Jeremy, Author at ATG Title

What a Title Commitment is & When You Need One

January 21, 2020 By Jeremy Leave a Comment

What a Title Commitment is & When You Need One

A title commitment is a document from a title company that says the property you are buying will be able to have a title insurance policy after you close the sale. The document you are provided with contains the same information that will be include in the actual title insurance policy, but it is not underwritten or ratified so it is not official or legally binding. That is the main difference between a title commitment and title insurance policy.

A title commitment is also a bit different than a marketable title in that it does not guarantee there will be zero issues with the deed to the property you are buying. It just says that you will be able to have an insurance policy on the property. This also does not mean that the title insurance policy will cover everything, but we cover that in a minute.

Now that you know what a title commitment is, you may be wondering if there are other differences between this document and your actual insurance policy. Maybe you want to know if a title commitment is required by law, or just for a peace of mind when you’re going through the stressful home buying process. Don’t worry, we’re ready to help with the frequently asked questions and answers about title commitments below.

Is a Title Commitment Required By Law?

No, title commitments are not required by law, but if you are buying a home, your agreement will probably require that the seller provides you with their title insurance policy. Also, if you are taking out a mortgage, the lender may require you get a title commitment before they sign the final documents to give you the loan.

The document will also contain all of them items that your insurance policy will not cover, which is another reason why title commitments are important for you to have in order to have a successful and easy closing. As a bonus tip, having the commitment show exactly what is not going to be covered can also help you make a more informed decision on if you should buy the property or not.

Is a Title Commitment the Same as Title Insurance?

No, title insurance is the legally binding agreement that you get after the closing of a property sale. A title commitment just says that a title insurance company will agree to provide you with a policy after you close. There are also two types of insurance policies. You can read about the difference between a lender’s and owner’s title insurance policy here.

What is a Title Commitment Form & What Do I Look For?

This is the form that is normally provided by ALTA. It is a standardized document that all title insurance companies will be able to access and provide you with.

The most important things to look for on the form are what is not going to be covered by your policy, and what potential issues could arise if you move forward with your purchase. The issues themselves are what can cause a deal to fall through, or if it is from the seller, what potential issues you may inherit. These include encroachments, claims on your property, liens, debts owed, incorrect boundary lines, improper zoning and easements to name a few.

Title commitments are important because they give a mortgage company or bank assurance that the investment will be covered, help you feel confident in your purchase because you have more insight into potential issues with the ownership of the property, and help close the deal faster because it lets all parties know that a policy is able to be issued.

What Land Contracts Are & How to Read Them

January 7, 2020 By Jeremy Leave a Comment

If you’re considering purchasing real estate, be it a home, land, or commercial property, your first inclination may be to seek financing through a lender. However, in some cases, a land contract may also be an option.

A land contract is a form of financing that allows buyers to make regular payments directly to the seller or real estate owner in exchange for ownership. This is different than a traditional mortgage where a house or condo buyer finances the property through a lender and makes payments to the lender for the duration of the mortgage.

Though a land contract is not considered a traditional mortgage, the two share some similarities. For instance, both are legally binding documents that outline the terms of a real estate transaction. Both also typically require the buyer to make a set amount of payments over a specified period of time. Once the payment agreement is met in full, the legal title will transfer to the buyer who will then own the property outright.

Why would someone use a land contract?

This type of seller financing can make it easier for buyers and sellers by negating the need for mortgage approval. For buyers, this makes purchasing property easier even if they aren’t eligible for a traditional mortgage. For sellers, a land contract can give them access to more buyers, create a steady income, and potentially sell their property for a higher purchase price. But there are risks for both parties. Below you’ll find common questions and answers about land contracts to help you decide if one is the right option for you.

What a Land Contract Is & How it Works

A land contract is an official agreement between the buyer, or vendee, and the seller, or vendor. When entering into a land contract, the buyer will make regular payments, typically monthly, to the seller.

