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Why do I need title Insurance?

Your title insurance protects the most important investment you’ll ever make – your home. With a title insurance policy, you have an indemnity contract that will reimburse you for loss in the event someone asserts a claim against your property that is covered by the policy. Our title experts conduct throughout research and examination of land records. Though, even the most thorough search cannot absolutely assure that no title hazards are present, despite knowledge and experience of professional title examiners. Your title insurance protects you in case other matters might exist that did not show up in your property’s land records.

What does title insurance protect me from?

The following are a few common hidden risks that can cause a loss of title or create a legal issue with your ownership rights:

False impersonation of the true owner of the property
Forged deed, releases or wills, Instruments executed under invalid or expired power of attorney;
Undisclosed or missing heirs; Mistakes in recording legal documents
Misinterpretations of wills Deeds by persons of unsound mind
Deeds by minors
Deeds by persons supposedly single, but in fact married
Fraud
Liens for unpaid estate, inheritance, income or gift taxes

Click here to watch a video on why Title Insurance is so important.

What are some examples of situations where it would be important to have a Title Policy?

Click here to watch a video on why Title Insurance is so important.

A fire destroys only the house and improvements. The ground is left. A defective title may take away not the only the house but also the land on which it stands. Title insurance protects you (as specified in the policy) against such loss.
A deed or mortgage in the chain of title may be a forgery.
A deed or a mortgage may have been signed by a person under age.
A deed or a mortgage may have been made by an insane person or one otherwise incompetent.
A deed or a mortgage may have been made under a power of attorney after its termination and would, therefore, be void.
A deed or a mortgage may have been made by a person other than the owner, but with the same name as the owner.
The testator of a will might have had a child born after the execution of the will, a fact that would entitle the child to claim his or her share of the property.
A deed or mortgage may have been procured by fraud or duress.
Title transferred by an heir may be subject to a federal estate tax lien.
An heir or other person presumed dead may appear and recover the property or an interest therein.
A judgment or levy upon which the title is dependent may be void or voidable on account of some defect in the proceeding.
Title insurance covers attorneys’ fees and court costs.
Title insurance helps speed negotiations when you’re ready to sell or obtain a loan.
By insuring the title, you can eliminate delays and technicalities when passing your title on to someone else.
Title insurance reimburses you for the amount of your covered losses.
A deed or mortgage may be voidable because it was signed while the grantor was in bankruptcy.
There may be a defect in the recording of a document upon which your title is dependent.
Claims constantly arise due to marital status and validity of divorces. Only title insurance protects against claims made by non-existent or divorced “wives” or “husbands.”

What happens in Escrow Settlement?

An escrow is an arrangement in which a disinterested third party, called an escrow holder or settlement agent, holds legal documents and funds on behalf of a buyer and seller, and distributes them according to the buyer’s and seller’s instructions. People buying and selling real estate often open a sale transaction with the settlement agent for their protection and convenience. The buyer can instruct the settlement agent to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the settlement agent to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the settlement agent to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out. Alamo Title provides professional escrow settlement services that are a convenience for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments and funds, deeds and many other items, using settlement as the central depositing point. If the instructions from all parties to the transaction are clearly drafted, fully detailed and mutually consistent, the settlement agent can take many actions on their behalf without further consultation. This saves time and facilitates the closing of the transaction. The settlement process was developed to help facilitate the sale or purchase of your home. The settlement agent accomplishes this by:

Acting as the impartial “stake-holder,” or depository of documents and funds
Processing and coordinating the flow of documents and funds
Keeping all parties informed of progress on the escrow
Responding to the lender’s requirements
Securing a title insurance policy
Obtaining approvals of reports and documents from the parties as required
Prorating and adjusting insurance, taxes, rents, etc.
Recording the deed and loan documents
Maintaining security and accountability of monies owed and owing.

How Does Technology effect Title?

Alamo Title’s superior financial strength and advanced technical capabilities and team approach to delivering title and escrow services combine the most skilled and customer-focused staff in the business, supported by a substantial investment in cutting edge technologies and training. It is your assurance of consistent quality, resourcefulness and professionalism. Our electronically linked framework of real estate professionals offers the most extensive title and escrow service and expertise available. Closely partnered with each customer, our staff uses a positive and proactive approach to overcome potential obstacles and keep you informed of the status of your transaction at all times. By understanding the delicate balance of the interests of the parties to a transaction and professionally handling issues as they arise, we guide the parties to a successful closing. We have excellent on-site mapping capabilities to deliver information to customers in record time. Our National Business Units strategically located around the United States and multi-state transactions are available to assist our commercial customer as a one-stop, single source for commercial title needs involving multi-site and interstate transactions. We customize our services to accommodate your needs, and can handle escrow details in every jurisdiction in the nation.

What is an on-site payoff department and how does it help me?

