Lender’s title insurance does not protect the property owner. The owner must purchase an owner’s policy for that valuable protection. Because of a simultaneous issue premium rate, the cost of an owner’s policy is minimal and is paid only once, at closing. The most thorough and competent title examination cannot protect against loss from hidden title defects created by misfiling and mis-indexing in the public records. Other covered risks are called “off-record”, meaning they are not created in the public records.
*Information courtesy of Chicago Title Insurance Company
Generally speaking, it is a contract of indemnity that is often required by lenders in order to insure the lender that the owner of the property has good legal title to that real estate, that the lender has a valid lien, and to compensate the lender in the event of a loss arising from the covered risks set out in the policy. Buyers purchasing real estate often choose to obtain an owner's title insurance policy to ensure their interest in the real estate.
Generally speaking, coverage is afforded up to the time that the insured party received their interest in the property. In other words, the title insurance policy insured that as of the time the deed and/or mortgage were recorded, the owner of the property has good title in the property. (There are some “enhanced” policy types that afford limited coverage for matters occurring after the documents are recorded.
Title Insurance is the most popular evidence of acceptable title as it affords more coverage than other forms of title verification, such as an attorney’s opinion letter on the status of title. Title Insurance goes beyond other forms of title verification in that it covers hidden title defects, mistakes in the public records, and is not subject to the same statute of limitation issues as other forms of verification.
Unlike other forms of insurance that require that premiums be renewed annually, the title insurance policy had a one time premium that lasts for the life of the policy.
Individuals issuing title insurance must be licensed by the South Carolina Department of Insurance and approved by a title insurance company.
*Information courtesy of Chicago Title Insurance Company
Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special issues of practice, and problems not present in other transactions. A real estate lawyer is trained to deal with these problems and has the most experience to deal with them.
In the typical home purchase, the seller enters into a brokerage contract with a real estate agent, usually in writing. When the broker finds a potential buyer, negotiations are conducted through the broker, who most often acts as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written contract for the sale, the purchase agreement. The buyer then obtains a commitment for financing. Title is searched to satisfy the lender and the buyer. Finally, the property is transferred from the seller to the buyer, and the seller receives the purchase price bargained for in the contract. This seems simple, but without a lawyer, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise.
A lawyer can help you avoid some common problems with a home purchase or sale. For example, a seller may sign a brokerage agreement that does not deal with a number of legal problems. This happens quite often; realtors often use standard forms, expecting that they will cover all circumstances or will be easily customizable for unusual circumstances.
In the absence of an agreement to the contrary, the seller may become liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. If the agreement allows the seller the right to negotiate on his or her own behalf, for example, you may avoid this problem. A lawyer can explain the effect of multiple listings. He or she can negotiate the realtor’s rights if the seller withdraws the property from the market, or can’t deliver good marketable title.
The seller should have the advice and guidance of an attorney with respect to a brokerage agreement. Even if the agreement is a standard form, its terms should be explained to the seller and revised, if necessary. An attorney should also determine if the agreement was properly signed.
Even if a lawyer is not needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of the transaction. To a seller, the tax consequences may be of critical importance. For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances.
The purchase agreement is the single most important document in the transaction. Although standard printed for ms are useful, a lawyer is helpful in explaining the form and making changes and additions to reflect the buyer’s and the seller’s desires.
Most buyers finance a substantial portion of the purchase price for a home with a mortgage loan from a lending institution. The purchase agreement should contain a carefully worded provision that it is subject to the buyer’s obtaining a commitment for financing.
Again, it is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. In addition, there are many kinds of mortgages that may be available. Mortgage loan commitments and mortgage loan documents are complex. Lawyers can review and explain the importance of these various documents.
After the purchase agreement is signed, it is necessary to establish the state of the seller’s title to the property to the buyer’s – and the finance institution’s – satisfaction. Generally, a title search is ordered from an abstract or title insurance company. In such cases an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy.
Assuming you are in an area where title insurance is customary, an attorney can help review the title search and explain the title exceptions as to what is not insured, and determine whether the legal description is correct and whether there are problems with adjoining owners or prior owners. He or she can also explain the effect of easements and agreements or restrictions imposed by a prior owner, and whether there are any legal restrictions which will impair your ability to sell the Property.
The title search does not tell the buyer or seller anything about existing and prospective zoning. A lawyer can explain whether zoning prohibits a two-family home, or whether planned improvements violate zoning ordinances.
The closing is the most important event in the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer, who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can be assured that these documents are appropriately executed and explained to the various parties.
Perhaps the most important reason to be represented by an attorney is conflicting interests of the parties. Throughout the process, the buyer’s and seller’s interests can be at odds with each other, and even with those of professionals involved in the sale. The broker generally serves the seller, and the lender is obtained by the buyer. Both want to see the deal go through, since that is how they will get paid. Neither can provide legal counsel. The respective lawyers for the buyer and seller will serve only their own clients’ best interests. Seeking the advice of a lawyer is a very good idea from the time you decide to sell or to buy a home until the actual closing.
*Courtesy of Findlaw
A Will makes it possible for the testator to:
• Designate how much and to whom all property owned, real or personal, is to be distributed after death.
• Leave property to family members equally or in varying amounts based on need or the affection for or worthiness of the chosen recipients.
• Leave property to someone who would not take under intestate succession, e.g., close friends or special and faithful employees.
• Make gifts to the testator’s church, or to charitable, educational, scientific, and health institutions or organizations.
• Subject to the approval of the probate court, nominate a personal guardian to care for any minor or incompetent person and a property guardian to manage the property inherited by the minor.
• Appoint a trustee and create testamentary trusts which, through proper estate planning, can diminish death taxes, e.g., estate taxes.
• Nominate a personal representative and grant the nominee special powers relating to the administration of the estate.
• Avoid many legal problems that may accompany an intestate’s estate administration, e.g., a will can waive the bond requirement for the appointed personal representative.
A Durable Power of Attorney is a written document which is recorded in the county which you reside. It allows another person or persons, called an agent or attorney in fact, the power to act legally on behalf of the person, called the principal, who authorizes and grants the power. The person appointed does not have to be an attorney. Spouses usually name their husband or wife to be their agent. A power of attorney granted during the principal’s life terminates at the moment of death.
A Health Care Power of Attorney (or Living Will is a written document that alleviates an individual's concern and anxiety about becoming incompetent due to aging, illness or accident. This document allows a competent person to determine, in advance and in writing, the kind of future medical care and treatment he or she wishes to have in case they become incapacitated or terminally ill. They will use this document to appoint an agent or proxy to exercise your wishes to continue or discontinue medical treatment.
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