All-American Title & Escrow Company, L.C., which was opened in 1995, has extensive experience with respect to real estate settlements, real estate closings, purchase transactions and refinances and is committed to providing a professional service which is personalized in order to meet all of your needs associated with the purchase or refinance of a home.
We fully understand that the purchase or refinance of a home is quite possibly one of the largest financial transactions in which you will ever engage. As a result, we are committed to taking the time necessary to make sure that you fully understand every single document that you will be required to sign and also to understand every aspect of the financial transaction.
Our commitment to you begins when you first contact our office in connection with the purchase or refinance of a home. If you have not already signed a contract then we can recommend an experienced attorney who would be willing to consult with you in regard to all aspects of the contract in advance of signing same. If you have already signed a contract then the terms thereof can be carefully reviewed by an attorney and advised you of any aspect of the contract which could cause any confusion.
For most people, purchasing a home is the largest single investment of their lives. Extreme care should be taken in selecting a home, entering into a contract for purchase, obtaining financing and finally, closing the transaction (sometimes called the “settlement”). This process may be complicated and full of hidden risks, both legally and financially, and prospective purchasers should seek the advice of experienced real estate professionals, including experienced real estate settlement agents a real estate attorney. A few of the many important questions prospective purchasers should ask to include the following:
- Exactly what real and personal property is included in the purchase?
- How should we take the title?
- What financing and terms of payment can be arranged?
- Are any liens filed against the property?
- Are real estate taxes paid to date?
- How can we evaluate the physical condition of the property?
- Do any easements or covenants restrict the use of the property?
- What local land use regulations affect the property?
- Is there mandatory membership in a homeowners association?
- Are utilities adequate?
- What happens if a builder fails to deliver as promised/when promised?
- Exactly what are our rights and responsibilities under the proposed contract?
THE REAL ESTATE SALES CONTRACT
The purchase/sales contract or agreement is the document by which the purchasers commit themselves to purchase the home and the sellers commit to all. Although many real estate agents provide printed “form contracts” there is no such thing as a “typical” form contract. Almost every contract of every different firm has its own peculiar provisions which have an important effect upon the rights and obligations of both the purchasers and the sellers. Although the “form contract” may seem innocuous, it usually is not; and great care should be taken by the purchasers to read and understand every provision in the contract presented. It is at this stage that the purchasers should fully understand what they are signing. Competent professionals can assist in this process, including retaining an attorney, either to review the contract from presented to them or draft a contract with the purchasers’ interest in mind. Remember, by law, absent a written agreement between the purchasers and the real estate agent, the real estate agent owes his or her primary duty to the sellers who pay the agent’s commission.
A contract to purchase a home must be in writing to be enforceable to a court. Oral agreements not evidenced by a written document are not binding. Further, a contract signed by only one owner, when the property is held by more than one, may not be legally binding.
The contract should contain all the terms of the purchase and sale including, at least, the following provisions:
- The names and addresses of the seller and the purchasers;
- The purchase price, and how it is to be paid, including the amount of down payment and deposit;
- Arrangements for financing, especially the purchasers’ right to cancel the contract if they cannot secure financing;
- The legal description of the real property, including a representation about the square footage/acreage of the property and when a survey is available, the incorporation of the survey into the legal description;
- A provision that title to such property shall be good and marketable of record, subject to reasonable easements, conditions and restrictions that may exist;
- Description of any personal property that is included in the sale;
- The condition of the property at the time of sale;
- The date of settlement and possession;
- A list of settlement cost and which party is responsible for paying them;
- A provision that the terms of the contract, particularly any warranties on the condition of the property, should survive the execution and delivery of the deed;
- A provision stating who bears the risk of loss if something should happen to the property before settlement;
- A provision stating who is entitled to the deposit in the event of default by either party;
- If the property is a condominium or part of a homeowners association, additional written disclosures are required by law and the purchasers should have the specific right to cancel the contract after reviewing the disclosures; and cancel the contract after reviewing the disclosures; and
- Signatures of all of the parties.