As a part of the Federal Wire System, we offer you direct fund transfers and same day payoffs that are fast and efficiently executed. This is very important to customers dealing in high dollar figure transactions because we are not dependent on another department or entity to conduct scheduled payoffs. All of our escrow officers and managerial staff have the appropriate wire transfer authority and can, therefore, wire funds. This expedites the close of a transaction and allows payoff to be done quickly and efficiently. We do not need to call or fax for authority. This capability means you have no “down time.” At Alamo Title, we take great pride in our seamless escrow process and work flow. This is why we are the solution for complex commercial, industrial, and subdivision transactions.

Why should a Home Buyer use a Real Estate Professional?

Real Estate deals often revolve around your most important business and family asset. Real Estate can become a complicated series of transactions, negotiations, and financial arrangements for the average consumer. Real Estate Agents (or brokers) are often highly skilled and have vast knowledge about local markets and important trends. A licensed real estate agent (or broker) can help you navigate the important decision making required – plus, he/she can answer any questions you might have along the way. Additionally, licensed brokers and agents must meet minimal continuing education requirements to maintain their licenses – this ensures that your agent has the proper skills required to professionally manage your transaction.

How can a Real Estate Agent help a Home Buyer?

A real estate professional can help:

Answer your questions and help you analyze tough decisions based on past experience and market knowledge
Help you establish a fair market value according to his/her past experience, local knowledge, and industry analysis.Choose financial terms that benefit your interests, to close more quickly, while still receiving a fair purchase price.
Help you structure a plan that reduces risk from unusual financing terms and explaining financial contracts in non jargon language.
A brokerage office with a steady stream of prospects and a strong referral network. Brokerage offices have resources, including MLS listings and national reach, that individuals cannot match.
Agents can handle all of the headaches to come, including contracts, paperwork, reports, insurance, and closing arrangements. Real Estate agents often cooperate with escrow companies, title companies, or closing attorneys.
Strategic Research partner – helping you search local markets and MLS listings based on your buyer’s criteria. Act as a source of guidance, giving expert advice about what you can expect to find on the market.
Analyze your financial situation and help help you determine how much home you can afford.
Help you obtain a pre qualification for a loan which will make you a more attractive home bidder. Your realtor or broker can also inform you about available financing options.
Your realtor is usually also a local expert in neighborhood facts, including school information, transportation, local taxes, and community features.
Your Realtor will also make you aware of required disclosures and make sure you navigate the negotiation, inspection, and closing with ease.

What are some Home Buyer Financial Responsibilities?

The following is a list to help you begin thinking about some of your financial responsibilities during the home buying process. Remember to consult your Alamo Title Team Member to receive step by step guidance throughout the title closing process.

Title insurance premium (according to contract)
Escrow fees (according to contract)
Document preparation (if applicable)
Notary fees
Recording charges for all documents in buyer’s names
Termite inspection (according to contract)
Tax proration (from date of acquisition)
Homeowner’s transfer fee
All new loan charges (except those required by lender for seller to pay)
Interest on new loan from date of funding to 30 days prior to first payment date
Assumption/change of records fees for takeover of existing loan (if applicable)
Beneficiary statement fee for assumption of existing loan
Inspection fees (roofing, property inspection, geological, etc.)
Home warranty (according to contract)
City transfer/conveyance tax (according to contract)
Fire insurance premium for first year

What are the different roles in an Escrow process?

The Seller:

Deposits the executed deed to the buyer with the settlement agent.
Deposits evidence of pest inspection and any required repair work, if applicable.
Deposits other required documents such as tax receipts, addresses of mortgage holders, any state or federal required documentation, etc.

The Buyer:

Deposits the funds required, in addition to any borrowed funds, to pay the purchase price with the settlement agent.
Deposits funds sufficient for home and title insurance.
Arranges for any borrowed funds to be delivered to the settlement agent.
Deposits any deed of trust or mortgages necessary to secure loans.
Approves any inspection reports, the Preliminary Report for title insurance, etc., called for by the purchase and sale agreements.
Fulfills any other conditions specified in the instructions.

- The Lender (If Applicable):
Prepares loan document package for buyer/borrower.
Deposits proceeds of the loan with the settlement agent.
Directs the settlement agent on the conditions under which the loan funds may be used.

The Settlement Agent

Opens the order for title insurance.
Obtains approvals from the buyer on the Preliminary Report/ Title Commitment, pest and other inspections.
Receives funds from the buyer and/or any lender.
Prorates taxes, rents, etc.
Disburses funds for title insurance, recording fees, real estate commissions, lien clearance, etc.
Prepares an estimated statement or HUD settlement statement, as required, for each party, indicating amounts to be disbursed for services and any further amounts necessary to close.
Records deed and loan documents, delivers the deed to the buyer, loan documents to the lender and funds to the seller, closing the escrow.
Issues final closing statement/HUD settlement statement and forwards to buyer, seller and lender.