Payments include the principal balance as well as any interest. During the payment period, the seller will maintain ownership of the legal title. The buyer, however, will maintain what’s known as equitable title, which prevents the property owner from selling the property, using it as a lien, or engaging in other activities that would infringe upon buyer’s rights to the property. It is important to note that the seller’s inability to sell or otherwise act against the interest of the contract is achieved by recording the land contract in County Land Records.

Once the final payments are made, the seller transfers the title to the buyer, and the buyer owns the property outright. At that point, the appropriate paperwork will be filed with the county and any other required government parties.

The Terms of a Land Contract Include:

Though land contracts vary from state to state and often seller to seller, they typically each include the following:

Repayment term, or how long you’ll have to pay the home off in full. While many mortgages extend to 30 years, land contracts are typically shorter. This is particularly important to note since some land contracts will allow for monthly payment for a specific period of time at the end of which the buyer will need to make a balloon payment for the remaining balance.

Down payment, or a lump sum payment made at the start of the land contract. Though these vary, they are often lower than the traditional 20% required of a traditional mortgage.

Interest rate, or the “cost” of borrowing. Land contract interest rates are typically set by the seller and therefore vary.

Are Land Contracts The Same As Rent to Own?

No, land contracts are different from rent-to-own agreements. Both are considered a form of seller financing, but there are significant differences between the two. For instance, under a rent-to-own agreement, the seller is still responsible for things like property maintenance, insurance, and taxes. A land contract, on the other hand, is very similar to a mortgage in that those responsibilities and costs shift to the buyer.

Further, in a land contract, the buyer also gains many of the typical rights extended to a homeowner, like the ability to make home improvements or other alterations to the property. Under a rent-to-own agreement, those rights can be limited.

Finally, and perhaps most importantly, is expected ownership. In a rent-to-own agreement, the intended buyer often chooses to purchase the home for a predetermined price, but they are not necessarily obligated to do so. In a land contract, however, the agreement is a binding one in which the buyer agrees to purchase the home. Failure to make payments and carry out the agreement would result in a default.

Is it smart to use one?

That depends on your situation.

For home buyers, a land contract can be a good idea if:

You can’t qualify for a traditional mortgage
Have a poor credit history
Can’t meet deposit requirements of a traditional mortgage

For home sellers, a land contract can be a good idea if:

You’re looking for a built-in income with interest
Your property has been on the market for a significant period of time
There are limited buyers and you want to attract more
You either own your home or are confident your current mortgage agreement will allow for a land contract

What Happens if a Buyer Doesn’t Pay Monthly Payments?

If a buyer doesn’t make the required monthly payments or defaults on the contract, the seller can take legal action against the buyer.

Up until the end of the contract, the buyer maintains an “equitable title,” which refers to, among other things, their right to work towards complete ownership of the property in question. This differs from the legal title, which is held by the seller until the buyer makes payment in full.

When the buyer fails to make payments, the seller can file a land contract forfeiture, which is a court action that ends the buyer’s equitable title. Once filed, the land contract is no longer valid and the buyer gives up all money previously paid as well as the future rights to the property. The seller maintains all monies paid as well as full ownership of the property.

Do Land Contracts Need to be Recorded With the State?

Real estate law varies from state to state, and so whether you need to record a land contract with the state depends on the state in which you live. For instance, sellers in Ohio are required to record the land contract within twenty days of signing. In Illinois, however, land contracts for residential property, also known as installment sales, must be recorded within ten business days of sale.

If you’re considering or in the process of entering into a land contract, consult a certified real estate lawyer in your state to find out exactly when and if you must record the contract with the state.

Who Pays Property Taxes on a Land Contract?

Typically, the buyer is responsible for paying property taxes on a land contract. However, in some cases, the buyer will only take on the financial responsibility and the owner will continue to make the actual payments, passing the cost along to the buyer.

Who Chooses the Interest Rates on a Land Contract?

