk of legal or title challenges to the property being mortgaged. Most lenders require a loan policy in the amount of your loan in order to issue a mortgage against your property. The loan policy protects the lender in case the buyer defaults due to an undisclosed or unknown title issue with the property. 

Unlike an owner’s policy, which remains in effect for as long as you or your heirs own the property, the loan policy decreases each year as you pay down your mortgage principal until the loan is paid off. 

Why do I have to pay for a loan policy when I refinance?

When you refinance, the terms of your loan reset. To protect the lender, most require a new title search and title insurance loan policy whenever mortgage terms are refinanced. The policy amount decreases each year until the loan is paid off. If you are refinancing, be sure to ask if you qualify for a discount rate or reissue rate. While they are not available in every state, and you may need to meet certain minimum criteria to qualify, the discount can be significant so it’s worth your time to inquire.

What is an owner’s title policy?

An owner’s title policy protects you when you purchase real estate. In the event that an undisclosed or unknown issue with the title comes to light after your purchase, your owner’s title policy covers your expenses up to the amount of purchase. The insurance remains in effect as long as you or your legal heirs have an interest in the property. 

What does the owner’s title policy cover?

Owner’s title insurance covers any problems with the title not uncovered during the title search and any legal fees involved in defending a claim to your title.

Who pays for the owner’s title policy?

Depending on where you purchase real estate, an owner’s title policy may or may not be included automatically in your closing process. The party who pays for the policy also differs by location.

When you negotiate your purchase, be sure to request an owner’s title policy and find out who pays for it in that area. An owner’s title insurance is paid with a one-time fee at closing.

What is a title?

A title is a document that shows ownership of a property. When you purchase or inherit a property, you receive the title to that property.

What is title insurance?

Unlike auto or home insurance, which protect you against things that might happen in the future, title insurance protects you from things that happened in the past. 

If you’re purchasing a property, the previous owner may not have known about or disclosed situations that can negatively impact your investment. Title insurance provides you with peace of mind when you buy a house, refinance your mortgage, or handle other real estate transactions. 

Title insurance comes in two forms: an owner’s title policy, which protects the buyer in a real estate transaction, and a loan policy, which protects the lender.

What is a title search?

Before purchasing a property, buyers should make sure a reputable title company conducts a thorough title search. This research uncovers any issues with the ownership of the property that could impede the sale or impact the new owner. 

Depending on the property, a title search can be intensive and complex, requiring expertise about the records and requirements of a state or area. For that reason, title companies are required to be licensed in a state before performing a title search for a property located in that state.

Why do I need title insurance?

Title insurance protects you from issues or problems with your title that may have occurred before you purchased it. If a seller fails to disclose, or wasn’t aware of, a title problem prior to closing, as the new owner, you are liable for that claim. The consequences could be minor, or cost more than the value of your property. 

Title insurance gives you peace of mind that, in the event that you discover a title issue that began prior to your purchase, you will be covered.

What is the difference between a title and a deed?

A title is a legal term indicating you have whole or partial property rights. When you have the title to a property, you can sell or transfer the portion of the property that you own. A deed, on the other hand, is the official document that proves your ownership. 

A signed deed transfers ownership (title) to a property.

When should I get title insurance?

Any time you purchase a property, or make a loan to someone else so that they can purchase a property, both the buyer and lender should get title insurance. 

Title insurance protects your investment against title issues that may have been unknown or undisclosed and which occurred prior to the purchase. You should be sure that title insurance is secured before you close on a property.

Do I need title insurance if I’m buying property from someone I know?

Even if you’re buying a property from a trusted friend or family member, that person may not be aware of all of the title issues associated with the house, building, or land. 

Any time a title problem is deemed to have begun before the sale—whether the previous owner knew about it or not—your title insurance will protect you in ways that your homeowner’s insurance or other insurance policy will not. 

Do I need title insurance for a newly constructed property?

While you will be the first owner of your newly constructed home or building, other people have owned the parcel of land before you or your builder. If any undisclosed or undiscovered liens against the land are found after your purchase, title insurance protects you. 

