Escrow (Title) Information
What is Escrow
The term “escrow” means any agreement between two or more parties (principals) wherein the delivery of instruments, monies, items of value, or evidence of title to real or personal property are deposited with a ‘NEUTRAL’ third party, (the escrow agent). This agreement contains specific written instructions executed by all parties to the transaction.
Other parties may be brought into the escrow by virtue of the instructions and requirements of the buyer and seller, i.e., the lender, lien holders, real estate agents, contract vendors, etc. In order for the seller and buyer to complete the transaction it may be necessary to receive money and documents from these other parties. Said parties will deposit their items of value along with their written instructions which confines the items to the escrow until their conditions have been met.
THE ESCROW AGENT REMAINS A DISINTERESTED THIRD PARTY. First American Title provides professional escrow settlement services unsurpassed in our industry.
PLACING YOUR ESCROW WITH FIRST AMERICAN TITLE PROVIDES:
A financially responsible and licensed custodian to safeguard funds and documents
Expertise in handling complicated transactions, especially in today’s challenging environment
A “clearing house” for the payment of all liens and other encumbrances
A single point of contact for coordinating the flow of documents and funds
An impartial third party to assume responsibility for the many tasks involved in closing
What is Title Insurance?
Title insurance is an insured statement of the condition of your “title” or ownership rights to a certain piece of property. A title insurance policy describes your property in detail and states what limitations, if any, there are to your owner- ship (i.e. you may take ownership subject to existing liens or encumbrances or easements that may have been granted to utility companies or adjacent property owners.) Title insurance also includes protection against other matters such as forgery, duress, improper signature, and other similar matters.
Most importantly, a title insurance policy guarantees the property information reported. Title insurance is issued in two forms; standard or extended. The standard form is limited to a search of the public record. The extended cover- age policy includes information outside the public record as could be identified by inspection or survey. Extended coverage requires additional information be provided and additional premium. All title insurance policies exclude coverage for planning or zoning and other identified matters.
How does a title policy work?
Before a policy is issued, the title company or one of its agents conducts a search of public records, maps, and documents. The records trace back to colonial estates, pioneer homesteads or Donation Land Claims and forward to the current owner. Only after collecting, examining, and interpreting appropriate records is a policy issued insuring the condition of title.
Defending the Title to Your Home is Our Priority
Besides describing your property and spelling out any recorded limitations on your ownership, a title insurance policy sets forth in clear terms what First American Title will do in the event that a flaw in title is discovered that was not dis- closed in our policy of title insurance or your rights of ownership are challenged. In simple terms, First American Title agrees:
To defend your title in the courts, as insured at its own expense or
To correct or clear the title when possible or
To promptly pay you for your loss in the event of an unsuccessful defense of your title
What does a Title Policy cost?
A low, one-time premium is all you pay to obtain the protection and peace of mind of a First American Title Insurance Policy. You have coverage so long as ownership remains in your name, or your heirs or you have liability to subsequent purchasers, or have a lien on the subject property. The policy is issued in an amount equal to the purchase price you pay. Of course, the greater the coverage given, the higher the premium.
Frequently Asked Questions (about Title Insurance)
What Is Title Insurance?
A title insurance policy protects the insured against any loss suffered as a result of the title to land not being as insured in the policy. For a one time premium the title policy provides protection as long as the buyer owns the property. The seller customarily provides an Owner’s Title Insurance Policy to the buyer; the buyer provides a Lender’s Title Insurance Policy to the lender. Unlike other kinds of insurance, title insurance insures against past events, affecting the rights to real property, rather than unforeseen future events.
Why Is Title Insurance Important?
You need title insurance because any home, no matter how new or apparently secure, is built on land as old as the earth itself. Undoubtedly, this land has had many previous owners. Claims against any one of these persons can be ﬁled against the property and against you as the present owner. Such hazards as fraud, missing heirs, old liens and many others can, and sometimes do, arise like ghosts out of the past. Title insurance protects you against these claims and title defects (it makes your home safely yours). Your title insurance policy is your shield of protection and will defend your ownership against loss insurance against in the title policy. Your protection and peace of mind last as long as you and your heirs remain in ownership.
How Much Does Title Insurance Cost?
Unlike the annual premiums of most other forms of insurance, you pay a one-time premium for title insurance. The premium will depend on the type of coverage you and/or your lender request.
Who Is Covered?
There are two basic types of title insurance policies: an Owner’s Policy and a Lender’s Policy.
Owner’s title insurance, which the seller typically pays for at closing, is issued generally for the amount of the purchase price. It protects the purchaser and the purchaser’s heirs as long as they own the property.
Most lenders require title insurance as security for their investment in the property. The borrower typically pays for the Lender’s Policy, which is issued for the loan amount.
How Does A Title Company Eliminate Risks?
Title insurers conduct an examination of the public records looking for matters affecting the title to the real property. These records can include, among other things:
Civil and Probate court records
Debts and other burdens
Restrictions on the property
An important part of the title insurance process is eliminating risk prior to insuring, thereby reducing the possibly of claim or loss. However, even the most careful examination cannot disclose “hidden hazards” to title.
What Are Some Hidden Hazards?
Hidden hazards can emerge after completion of a real estate purchase creating an unpleasant and sometimes costly surprise. Some examples are:
Forged deeds, releases or wills.
