Title Issues

29 Jul

by Tom Resnick   writing for the Daily Herald this week:

Q. We have someone very interested in purchasing our home. For various reasons, they need to close within the next month or so. Although my husband and I were planning on putting our home of 34 years up for sale soon, this is sooner than we planned. At this point in time, we not only don’t have anywhere to go, we don’t even know where we want to be next. We may stay here or we may move near my relatives in North Carolina.

Someone told me we might be able to negotiate staying in our house for some time after the sale. Is this possible? What issues must we consider when discussing this with our prospective purchasers?

A. Although attorneys, especially purchaser’s attorneys, often attempt to discourage these arrangements, sellers often retain possession of their property after closing. Attorneys frown upon post closing possession as it may lead to disputes regarding condition of the property when possession is eventually tendered, timely tender of possession and other issues.

However, seeing as you are willing to accommodate the purchasers in the timing of the sale, they should be willing to accommodate you in regards to allowing you to stay after closing. Issues to consider are: Rent (which is often calculated based upon purchaser’s actual cost of owning the property), possession date, insurance, escrow deposit (to guaranty timely possession and the condition of the property), utility payments and who is responsible if something breaks while seller remains in possession.

There are additional issues you also must consider. Your real estate attorney will assist you in drafting a post possession agreement that addresses all the relevant issues. Make sure you give yourself enough time to make your decision.

Q. I bought my first home (a condo) a few weeks ago. I had a free attorney from my job as I am a member of a legal services network. I’m not sure he understood any more of what was going on than I did.

In going over the settlement statement, I paid $875 for a closing fee and $1,025 for lender’s title insurance. Can you explain these to me? I thought the seller paid for the title insurance. And what’s a closing fee?

A. Sorry for you negative experience with our profession. Virtually all attorneys practicing real estate law are skilled and very knowledgeable. Unfortunately, it appears the legal services administrator responsible for assigning out attorneys lacked respect for what was required to adequately represent your interests.

The closing fee is the fee paid to the title company to administer the closing. The title company is responsible for insuring that the lender’s instructions are carried out. These instructions include insuring all documents are properly executed, appropriate funds are collected and disbursed, all required documentation is submitted, all title exceptions are properly addressed and lender funding is obtained. The job of “closer” has become more difficult as the lending world has become more and more complicated requiring additional documentation and compliance to more regulations.

You are partially correct regarding who pays for title insurance. In our jurisdiction, the seller customarily pays for the owners title policy. However, the lender (presuming there is one) also requires a policy insuring them. This is the purchaser’s obligation. Given the cost you indicate, it appears you paid for a base policy and three endorsements, which are coverages over and above the standard policy.


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