Deeds and Title Insurance
Deeds transfer ownership of real estate from one or more parties to one or more other parties. A person transferring ownership is the “grantor.” A person gaining ownership is the “grantee.” In Pennsylvania, when real estate is owned by two legally married persons, it is owned by “the entireties.” When one spouse dies, the survivor becomes the sole owner of the entireties property.
Two or more unmarried persons may own property jointly. If they choose to title the property as “joint tenants with a right of survivorship,” when one dies the remaining owners automatically gain the dead person’s interest. If they do not provide for survivorship, a dead owner’s interest passes to his or her estate.
If you are buying real estate, you will want be sure that the person selling it actually owns it! You also need to be sure that what is being sold is the same as what is described in the existing deed. It is very important that a deed contain a full and accurate legal description of the property that is being conveyed.
A deed may not convey more than what the grantors actually own. A deed should not convey less than what the parties have bargained for. Like any other contractual transaction, in any dispute over what has been conveyed the courts will try to determine the actual intent of the parties. Examining the “chain of title” – the history of title transfers – is critical; it is also something that should only be done by persons with training in title searching.
The expenses involved in transferring title are fixed by law. In Pennsylvania, each department of records/recorder of deeds office has a recording fee. In addition, generally speaking, you will have to pay a transfer tax, the amount of which is based on the value of the real estate. A transaction may be exempt from transfer tax if it is between certain family members. In addition, you are likely to be charged a fee by the attorney or real estate professional who prepares the new document for you.TITLE INSURANCE
Most people buying homes need mortgage financing. Mortgage companies and other lenders will require you to buy a policy of title insurance as a condition of giving you a mortgage loan. It is also advisable to buy an owner’s policy for a small additional charge.
The owner’s title policy guarantees that the property being purchased is free from undisclosed liens or claims. If it turns out that there are undisclosed liens or claims, the title insurer can be held responsible for actual loss in an amount up to the limits of the policy. Not only does this protect an owner against such problems during the period of ownership, it protects the owner’s ability to re-sell the property at a later date. For example, your home may not be marketable if a potential buyer discovers that the person you bought your house from did not actually own the property!
The mortgage lender requires a lender’s policy because the lender’s ability to foreclose on a loan depends on the title being “clean.” Title insurance protects a lender in the event there have been forged documents in the chain of title; clerical errors in the public records; failure to find prior recorded mortgages; failure to discover prior recorded liens and judgments; and other circumstances that impair the value of the real estate being mortgaged.
In Pennsylvania, the fee paid to title insurers is set forth in a uniform schedule. The amount paid to the insurer is in accordance with the price being paid for the property. While it may be tempting to save the cost of the one-time payment, in the long run buying title insurance is the only sensible course. Further, this is true whether you are buying a house from a complete stranger or from a relative. It is not unusual for family members to sell property to other family members and simply give them a “quitclaim” deed. As the grantee in such a transaction, you may discover ten years later that no one will buy your house because no title insurance company will sell the buyer a policy. The safer course when buying from a relative is to insist on a standard warranty deed and to buy title insurance to protect your interests.
At Pinnola & Bomstein, we can assist you in all stages of the purchase or sale process. We can answer your questions as to how the process works. We can assist you in negotiations over the terms of a transaction. We can help you find a title agent to search title and obtain title insurance. We can work with title agents and mortgage lenders to iron out problems to pave the way to a smooth closing. We can attend closing with you and make sure that your interests are fully protected before you sign on the dotted line to conclude the transaction.