The seller determines the interest rate on a land contract.

What a Sellers’ Net Sheet Is and How it Helps You

December 24, 2019 By Jeremy Leave a Comment

A Seller’s Net Sheet is a document that calculates how much money one can expect to have when the sale of their home is final.

Seller Net Sheets factor in all of the fees and expenses that occur in the process of the sale, leaving the seller with an accurate estimate of what they can expect to take home when all is said and done.

For example, if you sold your home at the asking price of $200,000, the actual amount of money you take home may only be $165,000. Seller’s Net Sheets come into play and tell you where that $35,000 went, allowing the seller to have a better idea in the exact amount of money they can expect to walk away with when the sale of their home is final.

It is important to obtain or create a Seller’s Net Sheet for a variety of reasons. First and most importantly, it provides a road map to where the percentage of closing costs and commissions are allocated. You’ll also learn why you as the seller will owe what you do, and what you can expect to keep after all is said and done.

Now that you know why seller’s net sheets are important, lets jump into some of the frequently asked questions about them, and learn how to read one.

How to Read a Seller’s Net Sheet

Reading a seller’s net sheet is easy. Simply look at the sale price, subtract the fees and deductions, and you now have your estimated profit from selling you home. Although the components can vary from state to state, the sheets are overall very similar. The purchase price is the number before any deductions. Then we go into what will be deducted from this price.

First you’ll find any and all of the commissions (as an estimate) that you should be expecting to pay. These are generally a percentage of the total purchase price. Next are the title insurance costs, followed by escrow fees and property taxes. By taking the total of all of these expenses and subtracting them from the total purchase price, this is how you get to the final take-home cash total.

Does Your Real Estate Agent Prepare The Sheet?

Seller’s Net Sheets can be prepared by both or either the seller or the real estate agent. There are benefits to preparing it on your own, or letting your professional agent handle it.

If you as the seller choose to prepare your net sheet on your own, various calculators are available online which will make this easy. Simply type “net seller sheet calculator” into Google, Bing, Duck Duck Go, or your favorite search engine, and you’ll find a calculator that works for your needs. By doing this, you can get an immediate idea as to what costs you can expect to accrue while closing on the sale of your home. However, if you are using a real estate agent, they can and most likely will prepare a net sheet for you.

This is what we recommend as real estate agents are more familiar with them, and they can predict hidden fees and get you more accurate numbers. Accuracy is the main benefit to having your real estate agent prepare your seller’s net sheet for you.

How Do I Calculate the After-sale Profit?

The best practice to calculate the after-sale profit is first to take the total home sale price.

You then deduct any real estate agent fees, which land around 5-6% of the total sale price. Other fees may include but are not limited to:

Any staging and prep work to the property
Seller concessions
Overlap costs like paying two mortgage payments
Tile escrow and transfer tax

These percentages vary but are usually around 1-2% in each circumstance. This overall amount, in comparison to your initial investment in the property, will provide your total after-sale profit. It’s also fair to mention that other fees can come into play, depending on where the house being sold is located. For example, in the state of Maryland, the seller is required to pay 0.5% in transfer taxes, unless they are a first time Maryland home buyer.

How Rental Property Depreciation Works & The Benefits to You

December 17, 2019 By Jeremy Leave a Comment

Are you wondering how rental property depreciation works and how rental property depreciation saves you money on your taxes? Forget the confusing legal and tax websites, we’ve got you covered.

Rental property depreciation is when every day life takes a toll on a rental property that you own. This includes the wear and tear on the floor boards, natural damage to the frame and foundation of the unit or building, and everything in between. Because rental properties naturally depreciate from wear and tear reducing the value of your asset, the IRS has a tax benefit for you as the owner.

Now that you know what causes rental property depreciation and that you can use it for a tax break, here’s how rental depreciation works as and some frequently asked questions.