The purchasers’ should review the provisions of the contract offer and make any changes which he or she determines would be in the best interest of the purchasers.
Most people do not have the personal economic resources to pay cash for their home and, therefore, must secure financing from some lending institution, such as a bank, a savings and loan association, or mortgage lender. In some cases, the sellers will take back a note secured by a deed of trust (the form of mortgage used in Virginia) for part of the purchase price or let the purchasers assume the loan under an existing deed of trust. In other cases, one of the purchasers’ family members or an independent third party may be interested in a shared equity financing arrangement for part of the purchase price or to bolster the purchasers’ qualification for mortgage financing.
Since the contract will usually include provisions with respect to the purchasers’ responsibility to apply for and obtain new financing, the purchasers are obligated to adhere to these terms of the contract. Usually, the real estate agent will assist the purchasers in making application for a loan to purchase the house. However, even at this state, it is best for the purchasers to seek advice from their attorney to ensure that the terms of the contract are being followed and that the contractual arrangements with a lending institution are legal and fair. Some loans which are insured by state and/or federal agencies, either the Federal Housing Administration, Veterans Administration or Virginia Housing Development Authority, call for lower interest charges or extended terms of repayment. However, such loans may entail additional fees charged by the lender to account for the below-market interest rates.
If the loan application is approved, the lending institution should provide its commitment to making the loan. The commitment will set forth the conditions under which the loan will be made, including, for example, if the loan is 80 percent or more of the sales price, a requirement that you purchase mortgage insurance to ensure the lender against potential loss in making the loan, payment of a loan discount and/or loan origination fee (usually 1 percent or more of the loan amount, thereby increasing the total finance charge for the term of the loan) and, of course, the interest rate of the loan.
Once the commitment is signed with provisions to the satisfaction of both the lending institution and the purchasers, the date and time for settlement should be arranged in accordance with the contract.
Prior to closing the transaction, the purchasers and the lending institution will want to be assured as to the quality of the title the purchasers are obtaining. First and foremost, of course, the purchasers and the lender want to be assured that the sellers own the property and have the power to convey it. But, also, there might be other matters affecting the title that would seriously impair the use and enjoyment of the property by the purchasers. Thus, while financing is being arranged, the purchasers will usually also arrange to have a title search performed among the land records of the county or city in which the property is located and order an examination of the title documents. (The title search involves only an investigation of the land records to identify documents bearing on the title in question. The title examination involves a review and evaluation of those documents.) The title search may be performed by your attorney or a title insurance company, which company may then agree to ensure title against certain challenges in the future (subject to such exceptions as may be included in the title policy). The settlement agent will examine the documents and form an opinion as to the quality of the title. In examining the title, your settlement agent will make sure that the sellers actually have a good title and that they have the right to transfer title of the property and will review covenants, easements or restrictions on the use of the property, as well as any real estate tax obligations which have gone unpaid. In addition, there may be special assessments for public improvements or covenants established by the developer or a homeowners association setting restrictions on the use of the property and imposing mandatory homeowners association fees.
In most cases in Virginia, lending institutions will require that the purchasers pay for a lender’s title insurance policy covering the lender in case future title problems may arise. The purchasers should seek counsel as to the advisability of also obtaining an owners’ title insurance policy to cover their interest as owners of records. Prudent purchasers always obtain owners title insurance. In
Virginia, title is usually transferred by a general warranty deed wherein the sellers guaranty the title against the claims of any other persons. The purchasers should, of course, have their attorney review the deed to ensure that it is properly drafted and conveys marketable title.
In some circumstances, title to property may be conveyed by special warranty deed. By this type of deed, the sellers are only warranting title against the claims of themselves and those claiming to hold title under them, but not against the claims of other persons.
Purchasers should also consult with their attorney on the following settlement, the best method of taking the title. For example, a husband and wife may wish to take the title as “tenants by the entirety with the common law right of survivorship,” which means that if one should die, the survivor will take the title by operation of law. Two unrelated persons may wish to take the title as “tenants in common,” by which each person would own a percentage share in the property and may convey his or her share independent of the other owner or owners. Questions as to the form of taking title may be complicated and the language used must be precise. Only an attorney can properly assist purchasers in making such decisions. Once the purchasers have been assured of marketable title and have obtained financing, it is time for settlement.
