Greg: Steph, nice to see you again.
Steph: Hi Greg.
Greg: This is going to be a very basic question. People talk about title insurance and title companies, but what is a title company? What does a title company do?
Steph: What we do at Horne Title is we coordinate the interests of all the parties to a real estate transaction. We work with the buyers, the sellers. If you have a mortgage, you will be working with your bank and also the real estate agents. What we do is we make sure that all the requirements for settlement are met. It usually starts 2 different ways. If there is a bank involved and a buyer is going to be getting a loan to pay for the purchase of a property, I will be contacted by the bank. It’s really important that if you like Steph Horne at Horne Title to handle your closing, if you want me to do your deal, then you need to make sure at the time you submit your contract to your lender, that you tell them that you request Horne Title handle your closing because the buyer determines, along with their lender’s approval, where the closing occurs.
I am approved for every major lender and every bank in town. They know I close for most everybody. That’s how it starts. When you give the contract, you’re ready to go with your contract, submitting it to the bank, you request Horne Title. The other way is if it’s a cash deal, you just give me your contract. Your lender or your realtor or you can just email me or drop by a copy of the contract and we will run with it. What does that mean a title company running with it? The first thing we do is we do a title search. We would look at the contract and find out what the property address is, and we order a title search. The title search is of the courthouse records. We examine it to make sure it’s free and clear of all leans or claims on the property so that a new buyer could receive the good title, good and clear marketable title.
Greg: That basically means the person selling the property actually owns the property and is allowed to sell the property?
Steph: Exactly. Then there’ll be things that we need to do. It directs us to look at the title to see what encumbers the property or what do we need to pay off in order to give clean title? Sometimes people have a free and clear where there are no mortgages, but most of the time, they have a mortgage that they need to pay. We have to look for taxes.
Greg: That shows up on the title? You see that when you do your paperwork?
Steph: Yes. We’ll see if there’s any mortgages or any other leans … That’s called a lean … That needs to be paid. We’ll see taxes that will show up if there’s taxes are due. Then also homeowners associations. We have to make sure we clear homeowners’ associations dues to make sure that they’re paid and cleared prior to closing. The next step is we actually read the contract. We’ll be looking for things in the contract like a survey. We’ll look and see if buyer has requested a survey.
They aren’t required for closings for lenders. They used to always order surveys or require us to order them, but most of the time now since the bank isn’t requiring a survey, then you don’t see surveys, but we always recommend that our buyers consider getting a survey. It usually costs about $300 in this area, maybe a little more, maybe a little less, but it’s well worth it because nothing is quite like a survey to show you different things that are located on your property such as if there’s an easement or building lines, things like that. It’s wonderful to have a survey.
Greg: It’s clients’ protection to make sure you’re actually buying what you think you’re buying as far as how far does the yard go? Is the fence on this side of the line or that side of the line?
Steph: That’s exactly right. It really shows you … We’ll look for that. Then, like I said, we’ll clear the property taxes just to make sure they’re current. We’ll pay any bills and that will be the subject of what we use then. Those amounts that we see will prorate on the settlement statement. We’re developing basically like a checklist of things that need to be paid at the closing. Is there a bill for survey? Are there taxes? There’s a title search to be done.
Then there’s another episode. We talked about title insurance. You’d have 2 types of lenders or the owner’s coverage. We strongly recommend that buyers purchase the owner’s title insurance to protect you against claims, defects. The lenders always require you to get it. Then what we do is we take all those figures and fees from the bank, the charge for the closing and the deed preparation goes on the seller’s side. Then there’s also a buyer’s closing fee. We take those and we put them on a document, a closing statement that we’ll have at the closing, so we’re coordinating that document, letting our realtors review it and the lender review it to make sure that we have all of the figures correct.
Greg: This goes back to your theme that I’ve heard you say many times: disclose, disclose, disclose. It’s not that there was anything too high, but you’ve got to make sure everything is out there for all of the interested parties to review and check and double check and make sure everyone is on the same page.
Steph: Right. We don’t want to miss a home warranty fee so we’re going to read the contract and we’re going to see, “Is there a home warranty?” We’re going to see if there is any other bills that need to be paid at the closing that are part of the transaction just to make sure that we have everything that we need so we don’t have any post closing issues. Then we’ll actually prepare the deed. We’ll prepare the documents for the closing that are required by the lender. They usually send us their documents. Then we have some of our own. We’ll put those closing documents together once the closing date is set. If it’s the cash deal, the buyers and the sellers and their agent will get a call and we’ll say, “We want to close on this date.” Usually our cash deals, we have a turnaround time of about 7 days. We can close in a week.
With the lender deals, they run anywhere between 30 and 60 days, and we don’t set the closing date for those. The lender will set the closing date. We’ll get a call from the parties potentially that they’re ready and we’ll let the lender know, but the lender then will tell us, “This is the date we close.” They’ll have called the parties also. Once the closing comes, then the lender will have sent us the document. We will at the closing explain the documents to the buyer and the seller. Then we’ll make sure that everything is signed and we disperse all the monies that are collected and pay all the necessary parties. We send the payoffs to the bank and then we follow up to make sure that the existing mortgages on the property are released.
Greg: How do you do that? I’ve always been curious does someone go to the bank or is this a phone call or is it … ? What kind of paperwork follows up a closing? Is someone going down to the courthouse? What happens after someone leaves? It sounds like you have a lot to do.
Steph: It’s a really good question. We have a post closing department. Sean gets the files after the closing and she prepares the title policies, but in order to prepare a clean owner’s title insurance policy and a clean policy for the lenders, at Horne Title what we do is we make sure that the mortgages that we’ve paid off are actually released at the courthouse. What we do … It’s very simple … We look. We look at the courthouse and see that the release is recorded. In the State of Kentucky, you’re required to record a release within 30 days from the date of the closing. If it isn’t done within 30 days of the date of the closing, believe me, we’re on it.
Greg: If I close with you tomorrow, in the back of my mind I can think that Horne Title is still working for me the next week and the next week and the next week. You’re still doing parts of the closing.
Steph: Right. We are. We’re still working after your closing goes. What happens is that 30 days, we’ll be making sure before we issue the policy that we have the full release of the mortgage. The idea is if after the 30 days they haven’t released it, we have a referral attorney who will be turning the file over to litigate the issue of them not releasing the mortgage within the 30 days if necessary.
Greg: That probably doesn’t happen too often, does it? I hope not.
Steph: I have about 3 files, and it’s $100 a day from the time they get a certified letter requesting that they are over the 30 days. I generally have 3 files. Every file usually falls out.
Greg: 3 files that fall into this category?
Steph: Yeah, I only have 3, but they are …
Greg: That sounds high to me. You say “only.” I’m surprised that there are 3.
Steph: Yeah, there’s 3. We are pursuing the release vigorously. We will really be at trying to make sure that every closing that comes through Horne Title, that our post closing is handled just as strongly as our pre closing and our closing.
Greg: That sounds great. I think I have a much better idea now of what a title company does.
Steph: Thank you Greg.