How to Determine Rental Property Depreciation

Property depreciation value is dependent on the useful life of the property. The IRS says for rental properties put into service in 1986 or later, the useful life is 27.5 years (based on the Modified Accelerated Cost Recovery System (MACRS) accounting technique).

To find your annual depreciation costs, calculate 3.636 percent of the home’s original value and claim that amount as an expense on your taxes. This 3.636 percentage rate is the equivalent of taking your home’s value and dividing it 27.5. The rental property depreciation distributes the amount across the useful life of 27.5 years.

In order for depreciation to be applicable, not only does the property need to have a determinable useful life beyond a single year, but the taxpayer must be the legal owner of the property. Additionally, the property must be used to produce income.

How To Calculate Rental Property Depreciation

Because only the value of the home can be used to determine depreciation expenses, a few steps must be taken during the calculation. The value of the buildings must be separated from the value of the land.

What does this mean? The property will sell as a whole at a set price. Only a portion of that price will be what the home is actually valued at while the other portion is what the land is valued at. Depreciation only applies to the value of the home and not the land. This is because land doesn’t lose value over time.

The tricky part about depreciation value is that it does not apply until the property is put into service. In the case that a property is purchased a portion of the way through a year, you will not be able to claim the 3.636 percent you would be able to during a year when a house has been in service for an entire year. Instead, you would only be able to claim a portion of that.

To simplify things, the IRS has developed what it calls the Residential Rental Property-GDS Table that helps investors find what percentage they can claim.

January: 3.485 %
February: 3.182 %
March: 2.879 %
April: 2.576 %
May: 2.273 %
June: 1.970 %
July: 1.667 %
August: 1.364 %
September: 1.061 %
October: 0.758 %
November: 0.455 %
December: 0.152 %

This table makes the process extremely simple. To find out what can be claimed at the end of the year, you take the cost of the property and find the percentage that applies to it based on the respective month that the property was put into service.

For example, if rentals begin in April of $100,000 home, the owner will be able to claim 2.576 percent of the $100,000 for that year, which is $2,576.

Once you hit a certain depreciation point, you may want to re-run your numbers and consider renovating the property to sell as a fix and flip. The property can only depreciate according to the value provided by the IRS.

What to do When Rental Properties Depreciate to Non-profitable Standings?

There are a lot of things you can do once your rental properties depreciate past profitability. The most popular option is depreciating the money spent on improvements. An improvement differs from repairs as to be considered, so they must be something that improves the property’s condition, enhances the property value, or adapts the property for new use.

Some examples of improvements that can be depreciated are replacing the roof, buying new appliances, adding a garage, or installing heating or air conditioning.

To stay ahead of the game and keep maximum cash in your pocket, you may want to consider renovating and flipping the property. But if this is the route chosen, you will need to anticipate depreciation and how that will factor into the capital gains tax. Also know that your total investment will be offset by these factors to make sure you make a profit when the time comes to sell. You may also want to check out selling on a 1031 exchange.

Do You Have to Pay Back Rental Depreciation on a Property?

Yes, you will need to pay back rental depreciation if you sell the property. If you’ve applied the depreciation deductions, the IRS will calculate the deductions into the total profits in the capital gains tax.

In some cases, the 1031 exchange can be filled out to help you avoid the capital gains tax. Sellers should consider this if they are interested in investing the proceeds from the sale to invest in a comparable property.

How Long Can You Depreciate Improvements on Rental Properties?

Improvement depreciation follows a five- to 15-year schedule based on the improvements useful economic life. Despite being considered a part of the home, improvements are not going to fall in line with the useful life of the property on account of their own subjective flaws and weak points. Because of this, they will need to be re-evaluated each year to ensure they are up to par with their respective service lives.

Please remember that tax laws and the rules for depreciating your rental properties can change. It is important to always talk to a licensed tax professional to get an up-to-date look at what you are depreciating and if you have any other opportunities to save money.