Before settlement, all of the settlement papers should be carefully drafted and reviewed. These documents include (1) the deed, (2) the note which evidences the loan, (3) the deed of trust conveying the property to trustees to secure payment of the loan, (4) the settlement statements by which an accounting is made of the transactions, (5) any deed of release or certificates of
satisfaction releasing the property from deeds of trust, (6) the truth in lending statement by which the lending institution discloses all of the finance charges, (7) the survey of the property showing any building restriction lines, easements or other encumbrances on the property, and (8) any other documents required by the lending institution or by the particular requirements of the settlement. The purchasers should, of course, be responsible for reviewing all of these documents to assure that they are in proper order. At settlement, the documents will be executed by the proper parties, and several of them will require notarization. Also, the settling of the financial accounts among the buyers, sellers, lender, sales agents and others will be explained by the settlement agent and the transaction will be completed.
Following settlement, the settlement agent is responsible for recording the legal documents among the land records of the county or city in which the property is located and disbursing all of the proceeds of the transaction to the proper parties. In Virginia, the Wet Settlement Act requires, among other things, that all the funds collected at settlement be disbursed to the proper persons by the settlement agent within two business days after all the funds are collected and deposited in the settlement agent’s escrow account.
A word should also be said about settlement costs. It is a settlement that the attorney’s fees, recording fees, real estate commissions and all other fees agreed to either the contractor or the finance documents will be paid. It is generally required that the purchasers bring the settlement the balance of the down payment and required closing costs by certified cashier’s check or wired
funds. It is recommended that purchasers consult with the settlement agent prior to settlement to assure ample time to convert money into the proper form.
The charges in closing the transaction will be estimated in advance. The expense will be modest in comparison to all the other essential costs of the transaction and in relation to the responsibility of the settlement agent for examination of title, preparation of documentation and conducting settlement.
There are three stages to the settlement process which are discussed below. The term “settlement refers to the time at which the parties meet to complete the performance of the real estate contract or the time at which the borrower meets with the settlement agent in order to execute the loan documents associated with the refinancing. Each of the three stages is discussed below.
Prior to Settlement We Will
- Have the land records searched to determine the status of the title to the property
- Request loan payoffs
- Order the plat of survey of the property
- Coordinate settlement
- Prepare the documents to be signed by all parties at settlement.
On the Day of Settlement We Will
- Conduct settlement in an orderly manner
- Carefully review all financial aspects of the transaction with all parties
- Discuss any defects in the property which may have been noted during the walk-through
After Settlement We Will
- Record the Deed and Deed of Trust among the appropriate land records
- Obtain and disburse all funds in accordance with the HUD-1 Settlement Statement
- Return all documents in connection with the transaction to the lender
- Then prepare and issue Owner’s Title Insurance if you purchased it at settlement.
- Forward the original recorded Deed to you once it has been received from the land records
Owners Title Insurance
Owners Title Insurance protects your home, possibly your most expensive investment, against potential or possible claims to your ownership. The cost of Owners Title Insurance is a one-time
fee. Although you pay only once, you and your heirs are protected against any possible claims against your ownership of the property.
Your Right to Choose
Although the real estate agent involved in the transaction, the lender or the seller may suggest a settlement service, you as the buyer or borrower have the final choice pursuant to state and
All American Title & Escrow Company, L.C. is committed to providing a professional service at a reasonable price which will eliminate any confusion or mystery and ensure that you fully understand every aspect of the transaction.
An important point to remember is that the purchasing a home is a significant event in anyone’s life and will affect both family life and financial position for years to come. Over a lifetime, it
will be more economical to retain the services of a competent real estate professional from the outset so that the process of purchasing a home, including contracting, obtaining financing and
settlement may be done precisely and properly. When done properly, the purchase of a home can be one of the greatest satisfaction of a lifetime.
“Our fees for settlement are generally lower than other companies in the area”