Why Should a Home Seller use a Real Estate Professional?

How can a Real Estate Agent help a Home Seller?

A Real Estate Professonal can help a Home Seller:

Answer your questions and help you analyze tough decisions based on past experience and market knowledge
Help you evaluate the fair market values of homes you’re considering according to his/her past experience, local knowledge, and industry analysis. Choose financial terms that help you sell your home more quickly, while still receiving fair equity in your home.
Help you structure a plan that reduces risk from unusual financing terms and explaining financial contracts in non jargon language.
A brokerage office with a steady stream of prospects and a strong referral network. Brokerage offices have resources, including MLS listings and national reach, that individuals cannot match.
Agents can handle all of the headaches to come, including contracts, paperwork, reports, insurance, and closing arrangements. Real Estate agents often cooperate with escrow companies, title companies, or closing attorneys.
Expertly market your home with the proper marketing message, including professional images and attractive descriptions that bring qualified buyers to your door.
Sales and negotiation professionalism that often results in the best possible return on your property.
Agents will continually work to improve your listing and strive for feedback from other agents in their network. This is valuable information you’ll need to successfully improve your property and its listing.

What happens after I make the sale?

An essential step in closing any sale is obtaining title insurance. Not only is this important in securing your ownership rights and delivering peace of mind, it’s also often required by lenders as a condition on their loan policy to protect their interests. When you ask your agent or broker for title protection from Alamo Title, we’ll get started immediately. Our diligent research and expertise will ensure that you’ll have the right to use your new property for its intended purpose. Your Alamo Title Account Manager is an integral part of your agent’s or broker’s closing team.

What are my Financial Responsibilities as a Home Seller?

The following list will get you started and help you consider the financial responsibilities of a home seller. Please consult your Alamo Team Member or your Real Estate Agent to receive step by step financial instructions:

Real estate commission
Document preparation fee for deed
Documentary transfer tax
Any city transfer/conveyance tax (according to contract)
Any loan fees required by buyer’s lender
Payoff of all loans in seller’s name (or existing loan balance if being assumed by buyer)
Interest accrued to lender being paid off, statement fees, reconveyance fees and any prepayment penalties.
Termite inspection (according to contract)
Termite work (according to contract)
Home warranty (according to contract)
Any judgments, tax liens, etc., against the seller
Tax proration (for any taxes unpaid at time of transfer of title)
Any unpaid homeowner’s dues
Recording charges to clear all documents of record against seller
Any bonds or assessments (according to contract)
Any and all delinquent taxes
Notary fees
Escrow fees (according to contract)
Title insurance premium (according to contract)

What is an IRC 1031 Exchange?

When an owner of investment real property (“Taxpayer”) sells the property, the sale often creates an obligation for payment of capital gains taxes. Section 1031 of the Internal Revenue Code of 1986 allows a Taxpayer to sell investment real property (“Relinquished Property”), have the proceeds used to purchase new investment real property (“Replacement Property”) and defer the taxes on the sale (the “Deferred Exchange”). A taxpayer may not simply sell Relinquished Property and use the money to purchase Replacement Property. The IRS and the Treasury Department have very strict requirements which must be satisfied in order for a Taxpayer to qualify for Deferred Exchange treatment (the “Regulations”).

How do I qualify for an IRC 1031 Exchange?

To qualify for a Deferred Exchange, the Taxpayer must enter into a valid exchange agreement (the “Exchange Agreement”) with a third party (the “Qualified Intermediary”). The Qualified Intermediary must hold the funds from the sale of the Relinquished Property and the Taxpayer and the Qualified Intermediary must comply with the requirements of the Regulations. The Regulations allow the Taxpayer and Qualified Intermediary to place the funds from the sale of the Relinquished Property into an escrow account (the “Qualified Escrow”).

Why Use Investment Property Exchange Services as the Qualified Intermediary?

Financial Strength and Security – During the exchange, the funds from the sale of the Relinquished Property will be held and controlled by the Qualified Intermediary. Many Taxpayers have had their exchange funds misused by unscrupulous intermediaries.

The Integrity of Your Exchange – The Qualified Intermediary will prepare most of the documentation that is required by the Regulations. The Qualified Intermediary must conduct its business in compliance with the Regulations or your exchange could be jeopardized.

Complexity – The Regulations on Deferred Exchanges are very complex. An unsophisticated intermediary could unwittingly act in a manner that could cause a Deferred Exchange to be disallowed under audit.

How Does the Taxpayer set up an Exchange?