What an ALTA Statement Is & How it Applies to You

December 10, 2019 By Jeremy Leave a Comment

ALTA settlement statements may appear confusing at first, but don’t worry, they are much simpler than they appear. Alta settlement statements are specifically designed to organize the property selling process and the post below walks you through each of the four ALTA statements and how to use them.

You’ll learn how these statements provide a thorough breakdown of what charges apply and to which party. This helps both the buyer and the seller better understand how the final costs have been reached and why each of you owes the specific fees.

What is an ALTA Statement?

The ALTA settlement statement is an itemized list of all of the fees or charges that the buyer and seller will pay during the settlement portion of a real estate transaction. Everything from the sale price, loan amounts, school taxes and other pertinent information is contained in this document.

The statements are provided to brokers and agents on both the buying and selling ends of the transaction.

There are Four Types of ALTA Statements.

Because ALTA settlement statements are designed for agents and brokers on both ends of the process, four types are provided. But please note that it is possible to have a combined ALTA Buyer’s or Seller’s statement.

ALTA Settlement Statement Combined – The Combined settlement is a document that bundles together all transactions as they apply to both the buyer and the seller.
ALTA Settlement Statement Cash – This is the version used for liquid cash transactions for property sales.
Settlement Statements – This is the version supplied solely to the buyer and contains only information pertinent to the buyers side of the transaction.
Seller’s Closing Statement – Throughout the transaction, credits given by the seller and other fees will impact the amount of cash the seller receives. This provides a breakdown off all transactions and how they play into what the seller will make.

The Difference Between Seller & Closing Disclosures, HUD-1 & Alta Statements?

The difference between a seller disclosure and closing disclosure is simple – the seller will receive a seller’s disclosure, which provides a breakdown of costs and fees that factor into the cash they will receive at the transaction’s end.

Due to TRID regulations, agents will have nothing to do with the closing disclosure. The closing disclosure is provided to the buyer and pertains a list of fees and costs and how they work into the buyer’s total expense. It is important to note that only the lender can provide the Closing Disclosure to the buyer 3 days prior to closing? And only the buyer should be able to see it unless they allow the release of it by signing a release disclosure. You should also know that the lender is obligated under the TRID regulations, and the lender can be penalized for failing to disclose 3 days after they’re loan application is approved and again 3 days prior to closing.

A Hud-1 used to be the primary statement associated with real estate and is used to document all cash transactions and how they affect both parties. It is now outdated. The Closing Disclosure was introduced in 2015 as a document that instead contains this information strictly for the buyer. ALTA statements were put into use to provide thorough breakdowns for agents and brokers to receive at the end of the transaction.

Are ALTA Settlement Statements the Same as Net Sheets?

No, an ALTA settlement statement is not the same as the net sale sheet. A net sheet is a document that can be provided throughout the sale process to give the seller an estimate on what they can expect to make. The net sale sheet is not final, and multiple sheets may be provided as offers are made and transactions process. An ALTA settlement statement is provided during the closing of a transaction and contains solid numbers rather than estimates.

Where Can I Download a Sample ALTA Settlement Statement?

You can download a sample ALTA statement by clicking the text link below.

Click here to download a sample alta statement

ALTA has developed standardized ALTA settlement statements for title insurance and settlement companies. These sheets help itemize all the fees and charges that both the homebuyer and seller must pay during the settlement process of a housing transaction.

Having a standard form for nearly all title insurance policy transactions maintains that all exchanges of land are done smoothly and efficiently.

Real Estate Agents Are More Than Just Door Holders!

December 3, 2019 By Jeremy Leave a Comment

Real Estate Agents do more than just hold the door open when you’re selling your house. Think about it this way, how do these people find your house when it is on the market?

What causes the influx of people to visit your house when you’re doing a public showing, and is there something in particular that gets potential buyers to make an offer? There are also times when potential buyers want to see your house, but you’re at work. Guess who is there to let them in, sell your house for you, and helps to make sure the potential buyer doesn’t go through your things while you are working.

