Public Records, Titles, and Closings Flashcards
public records
county’s collection of documents relating to real estate
caveat emptor
latin phrase: “let the buyer beware”
a buyer purchases the property as-is, without warranties of title or of condition of the property
constructive notice
notice given to the world by recorded documents
actual notice
written or spoken instructions given to the public as notice
direct knowledge
when an individual has actual notice of any information
suit to quiet title
court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title
evidence of title
documentary proof that the seller of property is in fact the owner and has good title to the property
four forms of title evidence
- abstract of title and attorney’s opinion
- title insurance policy
- Torrens certificate
- certificate of title
abstract of title
a brief history of a piece of land, and it is used to determine whether or not there is any kind of claim against a property
attorney’s opinion of title
a written statement by an attorney regarding the identity of all current title owners, lien holders, and possible claimants of a particular land
title insurance policy
a policy meant to protect home buyers and mortgage lenders from damages or financial losses caused by a bad title due to title defects
Torrens certificate
not used in NJ
a document that assigns unassailable ownership of real property to the registered titleholder
certificate of title
an official state or municipal-issued document that identifies the owner(s) of personal or real property
marketable title
title that is free from significant defects
Real Estate Settlement Procedures Act (RESPA)
requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process
affidavit
written statement sworn to before an authorized officer
payoff statement
a statement prepared by a lender providing a payoff amount for prepayment on a mortgage
escrow closing
closing of a transaction through escrow agent
rarely used in NJ
closing statement
detailed cash accounting of a real estate transaction showing all cash received, and charges and credits made, and all cash paid out
debit
a charge
credit
an amount entered in a parties favor
realty transfer fee
seller must pay 1% of the sales price upon recording the deed
origination fee
an upfront fee charged by a lender to process a new loan application
assumption fee
the charge paid by the buyer who assumes a mortgage on a property
reserve
sum of money set aside to be used for a particular purpose
prorations
credits between the buyer and seller at closing (interest, taxes, utility bills)
arrears
payment after the service has been rendered
accrued items
items to be prorated that are owed by seller but will be paid by buyer (i.e., interest on mortgage loan, water bills)
prepaid items
payments made in advance of the monies due to obtain your new loan
three methods of calculating prorations
- yearly change is divided by 360-day year
- monthly charges divided by actual number of days in the month of closing
- yearly change is divided by 365 to determine daily charge
are you required to record your real estate ownership history?
no
cloud on title
a claim or encumbrance that affects the ownership of a property.
is a deed proof of title?
not always, it depends on the type of deed and if the deed conveys interest in property
what two closings happen at the end of sales transactions?
- closing of buyer’s loan
- closing of the sale
what might a lender require before closing to protect their loan?
- insurance policy
- fire/hazard insurance
- certificate of occupancy (if required)
- inspection reports
- establishment of reserve, escrow accounts
- representation of their own attorney
kickback
illegal payment IRS doesn’t see
exit tax
a prepayment of the estimated tax you owe on the sale of your property
prepaid items
credit to the seller
Other expenses involved in real estate transactions
- broker’s commission
- attorney’s fees
- recording expenses
- transfer tax
- title expenses
- loan fee
- tax reserves and insurance reserves
what is included in a Closing Disclosure?
1.costs to close
2. itemized closing costs
3. analysis of any changes from original loan estimate
4.disclosures
5. summary of loan payment
when does Closing Disclosure need to be provided?
at least three business days before closing; minimum seven days between loan estimate and closing
Federal Flood Insurance Program
federally regulated lenders must require flood insurance on any property secured by mortgage in ares of high risk for flooding
