• Home
    • Blog
    • What’s a title company? and why you need them!

    What’s a title company? and why you need them!

    All real estate transactions in the state of Utah are supposed to use a title company. Title companies are vitally important at tracking the history of owner for real property and insuring that new buyers get “free and clear” title. In this interview, you will learn answers to common questions buyer and sellers have concerning the Title Company as they complete a real estate transaction.

     

    Transcription:

    Hi everybody, it’s David Pestana Broker, owner of Rise Realty. It’s good to be here at access title with my friend Dan Hall. Thank you for, for being here with us. Thank you. Happy to have you. All right. So the reason we’re here is to answer some of the common questions we get about title. Okay. So I brought the expert in. How many years experience do you have? A 14 and a half 14 and a half. Yeah, so I started on the, on the title side of things 14 and a half years ago. In title in here in Utah you have the escrow side and the title side. And in Utah we do both sides at the same title company other states, you know, do it differently sometimes you have, like in California for example, you have a title company and an escrow company, but here in Utah it’s all combined into one.

    And so, uh, there’s two different licenses that are that a person has to have. The inside of title is an escrow side license and a title license. I happen to have both because I started on the title side and then moved over to the escrow side about four years after starting the title side. Okay, so about 14 and a half years of experience. We want to ask you a few questions. I think most people have. One is like what is title or what does the title company to for the client? That’s a very good question. So title company, what we will do is we take the real estate purchase contract that you prove that you fill out what the clients and you provide to us will take all that information put into our computer systems and then what we first initially start with is we’re going to prepare what’s called a preliminary title report.

    The preliminary title report is basically the easiest way to explain that is is like a genealogy report on the property itself and a little bit about the people, not totally about the people, but if there’s any liens or judgments against any individual that has owned the property in the past 40 years, we’re going to research that information out and put that in the preliminary title report so that when you come to purchase a property or you’re selling a property, you’re going to know exactly what’s laid out on this property, what kind of judgments or leans or boundary issues may exist with the property. So this Kinda goes into that second question that Kinda correlates with that, which is what is. What is the title? Insurance title? Insurance title insurance is going to ensure it’s a one time charge. Instead of like a car insurance where you pay it every single year or your homeowner’s insurance.

    You pay every single year. It’s a one time fee, a 95 to 98 percent of the time. The seller is going to pay for that fee and it’s a one time charge. And what that does is that guarantees the buyer that they’re getting the property that they think that they’re getting, they’re getting it free of being encumbrances or judgments or liens that anybody could come down the road and file against the property. Now, is it a hundred percent correct? All the time. No. That’s why you get the title insurance, uh, because sometimes there are clouds out there on title that we as a title company try to, to see. But you can’t always see everything that’s out there. Sometimes there’s items that are not seen that pop on later. So I buy a house. I, uh, I have a title, I have a policy that says I own this property and all of a sudden I.

    What are possible things that we could find? Good question. Uh, we, we, uh, insured a couple properties in Mapleton a couple of years ago. It was a brand new subdivision. So a surveyor went out, surveyed the property, the developer went out and developed the property, made lots. These were very large, lots of Mapleton, three quarter acre lots at butted up against a canal that was owned by the US government. Well, they used the surveyor. The city signed off on it, survey or signed off on it, the developer signed off on it. It was planted, recorded with the county new plat. This is your lot. So people go out and buy this lot. They think they have a three quarter acre lot. Thinks everything’s good, everything’s great. They build their house, they put landscaping in, they put a nice barn in the back because there’s a very large lot.

    It was live in Barn, uh, you know, opened up doors really nice. Well, two years after owning their home, the US government comes out and starts putting stakes 45 feet inside of their backyard, inside of, you know, all their landscaping right in the middle of the grass. And they say, we own this property and you as a homeowner, the US government says, we own this property. This is US government property. You as a home owner going, well, wait a second, I have this lot. I’ve built this beautiful, you know, it was approved, approved. It’s already been signed off by the city. It’s been signed off by the surveyor. They had title insurance, good reason, uh, example of why you would get title insurance. Uh, it turned out that the surveyor used a survey that was in 1930, did not use a survey that was done by the US government was done back in 1912.

    US government was going off a survey that was done in 1912. And so according to that survey, they owned all that property. So who won? So here’s. what happens in those situations. So it wasn’t an easy fix. So in with, into the US government owned the property, it took to act an act of Congress to be able to purchase that property back from the government. It took over three years to be able to purchase the property. We had to get Jason shaphis involved to help us to be able to purchase the property from the US government so that they could get that back. Now. It was a three year process, you know, very frustrating for a home buyer as well. All of a sudden you think that you have this property and now there’s these stakes that are being put in the back of the property.

    You don’t know if you want to do more development back there because you don’t know exactly what’s going to happen. Well that was a pretty big example, I thought you were going to tell me something like that. Mechanical. One item that comes up quite often, and this is the one that is probably the scariest one for me as a, as a title owner, is a deeds that are signed by grandma and Grandpa that are held inside of a safe. So grandma and Grandpa, but uh, you a sign a deed and they sign it over to Johnny, you know, son Johnny and they just put it inside of a safe and it’s never recorded. The county recorder’s Office. Well, years down the road they still own the property. They go and they’re going to sell the property. But Johnny knows about this deed that’s inside the safe.

