RGS TITLE - FAQ's

Are there different types of title insurance?

Yes. There are three different types of Title Insurance. A Lender's Policy, Standard Owner's Policy and the Owner's Enhanced Policy. Lender's Coverage is required by all corporate lenders as a condition of the purchaser's loan. This covers only the lender for the amount of the loan they are making to a borrower. The Lender's Policy that the lender is provided with is the standard ALTA 1992 Loan Policy. It provides coverage to the Lender against such title encumbrances as fraud in connection with the execution of document, incorrect representation of the marital status of grantors, wills not properly probated, and many other circumstances that might jeopardize the Lender's security in the property.

The Standard ALTA 1992 Owner’s Policy protects you as the owner of real property against fraudulently executed documents, incorrect representations and improperly probated wills as well as any unsatisfied claims that may not appear in the County land records.

The Owner’s Enhanced Policy covers you, the owner against all that is included in a standard ALTA 1992 policy but with additional and enhanced coverage. For an estimate of costs for title insurance please see our cost calculator. Subject to limitations, some of the benefits of an Enhanced Policy include:

How are closing costs credits applied and are there any limitations?
A closing cost credit is usually agreed in the process of negotiating the terms of the sales contract. In some instances however, a closing cost credit can be added to the transaction specifics through addendum, usually to resolve some other issue that has arisen during the transaction. Closing cost credits are usually applied at the closing table as a line item on the HUD-1 Settlement Statement. It would appear as a debit to the Seller’s proceeds and a credit to the Purchaser’s cost on the day of settlement. Still, in other situations, depending on the purchase money lender’s instructions, the closing cost credit could also be applied by simply charging some of the borrower’s fees to the seller to total to the agreed amount. In every situation the closing cost credit is governed by the Purchase money lender (when applicable) and the instructions they provide to the Title Company.

Though the limitations differ from lender to lender and on a per transaction basis, the general rule is that the lender will allow up to a 3% credit of actual or non-recurring closing costs. A non-recurring closing cost is one that is specific to the closing itself. For instance, a lender will allow the government recording charges to be included as it is a one time cost associated with the closing, but would likely limit the cost of escrows or prepaid interest as both are cost associated with the continual ownership of the property.

In addition, the lender may limit the amount of a closing cost credit to a certain amount even though the credit agreed was higher. As an example, if a sales contract for a $500,000 property agrees to a $20,000 closing cost credit, but lender limits the transaction to a max seller contribution of 3%, then $5,000 is being “left on the table”. This is why it is so critical for a buyer to be in constant contact with their lender representative and determine how much is allowed and if limitations are set by the lender, how to extend them. Running into this limitation at the closing table is one uncomfortable and two most likely to be too late to make a change. In some situations, it may be possible to extend the allowable credit by increasing some of the costs that are acceptable to the lender, such as Discount Points.

Is it important to have a house location survey done in association with the purchase?

This question is best answered by first defining a house location survey. This type of survey is one that illustrates the location of the structure or structures on a piece of property as they relate to the property lines. These surveys are not meant for construction purposes to include fences and decks. For that you would need a boundary survey. In many situations the survey will be a requirement of the transaction due to the Title Insurance coverage that needs to be provided to the Purchase money lending institution.

The policy issued to a lender will typically require no exceptions for matters of survey and the only way to remove such a requirement is to perform an accurate house location survey. While the survey will not reveal all issues it will provide a general idea of the location of fences, property lines, locations of easements or encroachments if there are any, government restrictions such as a Building Restriction Line and other matters that are valuable for a homeowner to have knowledge of.

It is important to have a survey done to disclose issues you might not otherwise be aware of. For instance, putting in a pool over a utility easement could certainly be a costly mistake if the utility company needs to excavate to service their equipment. Or planting your award winning rose garden in the back of the property in a Sewer Authority easement that needs service could destroy some if not all of that hard labor. A survey may not always be required, but is always recommended, especially when purchasing a property not located in a subdivision, or one that has a good deal of acreage.

Is there a difference between a Loan Broker’s approval letter and that of an actual Lender?

Yes. In the simplest of terms, a Loan Broker is one who will go out and find a lending institution to invest or service your loan. Though a Broker may have numerous lenders they work with and may know most of the requirements, the actual Bank providing the funds gets to make the rules and set the limitations. So, in a situation where a Broker provides a letter stating approval to a certain amount it is still subject to the final underwriting by a lender which in some cases is not finally determined until very late in the process, if not two days before. However, a lender letter from an actual lending institution that will be responsible for sending the funds will be issued already knowing the underwriting guidelines of the lender and the requirements to ensure a timely closing.

If I need to bring money to the closing, what sorts of funds are acceptable?

Paragraph 5 of the regional sales contract states that the down payment will be paid by certified or cashier’s check or by bank wired funds. (This applies to both buyers and sellers when necessary). It is imperative that funds be brought to the table which are essentially liquid due to the Wet Settlement Act in Virginia. A purchaser may bring a personal check up to $1,000.00 but anything over that amount will take too long to clear and will therefore delay recording and disbursement.

Often times a final figure will be unavailable to obtain a cashiers check for the exact amount due. In this case we recommend that the lender’s good faith estimate be used and some padding added to that number by reason of escrow collections, or other estimates that may not bee 100% accurate. In this situation, if a borrower brings too much to the table, we will reimburse the difference in a check at the table that day. Note, if an assignment of funds is to be used for the down payment, the sales contract requires the seller be made aware and prior written consent be provided. In addition the Title Company accepting the Assignment will need to approve such a method in advance as well.

As a seller, when will I receive my proceeds and in what form?

In Virginia the Wet Settlement Act requires that a transaction be on record prior to any disbursement of funds. In most situation, the recording will take place the following day, but can take up to 48 hours. The norm is that funds will be available the business day following your settlement. However, caution should be used when closing on a Friday or over a Holiday weekend as there will surely be a delay.

It is possible to record the same day of the settlement, however, time and other restrictions will play into the feasibility of that process. In addition, if an assignment of funds is needed for a purchase elsewhere, you much ensure the purchase title company will accept that assignment and that the laws of the state allow for you to close without having actual money at the table. For further clarification, check with the branch office you are closing with. When disbursing funds, we can provide a wire at no charge, although your bank may have a fee, or by check for pick up or mailing to a designated location.

When will I receive my bottom line figure as a buyer?

Often it is possible to get you a bottom line figure prior to closing, hopefully 24 hours in advance. Unfortunately, it is also quite possible that you may not have a figure until the day of or even an hour before the closing. This is often the case due to receiving Loan Instructions or the final loan package the day of the closing.

Additionally, the closer to the end of the month you close; the more likely it is that there will be a delay in getting figures to you. 75% of all real estate transactions close in the last few days of the month. In an effort to avoid delays or get a good figure as early as possible, you may want to consider closing a bit earlier in the month.

How can I receive a loan package prior to closing to review?

This is often difficult to do as the loan packages do not normally arrive until the day of closing. You can however, request a copy of the package from your loan representative or make the request of your title company who will make your wishes known to the lender and attempt to get the package early. You might also want to consider visiting the Fannie Mae & Freddie Mac web sites and download copies of the most standard documents. You will find the most common Note instruments and Deed of Trust Instruments for review. The rest of the documentation will need to come from the lender directly as the disclosures are specific to their institution. We are able to provide you with our internal documentation as early as you like.