The exchange must be set up before the Taxpayer can close on the sale of the Relinquished Property. The Qualified Intermediary prepares an Exchange Agreement and an assignment document to assign the Taxpayer’s rights in the sale contract to the Qualified Intermediary. The Taxpayer and the Qualified Intermediary sign the Exchange Agreement and the assignment document. The Buyer of the Relinquished Property also signs the assignment document. If a Qualified Escrow is being used the Qualified Escrow Agent also signs the Exchange Agreement. The Qualified Intermediary or the Qualified Escrow Agent holds the executed Exchange Agreement. The executed assignment document is delivered to the escrow agent handling the sale of the Relinquished Property.

Once the sale escrow agent gets the assignment, and all other terms of the sale are satisfied, the sale escrow can be closed. Upon close of the sale escrow the sale escrow agent transfers all of the Seller’s net proceeds to the Qualified Intermediary or to the Qualified Escrow.

Can the Taxpayer deed the Relinquished Property directly to the Buyer?

Yes, the Regulations allow the Taxpayer to deed the Relinquished Property directly to the Buyer. This avoids extra fees.

Can the Taxpayer earn interest on the funds while they are held by the Qualified Intermediary? Or in the Qualified Escrow?

Yes, the Regulations allow the Taxpayer to earn interest on the funds; however, the interest may not be paid to the Taxpayer until the end of the exchange. The interest which is earned will be taxed as ordinary income.

How long does the Taxpayer have to identify Replacement Property and to complete the exchange?

Replacement Property must be identified on or before midnight of the 45th day following the day on which the sale of the Relinquished Property occurred (the “Identification Period”). Provided the identification requirements are satisfied, the exchange must be completed by midnight of the 180th day following the day of close of the Relinquished Property or the due date of the tax return for the year in which the transfer took place, including extensions (the “Exchange Period”). The Identification Period and Exchange Period must be counted very carefully. They are not extended for holidays or weekends.

How many Replacement Properties can the Taxpayer Identify?

The Taxpayer may identify a maximum of three (3) Replacement Properties, of any value (the “3 Property Rule”); OR The Taxpayer may identify more than three (3) Replacement Properties BUT the aggregate value of all identified Replacement Properties cannot exceed 200% of the value of the Relinquished Property (the “200% Rule”); OR If the Taxpayer identifies more than three (3) Replacement Properties with aggregate value in excess of 200% of the Relinquished Property, Taxpayer must actually acquire at least 95% of the value of the identified Replacement Properties. Replacement Property which is actually acquired prior to the end of the Identification Period will qualify.

What form does the Taxpayer use to identify Replacement Property?

There is no special “form” however, the identification must be in writing, must be signed by the Taxpayer and must “unambiguously” describe the Replacement Property. A revocation of a previously identified Replacement Property has the same requirements.

How is the Replacement Property acquired?

The Taxpayer negotiates the purchase of Replacement Property in the normal manner with wording similar to the following inserted in the purchase contract: Buyers Exchange Provision: It is the intent of Buyer to Acquire this property as Replacement Property in an Internal Revenue Code Section 1031 exchange. To affect such exchange, Buyer reserves the right to assign their position herein to a Qualified Intermediary. Seller agrees to cooperate in Buyers exchange, provided that Seller will be at no additional expense or liability for Buyers exchange and Buyers exchange shall not delay the closing of this escrow. Before the Replacement Property can close, the Qualified Intermediary prepares an amendment to the Exchange Agreement and an assignment document in which the Taxpayer assigns his rights in the purchase contract to the Qualified Intermediary. The Qualified Intermediary and the Taxpayer sign the amendment and the assignment. The seller of the Replacement Property also signs the assignment. When all conditions of the Replacement Property are satisfied, the Qualified Intermediary transfers the required funds to the Replacement property escrow agent.

Where can I find a Realtor?

The best way to locate a Realtor is to start by asking friends and family for recommendations. This will ensure that your Realtor has a proven history of providing excellent service to someone you know and trust. Next, interview your Realtor and ask him/her questions. Pay attention to how your Realtor communicates and whether you feel comfortable discussing important personal matters. Trusting your Realtor with financial, property, and personal questions is an important factor when choosing who to work with.Try interviewing multiple realtors and asking for references from each one. make sure to check these references thoroughly by calling each person and asking what they did or didn’t like about the experience the Realtor provided.

Need an Expert?

Have a question? Need an expert opinion? Our Marketing Team is here to assist you.

Contact the Marketing Team

Closing on a property? Our Escrow Officers can walk you through the process.

Contact the Closing Team

Working with commercial property? Visit our Commercial Group for personalized service.

Contact the Commercial Group

From Our Friends in the Legal Department

This website has been designed to be introductory and educational only. Because of the constant changes inherent in the title insurance industry, and particularly in regard to state and regional differences, it is not to be construed as an up to date document, a statement of duties, liabilities or coverage. Your situation may differ; Please consult your Title, Real Estate, and Financial adviser to receive advice.

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