In Maine they pass papers; in California they close escrow. It’s closing, settlement, transfer of title—the moment when the seller gets the money and you get legal ownership and the front-door keys. In few real estate matters does local custom vary so widely. In your area, closing may be conducted by attorneys, title companies, an escrow service, a lending institution, even by real estate brokers. It may take place at the county courthouse, a bank, an attorney’s office, or another location. Sometimes everyone sits around a big table; sometimes buyer and seller never meet. Your purchase contract provides a blueprint for the final transfer. The seller’s main responsibility is to prove title, to show that you are receiving clear and trouble-free ownership. Depending on the mortgagee’s requirements and local custom, the seller may prove title by furnishing an abstract and lawyer’s opinion, title insurance, or, in some states, a Torrens certificate. Two types of title insurance are available. A fee policy, which may be required by your lender, protects the mortgagee—the lender—against loss if other parties challenge your ownership. If you need the policy for your mortgage loan, you may be asked to pay for it. The premium is a single payment; good for the whole time you own the property. For a relatively small additional fee, you can purchase at the same time an owner’s policy, which protects you personally. An abstract is a history of all transactions affecting the property, researched from the public records (see Figure 12.1). Typically, the seller must furnish an up-to-date abstract and forward it to you (better yet, to your attorney) for inspection before the closing, just to make sure no problems exist. Where escrow or title companies handle closings, many of the same procedures are followed within the company. A third method of proving title, the Torrens system, is used in some states and provides a central, permanent registration of title to real property. |
