FAQ

Question: What does a title company do?

Answer: A title company is a crucial entity involved in real estate transactions. Its primary role is to ensure that the property being sold has a clear title and to provide title insurance to protect the buyer and lender against any potential title defects or claims.

Here's a brief synopsis of what a title company does:

• Title Search: The title company conducts a comprehensive examination of public records to verify the ownership history of the property. This search reveals any existing liens, encumbrances, or judgments that could affect the title.
• Title Insurance: After completing the title search, the title company issues a title insurance policy. This policy protects the buyer and lender from financial loss due to any undiscovered title issues, such as undisclosed heirs, forged documents, or errors in public records.
• Escrow Services: Title companies often act as neutral third parties in real estate transactions. They hold funds and important documents in escrow until all the necessary conditions of the sale are met. This ensures a secure and transparent transaction for all parties involved.
• Closing and Settlement: The title company facilitates the closing process by coordinating with the buyer, seller, real estate agents, and lenders. They prepare the necessary documents, handle the transfer of funds, and oversee the signing of the final paperwork.
• Recordation: After the closing, the title company is responsible for recording the deed and other relevant documents with the appropriate government authorities. This ensures the legal transfer of ownership and establishes the buyer as the new rightful owner of the property.
• Payoffs and Disbursements: The title company ensures that any outstanding debts or liens on the property, such as mortgages, taxes, or utility bills, are properly paid off or transferred to the new owner. They also disburse the funds from the sale to the appropriate parties, such as the seller, real estate agents, and lenders.

Overall, a title company plays a vital role in verifying and guaranteeing the ownership rights of a property, protecting the buyer and lender from potential title issues, and facilitating a smooth and secure transfer of real estate ownership.

Question: What is Wire Fraud and how can I avoid it?

Answer: Wire fraud is a serious concern in real estate transactions and involves criminals attempting to intercept or divert funds by deceiving buyers, sellers, or other parties involved. To avoid falling victim to wire fraud, it is crucial to exercise caution and follow preventive measures.

Firstly, establish secure communication channels with all parties involved, such as real estate agents, attorneys, and lenders. Be wary of any sudden changes in wiring instructions and always verify such instructions directly with the trusted recipient using a known and verified phone number. Avoid sharing sensitive financial information or wire transfer details through unsecured email accounts.

Additionally, be cautious of any unexpected or urgent requests for funds and independently confirm the legitimacy of such requests before proceeding. Lastly, consider using a dedicated and secure wire transfer service or consult with professionals experienced in identifying and preventing wire fraud to ensure the safety of your funds during a real estate transaction.

Question: What do I Need to bring to closing?

Answer: First and foremost, don't forget to bring your driver's license or any other government-issued identification for verification purposes. Additionally, if required, it's advisable to bring a voided check, which may be necessary for setting up or updating your account information. If you happen to be the seller, remember to bring or leave behind all the relevant items such as keys, garage door openers, warranty information, and any other documentation associated with the property. Being organized and having these essentials on hand ensures a smooth and efficient closing process.

Question: What Do I need to do to prepare for closing?

Answer: For buyers, it's important to schedule a wire transfer in advance to cover the down payment and closing costs. Notify your chosen homeowners insurance company to secure coverage for your new property. Additionally, set up utilities to ensure a seamless transition into your new home. Don't forget to schedule a final walk-through with your Realtor to verify the condition of the property before closing and address any outstanding issues.

For sellers, there are several tasks to consider. Make arrangements to have any utilities changed over to the buyer's name or cancelled effective from the closing date. Order your mortgage payoff through the date of closing and notify your closing agent. Notify your insurance company about the upcoming sale of the property. Finalize any agreed-upon repairs as per the terms of the contract. It's crucial to inform the closing agent about any significant changes such as deaths, divorces, or marriages that have occurred since you acquired the property. If you do not reside in the state, let them know if you intend to use the funds to purchase another home. Fill out a change of address card with the USPS and stay in touch with your Realtor to stay updated on the closing process. By completing these tasks, you'll be well-prepared for a successful closing!

Question: What happens after closing for the purchasers?

Aanswer: If this is your primary residence, file your homestead exemption with the tax assessor’s office no later than December 31st. Within a few weeks, your title binder will come in the mail, keep a copy of this somewhere safe! Happy with the services offered by your lender, REALTOR, or Title Rep? Make sure to review them and refer your friends and family members!

