You are at closing, reviewing the Settlement Statement and see a charge listed for Title Examination. The first thought in your mind may be, "that's a lot of money for 30 minutes in the office." Your thought might not be far off if that charge reflected 30 minutes worth of work. In fact, that charge can reflect five hours of work or more, the majority of which involves no contact with you directly. What are you getting for the Title Examination charge? Read on to find out.
Generally, the closing attorney represents the buyer in a real estate transaction. As part of that representation, the attorney must search the title to the real estate, give an opinion on the title to the real estate in order to obtain title insurance, clear up or correct any title defects, prepare the closing package, negotiate any last minute changes or problems on behalf of his client, close the transaction, update title and record the transaction documents, prepare a final title opinion and obtain the title insurance policy. In a commercial real estate transaction, reviewing and negotiating the loan documents and preparing a legal opinion are additional responsibilities of the attorney.
In a transaction where the title is "clean" i.e., there are no title defects or coverage issues, and in which the parties require no last minute negotiations or changes, the bulk of the attorney's time in a real estate transaction is spent searching the title to the real estate and in preparing the closing package. Both of these items are worth discussing in a little more detail.
In searching the title to a parcel of real estate, the attorney must create a chain of title to the land stretching at least 30 years back into the past. More often than not, chains of title of more than 50 years back are required. The chain of title is comprised of the owners of the real estate. Once the chain is established, then the attorney must search the out conveyances of each party in the chain of title. This allows the attorney to determine if the party sold the property to someone other than the next person in the chain of title, or if the person somehow encumbered or placed a lien upon or created a defect on the title. This process must be completed for each parcel of land that is involved in the transaction.
When a loan package is received in the office and a lender is involved, the closing instructions must be reviewed in detail. The closing instructions set out the lender's requirements for closing the loan. These requirements can include paying off certain debts, obtaining evidence of either cancellation of debts or existence of money in accounts, and obtaining miscellaneous documents which the lender believes are important to have prior to closing the loan. Typically in the loan instructions are the fees which the lender is charging along with other loan-related expenses. These charges are used to prepare the HUD-1 Settlement Statement. The Settlement Statement must be prepared and reviewed by the lender and the parties to the transaction to insure accuracy prior to closing. Additionally, in preparing the loan package, the attorney must also review all the loan documents to make sure they are all present, completed and correct.
The cost of closing a real estate loan and transaction varies from transaction to transaction. The factors that influence the cost include the number of parcels involved in the transaction, the difficulty in searching the title to the land, the number of loans the borrower is obtaining from the lender, and the title defects, if any, that must be corrected before closing. Another influence on the price of closing a real estate loan is the purchase price or loan amount.
The real estate section of White & Allen is comprised of attorneys Joe Bower, Dick Archie and Ned Manning along with paralegals Pat Williams, Alice Herring, and Sheri Taylor. With one of the most experienced groups in the area, we stand ready to assist you in all your real estate transactions, both residential and commercial. We handle transactions throughout the State of North Carolina and represent clients in out-of-state transactions through the association of local counsel. For your next real estate transaction, please contact our office with any questions and let us assist you in that transaction.