We have provided some basic information and definitions about the process of buying and selling property.
Contract of sale — the seller agrees to sell the property and the buyer agrees to purchase the property upon the terms and conditions contained in the contract.
Escrow — money or property held for delivery upon completion of a particular condition or event
Earnest money — buyer offers a sum of money to be held by the seller to indicate the buyer’s sincerity and intent to go through with the purchase process
Common terms in a contract:
- Sale price
- Closing date and location
- Amount of earnest money
- Whether a title insurance policy will be provided by the seller
- Who will pay what closing costs
- Who will provide a survey of the property
- Does the buyer have an option period or feasibility period during which inspections will be conducted
- Will the buyer take possession at closing or at some other time.
- If you are represented by a real estate agent, the agent will most likely prepare the contract for you using forms provided by the Texas Real Estate Commission.
The Closing Process
- Begins when the contract and any earnest money are delivered to Lone Star Title of Cass County.
- For refinances, the process is typically initiated when the lender submits an order for a title commitment.
- If you are obtaining a title insurance policy, the title to the property is examined through the Real Property Records maintained at the County Clerk’s office. This examination provides the basis for a title commitment and ultimately the title policy.
- The title commitment:
- Identifies the current record owner of the property and the legal description of the property to be insured
- Identifies aspects or conditions concerning the property such as easements, mineral reservations and restrictions that will be excluded from coverage under the policy.
- Identifies requirements that must be met at or prior to closing, such as paying off liens or resolving ownership issues.
As a buyer, you should be particularly interested in what will not be covered by your title policy. For example, if it lists covenants, conditions or restrictions on the property, these are items that may restrict your ability to use the property for certain purposes. Our standard practice is to only identify the documents that potentially affect the property being purchased. If you desire to review the, you may obtain a copy from the county clerk’s office or we can provide you copies upon request.
- Title insurance — represents the judgment of the title company as to the insurability of the title and may, in the event title is challenged, provide certain remedies for the insured. Title insurance is not a representation or warranty as to title.
Two basic types of title insurance policies:
- Owner Policy of Title Insurance – insures the owner of the property against certain risks and typically provides coverage in the amount of the sales price or the value of the property and any improvements located on the property.
- Loan Policy of Title Insurance ‑ insures the lender’s lien is valid against the property and typically provides coverage in the amount of the loan.
Why do I need Title Insurance?
The research and corrective work of o Lone Star Title of Cass County can dramatically reduce the likelihood an insured will suffer a loss due to a title problem. Protection also comes after the sale, when title insurance can offer coverage for certain defects in the title that may arise and were not identified and addressed by the title company.
o Lone Star Title of Cass County identifies information about the property to be purchased, including the existence of any potential defect in the title. Defects can range from a lien against the property held by a lender or a governmental agency to a competing claim of ownership of the property.
Who Underwrites Title Insurance?
o Lone Star Title of Cass County is an agent of Chicago Title and North American Title Insurance Company.
Chicago Title is a division of The Fidelity National Title Group, a Fortune 500 Company and the global leader in the provision of real estate and business information services. Learn more about Fidelity National Title Group by clicking here.
North American Title Insurance Company is a seasoned title insurance underwriter that has been helping customers achieve the American dream of home ownership for over 50 years. Learn more about North American Title Insurance Company by clicking here.
The Property Survey:
- The survey takes the legal description of the property and should depict the location of all easements, fences, building setback lines, encroachments and overlapping improvements.
- Closely review the survey and title commitment immediately upon your receipt of them. The buyer is usually given a limited amount of time to object to any problems. If you do not object then you are typically bound to buy the property subject to the problem…and it becomes your problem instead of the seller’s problem.
- Once the inspections are completed and the title requirements are resolved, the buyer, seller and/or lender can contact us to schedule a closing date and time.
- For cash transactions, there may only be a handful of documents necessary to close
- For a loan involved, the number of documents required to close the transaction is significant.
The Settlement Statement or HUD-1 Form:
- The Settlement Statement — prepared by o Lone Star Title of Cass County, identifies all of the costs related to the transaction and breaks down who will pay for each item.
- Establishes the dollar amount each party will receive, or pay, at the closing. On transactions involving a loan, the HUD-1 must be submitted to the lender and approved before the closing can take place.
- On transactions involving a loan, the HUD-1 must be submitted to the lender and approved before the closing can take place.
- Following HUD-1 approval, the parties and, if applicable, their realtors, will meet at the offices of o Lone Star Title of Cass County on the day and time scheduled for the closing. Typically one hour is allotted for each closing, with the seller generally having fewer items to complete than the buyer.
- There is not time to read the documents at closing. If you are interested in reading all of the documents, please let us know ahead of time so that we may provide you a copy of all of the documents or arrange for you to come in to read everything prior to closing.
In a typical transaction, the following fees are charged:
- Settlement Fee – This is the fee charged by o Lone Star Title of Cass County to close the transaction, and it starts at $250 for a cash purchase.
- Document Preparation – If documents have to be prepared through our attorney, fees for these documents vary by type, and we will have to notify you of these fees on a case-by-case basis.
- Recording Fee – o Lone Star Title of Cass County charges $26 for the first page of a document and $4 for each additional page.
- Title Insurance – In Texas, it is customary for the seller to provide the Owner’s Title Policy; however, this is negotiable. In addition to the premium, the party paying for the policy must pay a $1.80 Recoupment Fee to the State of Texas for each title policy and for tax certificates from the applicable Central Appraisal District. Tax certificates are $10 each.
- Miscellaneous Fees – sellers must pay any fees necessary to clear up title issues such as pay-offs on loans, amounts owed under judgments that are abstracted in the County Clerk’s records, or any taxes that are due and payable. These fees are charged in a typical transaction to the seller’s side only, and the buyer typically pays other fees.
- If the buyer is paying money at closing, any amount over $1,500.00 must be certified funds, such as a cashier’s or certified check or an electronic wire. This is a regulation mandated by the Texas Department of Insurance.
- If the buyer is getting a loan, fees vary greatly depending upon lender and the type of loan being obtained. Be sure to check with the lender for a complete list of fees associated with the loan.
NOTE: All fees are subject to change and can vary significantly due to the facts and circumstances of each specific situation.
At this point the deal is officially closed and ownership and possession of the property is transferred from the seller to the buyer.