    And he goes and records. You’re right before the end of the for the other properties happening and sometimes that will mess up the transaction because all of a sudden johnny owns the property instead of the trust because he recorded prior to the other document being recorded and so that’s the one that kind of scares us sometimes because sometimes we don’t know of deeds that are out there that could be recorded after the fact or even before the fact, right before the fact. Well then let me ask you, because you brought this up when we first got here, is vesting. Vesting is how you’re going to own the property. Whether you’re going to own it personally in your own individual name. Are you going to own it with a Wife? Are you going to own it with a sibling or are you going to own it with a child?

    Are you going to put it into an LLC or are you going to put it into a family trust or as a corporation going to own it? Vesting is whoever is going to be the, the end owner of the property. Uh, typically if a husband and wife are purchasing property, most likely you’re putting in what’s called joint tenancy. So my wife’s name is Lisa, so Dan and Lisa Hall own our property as joint tenants, as husband and wife, joint tenants. If I was to pass away, my wife would own the property without having to go through probate. Great scenario. Here’s, here’s the, uh, the downside of that. Let’s say my wife and I go on vacation and we’re in an airplane and the airplane goes down. We both die. We own the property as joint tenancy, but we have both passed away. It’s now going to have go through probate because we both passed away.

    The better scenario, if you’re able to set up a family trust, we as trustees, my wife and I can be trustees of the trust and we have a successor trustee. If we go down in an airplane crash together and its own in our family trust or successor trustees can take care of the property without going through probate and they’re able to do whatever our wishes are as a husband and wife to be able to transfer that onto our children or whoever we want the property to go to. Oftentimes too, you’ll see where maybe either a wife or a husband will be the only one on top. Getting a loan because maybe only one of one of them are working or credit issues or credit issues we see as well. Um, it’s good to know what the spouse’s name is, whether or not they want to put it into joint tendency.

    A reason you wouldn’t want to put it into joint tendency is let’s say maybe your husband is a doctor and he could be sued very easily or he has judgements against his name. You wouldn’t want to put it in joint tenancy because soon as we put it into joint tenancy, any judgment of any spouse that you’ve put on title those judgments have now what attached to that property for eight years. So if you have judgments in your past or your bankruptcy or anything like that in the past little while, you may not want to put the property into a vesting into that individual’s name. Okay. Now, one more question I want to ask you is, is uh, uh, how much does all this cost? What someone has kind of come here as a buyer or a seller is the buyer. We mentioned seller pays for a owner’s policy, but does the buyer pay anything?

    The buyer would, if they’re getting a loan. If a buyer is getting a loan from a bank, a bank is going to require that you purchase what’s called a lender’s policy. Now Lender’s policy, and that’s through you guys. That’s through us as well. A lender’s policy is 40 percent cheaper than an owner’s policy, and what a lender’s policy does is it’s a guarantee. The lender that that lien that they’re taking out, that mortgage, that taking out is in first lien position. In the case that the buyer is not able to pay the mortgage and they have to foreclose the property, they want to make sure that they’re first in line to be able to get the property back and that not somebody, you know, somebody else is not in line in front of them. So that policy is going to be required by the lender and again, that’s a 40 percent discount on what an owner’s policy would be

    and the buyer pays for that. Okay. Any rough estimates on what those things cost? So it’s, it’s. So we’re regulated by the State Insurance Department. Uh, almost all title companies are very, very similar in price because we are really regulated by the State Insurance Department. Uh, roughly $100,000 is going to be on a lender’s policy is going to be somewhere in the range of $600 for $100,000 in it. And for 200,000 is going to be about 850. It doesn’t go up as much as much. So it’s not going to double or triple or anything like that. It goes up gradually. Some sort of Matrix, so there is a rate sheet that’s done by the underwriter and we just go off of exactly what the purchase price is and some most, most companies as far as like why they would use you as far as pricing about the same pricing is about the same, uh, for, for most title companies.

    There’s, you know, in, in, in, in any industry there’s, there’s the, you know, real expensive, there’s the ultra cheap and then there’s everybody else is right there in between them. You know, we’re right, we’re right in put access title has Dan, right? That’s right. So, and you know that that’s something that’s unique about our company, that we really are quite, uh, that we really enjoy that we like that. I think that sets us apart a little bit is I talked to you a little bit about the two different licenses that you have to have inside of title and agency. Most places that you’re going to go and close with either have one license or the other. Everybody at my office. So I have four licensed escrow officers and we are all also title officers. So we have both licenses on both sides and why that’s important is when you’re at the table and a question comes up about the title is, you know, is there access issues, is there an easement on my property instead of the escrow officer at the table saying, Hey, he asked my title department on on that, everybody on my staff here’s going to be able to answer that question at the table because they also are title officers as well, so they’re not gonna have to send it to the title, title side of things and ask those types of questions.

    I’m trying to find that information out so we have a lot of experience here at our office. All right, well I could vouch for that too. It’s been good so far. Great. Okay. Well, uh, thanks for watching. If you like this, give us a thumbs up, subscribe and follow us. We can give you more good content. If you have questions, please ask them in the comments and we’ll try and get to them. Thanks. Take care.

    Trackback from your site.

    Leave a Reply