Your Real Estate Agent is your partner when you are selling your home. They are not just opening doors, they’re working hard to ensure you get a good offer, reading the market to find out what is a fair asking price, and your agent uses their connections to bring the right people to you so you don’t have to worry.

The job of a Real Estate Agent is to:

Price your house against the market and find ways to increase the value so you get more money.
Stage your home based on what they know moves houses and condos in your area.
Create an open house with every detail from snacks to waste baskets in the right places. Real estate agents are experts when it comes to to creating a welcoming feeling for potential buyers.
Market your home with their own money and connections to bring potential buyers to you.
Attend networking events with other agents to find colleagues with clients looking to purchase houses like yours.
Show your house when you’re at work, spending time with your family, or enjoying your life.
Negotiate with the buyer to get you as much money as possible.
Help you have a quick and trouble free closing, as well as understand all of the legal documents. Without an agent, you have less protection from an aggressive buyer who may take advantage of you, or require you to cover fees that they would normally be responsible for paying.

Real Estate Agents work around the clock, on weekends, and when you’re at your day job. They are the masters at marketing properties and they use their own money to advertise your home. The best part is they do this all on commission. You only pay when your house sells. Try getting that kind of deal somewhere else!

If you’re wondering why you can’t sell your home without an agent, well technically you can, but it isn’t recommended.

Real Estate Agents have assets that you as a consumer do not. These assets can include:

Custom deals with home buying magazines for premium ad space.
Websites with active home buyers in your city.
Networks of other agents who have home buying clients.
Experience in finding competitive and comparable prices with a tool called the MLS. This helps ensure you’re being competitive and realistic. These insights are what can help you to get a higher price by knowing the history of your neighborhood with comparable properties.
Lists of home buyers, investors, and likely home buyers that they can email to bring you more leads.
Graphic designers that create postcards and mailers to send to their lists of homebuyers.

Without having a real estate agent, you can still sell your house, but it isn’t advised. Yes, a Real Estate Agents commission is expensive, but they are working around the clock on your behalf so that you don’t have to stress.

If it seems like all your agent is doing is holding a door open and saying hi, just remember those people only found your house because you have a Real Estate Agent working hard for you. Real estate agents are more than just someone who holds a door open, they are your 24/7 marketing machine with the connections, experience, and ability to sell your home and get you the money it is worth.

Lender’s Title Insurance Policies, Everything You Need to Know.

November 26, 2019 By Jeremy Leave a Comment

Lender’s title insurance is a type of insurance that protects the lender from any financial losses that may incur as a result of owning a property, while you’re paying them back for the loan.

Lender’s title insurance works like a backup plan to protect the lender in case any unforeseen issues surface that were not discovered during a title search. These issues can range from an undisclosed heir to a mistake in ownership history. These title issues may result in casting doubt on the ownership of the property and potential cause you to lose ownership of it.

Here are some common questions and answers about lender’s title insurance.

Am I legally required to buy a policy?
Is this the same as the owner’s policy?
If the lender’s policy is purchased, do I still need an owner’s policy?
How much does a lender’s policy cost?
Who pays for the lender’s title insurance policy?
Who picks the lender’s title insurance policy?

Am I legally required to buy a policy?

Yes, you are legally required to buy a policy, and most lenders require that the borrower (the home buyer) purchase the lender’s title insurance policy. The lenders requires this to protect themselves in case someone lays claim to your property. [Read more…]

Owner’s Title Insurance Policies, Everything You Want to Know.

November 14, 2019 By Jeremy Leave a Comment

An owner’s title insurance policy is protection for a homeowner against people who could try and take the deed from them. The owner’s title policy should be purchased before closing on the property, and the policy protects homeowners from issues like clerical mistakes, liens, or money owed to contractors. Having a policy can also protect the property owner from unknown heirs claiming the property is rightfully theirs. There are numerous ways you could lose your house and an owner’s title insurance policy is what provides you with more security from this happening.