Undisclosed heirs claiming an interest in the property.
Documents executed under an expired or fabricated power of attorney.
Mistakes made in the public record
Deeds executed by persons of unsound mind
Gaps in the “chain of title”
While many of these hidden hazards might not be revealed as a result of a routine title examination, they are covered under the terms of a title insurance policy. First American Title Insurance Company will defend the insured owner against an attack
on their title and cover the cost of any settlement, including attorney fees.
What Is A Preliminary Title Commitment/Report?
Based on the results of the title examination,
First American Title Insurance Company will issue a Preliminary Title Commitment for Title Insurance. The title commitment will include the following:
The names of the buyers and sellers
The type and amounts of coverage to be issued
The legal description of the property
A report of the condition of the title including any easements, liens, judgments and existing loans
A sketch (map) of the property
Copies of pertinent documents disclosed in the title report or commitment
An agreement to issue a Title Insurance Policy upon payment of the premium, subject to the terms and conditions as stated
What Are Some Exceptions To The Title Policy?
The following are some items which are typically not covered by the title insurance:
Taxes or assessments not shown by the public record
Errors due to poor surveying, such as faulty boundary lines
Limitations on land use, such as laws against farm animals
Exceptions may also be added to your policy.
Easements, right of way and other legal obligations noted in the deed or other public records
Restrictive covenants or agreements limiting uses to your property
Things to Look For on Title Reports
Before title insurance can be issued on a subject property, a civil action affecting the property will generally need to be dismissed or settled. A pending divorce may not need to be finalized prior to closing of a sale or loan, however there may be special circumstances. Be sure to check with your First American Title Office for further information.
Taxes And Assessments
Be sure to look for any special circumstances such as exemptions or classification designations that could change the tax amount as a result of a sale or loan, then disclose this to the buyer.
Your seller should be vested in the property. If they are not in title, look for a real estate contract as an exception. If one does not exist, check the legal description to make sure it is the same as on the purchase and sale agreement.
Driveways, party walls and access easements may require a joint maintenance agreement by the lender. The title report will show if one has been recorded.
If an extended coverage policy is requested, an ALTA survey of the property might be required. If there is a question on encroachment, lien rights or other matters, these must be cleared prior to closing. A supplemental report will be issued if these matters are cleared by an Inspection of the property.
The legal description should always be compared to the legal description on the purchase and sales agreement to ensure all property being conveyed has been included and thereby covered in the preliminary commitment.
Judgments and Liens may be eliminated with an identity affidavit if they do not affect the party in question. If they do affect the party, but have been paid and not satisfied of record, a release should be recorded or filed to eliminate the matters from record.
Deed Of Trust
Deeds of Trust which are paid off require a reconveyance from the trustee or a court-ordered release to remove it from record.
In rare circumstances, upon proof of payment and indemnification acceptable to the title company, these encumbrances may be eliminated as exceptions to the title policy coverage.
Common Ways To Hold Title
THE FOLLOWING INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED TO REPLACE LEGAL ADVICE FROM YOUR ATTORNEY OR TAX CONSULTANT
AS AN INDIVIDUAL MAN/WOMAN – An individual may hold title in his or her name alone whether they are married or unmarried. If the individual is married their spouse has no rights in the property (i.e. Jane Doe, an individu al) during the lifetime of the owner.
TENANTS BY THE ENTIRETY/MARRIED COUPLE – Oregon Revised Statutes (“ORS”) 93.180 provides that a conveyance to a married couple is presumed to create a tenancy by the entirety which is a survivorship estate as between the two parties, i.e. the title passes automatically from a deceased party to the survivor, unless they express specific intent to hold it in a different manner. (i.e. John Doe and Jane Does husband and wife or John Doe and Jane Doe tenants by the entirety)
REGISTERED DOMESTIC PARTNERS – House Bill 2007 provides that persons of the same sex who comply with the registration provisions are afforded the same privileges, immunities, rights and benefits afforded to married persons. Individuals may take title as tenants in common (see below) or they can take title in a survivorship estate similar to a tenancy by the entirety. (i.e. John Doe and Fred Buck as Oregon registered domestic partners with the right of survivorship)
SURVIVORSHIP ESTATE – ORS 93.180 provides that two or more individuals may take title in a survivorship es- tate; i.e. title automatically passes to the surviving person(s), if they state the intent to do so (i.e. John Doe, Fred Buck Mary Shelley with rights of survivorship)
TENANTS IN COMMON – ORS 93.180 provides that a conveyance to two or more persons who are not married are presumed to be tenants in common, that is each has an equal, or as otherwise stated, undivided interest in the property (i.e. John Doe, Fred Buck and Mary Shelley tenants in common)
ENTITY – A recognized legal entity may hold title to real property, examples are Partnership (general or limited), Limited Liability Company, or Corporation. The grantees name should be exactly as registered with the State of Oregon or other state where the entity was created.
REPRESENTATIVE CAPACITY – Title to real property may also be held by an individual or entity in their capacity acting on behalf of others, e.g. John Doe, Personal Representative of the Estate of Mary Shelley, deceased, John Doe Trustee of the Mary Shelley Trust, etc.
First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. © 2011 First American Financial Corporation. All rights reserved. | NYSE CMA-05/11
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