Question: What is Homestead Exemption?

Answer: A homestead exemption is defined as a single-family owner-occupied dwelling and the land thereto, not exceeding 160 acres. The property owner may be entitled to a homestead exemption if he or she owns a single-family residence and occupies it as their primary residence on the first day of the tax year for which they are applying. There are several different types of exemptions a homeowner can claim in the State of Alabama. Please visit your local county office to apply for a homestead exemption. To see the different homestead exemptions: https://www.revenue.alabama.gov/property-tax/homestead-exemptions/

Question: What are Closing Costs?

Answer: In a real estate transaction in Alabama, closing costs refer to the various expenses and fees associated with the transfer of ownership from the seller to the buyer. These costs are typically incurred by both parties and are paid at the closing of the transaction. While the specific fees and amounts can vary, I can provide you with a general overview of common closing costs in Alabama:

1. Loan-Related Costs: If the buyer is obtaining a mortgage loan, there will be several fees associated with it, such as origination fees, appraisal fees, credit report fees, and discount points.
2. Title Insurance: Both the buyer and seller typically pay for separate title insurance policies. This insurance protects against any title defects or disputes that may arise.
3. Attorney Fees: It is common for each party to have their own attorney to handle the legal aspects of the transaction. Attorney fees can vary based on the complexity of the transaction and the attorney's rates.
4. Escrow Fees: An escrow company or attorney is often involved in the transaction to hold funds and documents on behalf of the parties. Escrow fees cover the services provided by the escrow agent.
5. Recording Fees: These fees are charged by the county recorder's office to record the deed and other relevant documents in public records.
6. Transfer Taxes: Alabama imposes a state transfer tax, known as the "stamp tax," based on the purchase price of the property. Additionally, some municipalities may charge local transfer taxes.
7. Appraisal Fees: If the buyer's lender requires an appraisal, the buyer typically pays for this service to determine the fair market value of the property.
8. Survey Fees: A survey may be required to establish property boundaries and ensure there are no encroachments or boundary disputes. The cost of the survey is usually paid by the buyer.
9. Prorated Expenses: Certain expenses, such as property taxes, homeowner association fees, and utility bills, may be prorated between the buyer and seller based on the closing date.

It's important to note that the specific closing costs can vary depending on the terms of the purchase agreement, the type of property, the location, and other factors. It's recommended to work closely with a real estate agent, attorney, or a qualified professional to understand and estimate the closing costs for a specific transaction in Alabama.

Question: What are Closing Documents?

Answer: During the closing, both buyers and sellers will encounter and sign several important documents that are essential for legally completing a real estate sale. Although each closing is unique, there are certain fundamental documents that are typically present at every closing. These include:

• Closing Statement or Closing Disclosure (CD): This document provides a detailed breakdown of all costs associated with the transaction, including the sale price and various fees. Both buyers and sellers will sign this document.
• Deed: The deed is the official document that transfers the ownership of the property from the seller to the buyer. It contains information about both parties, the purchase price, a legal description of the property, and the loan amount, if applicable. The seller signs the deed and then transfers it to the buyer.
• Title documents: The seller signs title documents confirming their ownership of the property and stating that no other parties have property rights. The buyer's title documents typically include an abstract of title, title insurance policies, surveys, and related documents.
• Mortgage payoff: The seller receives a payoff letter from their mortgage company, and the existing loan is paid in full at closing. The closing company facilitates the transfer of funds to the mortgage company once the closing is finalized.
• Loan package: If the buyer uses a mortgage loan to purchase the property, they will review and sign an extensive loan package. This includes the loan application, mortgage agreement, first payment letter, property tax documents, and any other documents required by the lender.
• Other documents: Additional documents may be required based on the specifics of the sales contract. These can include termite documents, HOA covenants, and other relevant documents.

Each document signed at closing has a designated purpose and destination. After the closing, the originals are typically sent to the mortgage company for approval. The title company records the deed, mortgage, and any powers of attorney with the county. The original deed is then sent to the purchaser.

If you require more information about the specific documents involved in your closing, don't hesitate to ask your closer. They can provide detailed explanations of each document and address any questions or concerns you may have.