Likewise, if your builder fails to pay any contractors or has any judgements levied against them, title insurance guarantees that no one can put a lien against your property.

Who gets to decide which title insurance to purchase?

Generally speaking, the person purchasing the title insurance decides which policy to purchase. However, if a buyer has a strong opinion about which title company to purchase from, many sellers will defer to the buyer. 

In every case, buyers should consult a realtor and/or real estate attorney to get recommendations about title companies, and be sure they are comfortable with the choice and the price of the policy.

What is the difference between homeowners’ insurance and title insurance?

Homeowners’ insurance protects owners against damage and problems that may happen in the future, after the date the policy begins. Title insurance, on the other hand, protects owners and lenders against title issues that began in the past, before the property was purchased. 

Because title problems often emerge long after the fact, it’s important for owners’ peace of mind to have both homeowners’ and title insurance.

What kind of problems can occur with the title to a property?

Property titles are subject to a range of legal judgements, which can be complicated. In order to avoid problems that could impact your closing or ownership, it’s important to conduct an in-depth title search prior to closing. 

Some of the more common problems with titles include:

  • Another individual or business entity has a lien against the property.
  • The seller’s mortgage was not paid in full at the time of closing.
  • Legal judgements were filed against the seller prior to closing.
  • The seller owed back taxes on the property that were not settled prior to closing.

Are all title companies also closing companies?

Some title companies also conduct closings, depending on the regulation of the state where the property is located. However, not all title companies are also closing companies. Closings can also be conducted by escrow companies, lenders, real estate brokers, or real estate attorneys.

Buyers may be able to save money by contracting with the same company for title work and closing. It pays to do your research and understand the regulations of your state prior to closing.

What things are typically covered by title insurance?

A typical owner’s title insurance policy covers:

  • Discovery that someone else owns the property you purchased
  • Incorrect, forged, or fraudulent signatures on title documents and other property documents
  • Incorrect records
  • Flawed record-keeping
  • Unreported or unrecorded restrictive covenants, such as easements
  • Outstanding lawsuits involving the property
  • Outstanding liens against the property
  • Other legal encumbrances or judgements against the property

In some cases, owners may choose to add additional protections to their title insurance policy. Check with a title insurance expert in your state for details.

How much does title insurance cost?

An owner’s title insurance policy pricing varies depending on the particulars of the property and its location. This one-time fee is paid at closing.

How long does title insurance coverage last?

For owners, coverage lasts as long as you or your heirs own or partially own the property. For lenders, coverage lasts until the mortgage is paid in full. 

What are the chances I’ll ever have to use my title insurance policy?

If you use a good title company to conduct your title search, you can go to closing with confidence that your title is clear. However, even the best title searches can’t account for inaccurate or faulty records. 

We hope you’ll never have to use your title insurance policy, but that small one-time investment gives you peace of mind for as long as you or your heirs own your property.

Are all title companies the same?

Title companies are not created equal. Some are local companies without a wide range of expertise. Others are national, but lack local knowledge. Some are staffed by people relatively new to the business, while others have teams of experienced experts. 

In some cases, title companies only do title searches and insurance, but a title company might also employ a staff of lawyers, real estate experts, and closing experts.

Why should you work with Meridian Title?

Meridian Title provides peace of mind through comprehensive, customized service that is always on-time and where you need it. With years of experience, sophisticated services and technology, and connections throughout the real estate and banking industries, Meridian Title handles even the most complex title cases smoothly. 

While we have a wide geographical reach, our staff are all local experts. We invest in the communities where we live and serve.

What do you do if you have a problem?

If you suspect you have an issue with your title or need to make a claim against your title insurance, promptly notify the title insurance company named on your policy. The policy should include contact information, usually at the end of the “Conditions and Stipulations” section.

If you can’t find your policy, or aren’t sure if you have one, contact the title company, title agent, or attorney that handled your purchase to ask about your coverage.

Who can you contact if you have more questions?

If you have additional questions, please call Meridian Title at (800) 777-1574. We’ll connect you to an experienced agent, attorney, or specialist in your region who can help you.