Now that you know what an owner’s title policy is, here are some common questions and answers you may have.

Is it required by law?
What is the difference between Owner’s and Lender’s Insurance?
Can I purchase a policy after closing?
What does a policy cost?
Is it the same as homeowner’s insurance?
What does my policy protect?

Is It Required by Law?

No, you are not legally required to have an owner’s title insurance policy by law. But it isn’t advised to go without. If someone lays claim to your property, or a mistake was made during the title search, you will more than likely be legally and financially responsible. You may also lose your house or land.

Is There a Difference Between Owner’s and Lender’s Policies?

The difference between the two policies is that one protects the lender if you have a mortgage, and one protects you as the homeowner. You can learn more by reading this post about the difference between a lender’s and owner’s title insurance policy here.

Can I Buy Owner’s Title Insurance After Closing?

Yes, you can purchase a policy at any time. But you should be aware that anything that happens in between the closing appointment and the time of purchase probably will not be covered. You’ll have to talk to the title insurance company to find out for sure as each company is different.

How Much Does Owner’s Title Insurance Cost?

The cost of an owner’s policy depends on the valuation and actual cost of the property at closing. Because the policy is paid in full, and at once, it does not go up or down over time, even if the value of the property you purchased fluctuates.

Is There a Difference in Homeowner’s and Owner’s Title Insurance Policies?

The difference between homeowner’s and owner’s title insurance policies is that homeowner’s protects the items within your home, and sometimes the features on your property like a pool or a shed. Your title insurance policy protects your ownership of the property itself. Neither are legally required, but both are highly recommended to protect your valuables and your ownership of your land and your home.

What Does Owner’s Title Insurance Cover?

Your policy will cover everything related to the ownership of the deed. A better way to think of this is what does your policy protect you against.

The list can include:

Unknown heirs and previous owners who had children out of wedlock
Contractors who are owed money
Liens
Zoning issues
Typos, writing, filing and clerical errors from previous transactions and city records
And more.

If you have questions about owner’s title insurance policies, we’ll be happy to help with them. Write us at info@atgtitle.com or call 703.934.2100.

What a Title Commitment Is

November 6, 2019 By Jeremy Leave a Comment

A title commitment is a document from a title company which says the property you are buying will be able to have a title insurance policy after you close the sale. The document contains the same information that will be included in the actual insurance policy, but it is not underwritten or ratified until after closing. This also means that a title commitment is not legally binding.

One of the reasons title commitments are not be legally binding is that title commitments will state if any conditions must be met like the homebuyer paying unpaid taxes, in order for the title company to issue an insurance policy. If these items are not completed, the person will not be able to get an insurance policy. Title commitments also list what the insurance policy will and will not cover once it is written.

Those are the main differences between a title commitment and a title insurance policy. The insurance policy is legally binding where the title commitment is not.

Now that you know what a title commitment is, you may be wondering if there are other differences between this document and your actual insurance policy. If it is required by law, or if it is just for a peace of mind. Look below to learn everything about title commitments and the home and land buying process.

Is a Title Commitment Required By Law?

No, title commitments are not required by law, but if you are buying a home, your agreement with the seller will probably require that the seller provides you with a copy of their title insurance policy. Also, if you are taking out a mortgage, the lender may require you get a title commitment before they sign the final documents to give you the loan.

The document will contain all of the items that your title insurance policy will not cover. This is what the lender will want to see. They need to protect their investment when they loan you money, and this is another reason why title commitments are important for you to have if you want a successful and easy closing.

Is a Title Commitment the Same as Title Insurance?

No, title insurance is the legally binding agreement that you get after the closing of a property sale. A title commitment just says that the title company will agree to provide you with a policy. There are also two types of title insurance policies. You can read about the difference between a lender’s and owner’s title insurance policy here.

Is it the Same as a Marketable Title?

A title commitment is different than a marketable title in that it does not guarantee there will be zero issues with the deed to the property you are buying. Instead, this document only says that you will be able to have an insurance policy on the property, and only if you’ve cleared all requirements by the title company before closing.

What is the Title Commitment Form and What Should I Look For?

This is the form that is normally provided by ALTA. It is a standardized document that all title insurance companies will be able to access and provide you with. You can download a sample form here.

The most important things to look for on the form are what is not covered, and what potential issues could arise. The issues themselves are what can cause a deal to fall through, or if it is from the seller, what potential issues you may inherit. These issues can include encroachments, claims on your property, liens, debts owed, incorrect boundary lines, improper zoning and easements to name a few.

If you have any questions about title commitments, or need help with a closing, contact us using the phone number or email at the top of this page and we will be happy to help.

The 9 Types of Property Surveys & What They Are For

October 24, 2019 By Jeremy Leave a Comment

When buying a home you’ll hear about property surveys. Each type of property survey has a direct impact on the land and home you’re buying. The information could include the history of the land, the topography, and the types of insurance and protections you’ll need if you buy it, build on it or invest in it.

The 9 Types of Property Surveys Include:

Property line (also known as the boundary line survey) – These map out the lines of your property, how far your home is from the edge of the land, and this one is given to you by the title company.
ALTA – This covers all characteristics and features of a survey.
Location – These are done to help make sure that the property you are buying is properly zoned.
Construction – These help to determine each of the structures that exist on the property.
As-built – This one will outline property lines and also determine where there could be flaws and ways to fix or improve on them. These recommendations may include features that cross onto a neighbors property like a driveway.
Topographic – This one will help you to learn about the topography of your property.
Site-planning – These are performed to help determine the way to utilize the space whether it is for residential or commercial use, and how to design the plot of land.
Mortgage – This option will show the property lines as defined for what will be covered in a mortgage.
Sub division – these are used to help divide the land into smaller plots.

The most common property surveys are the location and the boundary line surveys. They will more than likely be requested by the title company so be prepared to have them done. The other types of property surveys are normally only requested under specific circumstances, so you probably do not need to worry about them.

Who Does Property Surveys?

Property surveys are typically done by the National Society of Surveying Professionals. However the property surveying company you use does not always have to be associated with this organization. When selecting a title company, they’ll be able to recommend a property surveyor that they trust, so you know you’ll be in good hands.

How Much Does a Property Survey Cost?

Property surveys can range from $100 to $1,000+. It all depends on the history of the property, the structures that exist, and the type of survey you need done. You are paying for the surveyor’s time, not a flat fee for a specific project.

Where Can I Find Previous Property Surveys of My Home?

The title company who worked with you when you bought your home, or whomever sold you your title insurance policy will have access to any surveys done on the property. That is where you should start. If nobody has a record, you may want to contact the closest title company to you and ask who they would recommend for a survey.

Why Are Property Surveys Important And Which Do I Need?

Property surveys are important because they help you to determine what you own, what may become public property in specific situations, if you’re zoned properly, and to help settle land disputes with neighbors.

Property line or boundary surveys are the most important and most common. You need them to determine where and how far you can extend your home. You’ll need to have one completed if you want to build a fence and need to know where the posts and border should be. This survey also helps to settle arguments with neighbors if they feel you’re driveaway or the structures on your land cross over to their property. With that said, the others are important too.

Floodplain and topographical property surveys will let you know if you should buy flood insurance, or what could potentially happen with a natural disaster. Site planning will give you the information to properly design the space of your property whether you’re adding a pool, building an addition or tearing down a home and rebuilding it from scratch.

Property surveys are an important part of buying a property and it can be risky to not have them done. If your property is not zoned correctly, if you have the wrong structures, or if your structures cross over onto your neighbors property, you could have someone lay claim to your home or get fined. That is why it is important to have them done. It is a peace of mind you won’t want to pass up.