5315 Lee Highway   

Arlington, Virginia 22207

703.531.1088 phone

The Process

Before Settlement | During Settlement
After Settlement | Title Search and Title Insurance

Before, During, and After the Settlement

Chatham Title will begin the process leading up to settlement upon receipt of either a request for title from a lender (for refinance) or a sales agreement from a realtor (for purchase).   Once the file has been opened, and the process has begun, a number of tasks are set in motion. 

BEFORE

As information is collected by Chatham Title, the HUD 1 Settlement Statement will be updated.  Real Estate agents working with the buyer and seller will receive a weekly update from Chatham Title that includes a preliminary HUD 1 as an attachment.  The preliminary HUD 1 will help sellers anticipate the amount of their proceeds and will help buyers anticipate the amount of money they must bring to the settlement table.

A title search is ordered.  This task is performed by an abstracter who goes to the appropriate court house and reviews the history of ownership for the property.  The abstracter reports back to Chatham Title with what is called an abstract of title which provides us with the chain of title along with information regarding any unreleased trusts or judgments recorded against the property.  A FULL SEARCH is ordered for a purchase, which means the abstracter will search back 40 years.  A BRING DOWN is ordered for a refinance, which means the abstractor will search back to the previous Deed of Trust recordation (usually the previous refinance, but sometimes the purchase of the property) to make sure that the title continues clear from that point forward.

The title search is examined by an attorney to verify that the title is clear of any defects.   If the chain of title is not clear, Chatham Title will investigate any and all defects and will take steps to explain or clear defects so that a "clear title" can be delivered at settlement.  All questions concerning title must be satisfactorily explained to Stewart Title in order for them to underwrite title insurance.  Most common among defects are unreleased trusts which occur when a loan is paid off but not released of record.  To clear an unreleased trust, Chatham Title will ask the lender to provide evidence that the loan was paid in full and will record a certificate of satisfaction to release the lien. 

Once clear title is established, Chatham Title will prepare a title insurance binder promising to issue an owner's title insurance policy to the buyer(s) and a lender's title insurance policy to the lender.  The lender's binder will be required before they will release loan documents.

For a purchase, a survey company will be contracted to conduct a survey.  This will be required as a condition of any loan application.

If the property is located in a building or development that includes a homeowners' association, a written report will be required from the home owner association (HOA) stating the status of the account for that property.  Dues and assessments should be up-to-date at settlement.  If a delinquency exists, delinquent dues, fees and penalties will be collected at settlement from the seller and paid to the HOA by Chatham Title.

If the property is a condominium, a certificate of insurance will be requested from the building management company as proof that an acceptable master insurance policy is in place.

The lender will be asked to provide a copy of their good faith estimate. This will be used in the preparation of a preliminary HUD 1 Settlement Statements to estimate lender costs associated with the loan.

The closing will be scheduled with the lender.  Once scheduled, Chatham Title will provide the lender with an insurance binder, insured closing letter, survey, termite report, preliminary HUD 1 and any other documents they require prior to issuing the loan package. 

Payoff demand statements will be requested from the current lender(s) to satisfy all current liens against the property.  The payoff amount sent to each lender is determined by their demand statement.

Final loan packages, including final lender instructions, will be received by Chatham Title, usually via e-mail or FedEx.  Occasionally, local lenders will send packages by courier.  Once received, Chatham Title will confirm that all lender instructions have been followed for the HUD 1 Settlement Statement and other documents.  Finally, the loan package will be organized, prepared for signature and copied for the buyer. 

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DURING

A settlement (also called a closing) finalizes all aspects of the loan transaction.  At settlement, Chatham Title acts as an agent for the lender to obtain and notarize borrower signatures. 

The settlement will begin with any discussion needed between the buyer and seller and their agents regarding any issues such as the pre-settlement walk-through.  If there are no issues, then the meeting will proceed.

The HUD 1 Settlement Statement is the first document presented for signature at settlement.  It includes all financial details of the sale.  Disbursements by Chatham Title are directed by the HUD 1. 

Sellers will be asked to sign about six documents, the most important of which is the Deed. The property ownership is changed once the Deed is signed, delivered and accepted by the new owner.  Chatham Title will record the Deed at the appropriate courthouse as public notice that the transfer has occurred.  The Deed should be signed (and dated) before any of the buyer documents are presented for signature. 

After signing their documents, the sellers have completed their side of the transaction and can be excused from the meeting if they choose.  Keys, garage door openers, etc. should be left with the settlement agent and given to the buyer only after the loan package(s) have been properly executed.

The buyer side of the transaction includes many more documents, most of which are prepared by their lender(s).  Of those documents, the Deed of Trust will be recorded at the appropriate courthouse by Chatham Title.  Buyers must provide evidence of a bank wire transfer of funds or certified funds in the amount indicated on the HUD 1 Settlement Statement.  The State of Virginia requires liquid funds in order to record a real estate transaction, so personal checks cannot be accepted.

For most settlements, lenders will allow title insurance policies to be prepared as part of the settlement package and delivered to the buyer at closing and to the lender when the signed loan package is returned.   

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AFTER

Chatham Title staff will sort and organize signed documents.  All documents will be electronically scanned and saved as digital files on CD and will be delivered to the buyer and seller.  Digital documents will also be stored in the Chatham Title case file.

The Deed and Deed of Trust will be sent to the appropriate courthouse for recordation, along with payment for transfer taxes and clerk's recordation fees.

These recorded documents will be returned to Chatham Title several weeks after they have been recorded.  Chatham Title will return the original recorded Deed (with Clerk's stamps) to the new property owner.  The recorded Note and Deed of Trust will be sent to the new lender.

All loan documents will be returned to the lender(s) according to their specific instructions.  Usually, this means overnight FedEx.

All loans are paid off.  Lenders will receive a check in the amount they have reported is due to pay their loan in full.  Payoffs are usually sent via FedEx to allow tracking and provide evidence of delivery.  In most cases, lenders will file their own certificate of satisfaction which releases their lien on the property.  Ninety (90) days after settlement, Chatham Title will follow up to make sure the release has occurred.  If it has not, Virginia law allows Chatham Title to assume this responsibility.  We will prepare and file a certification of satisfaction to release the lien and clear the title.

Any taxes that are due must be paid in order to deliver a clear title.  These taxes will be detailed on the HUD 1 Settlement Statement.  Collection of current real estate taxes at settlement will vary depending on the time of year and the municipality.  The rule is, if settlement occurs within a 60-day window preceding the due date for semi-annual taxes, Chatham Title must collect and pay them.  When this happens, there is usually a lender escrow account surplus that will be refunded to the seller.  This refund must occur within 30 days of the settlement date.

Chatham Title will pay any current or delinquent homeowner association dues, as reported on the HUD 1, directly to the homeowners association or management company.

Chatham Title will pay any amounts identified on the HUD 1, such as contractor invoices or realtor reimbursements for work done to the property prior to settlement.

Seller proceeds will be delivered to the seller as soon as Chatham Title has been notified that the transaction is on record.  In some cases, this could occur on the same day as settlement.  Sellers will instruct Chatham Title as to how they wish to receive their proceeds. 

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Title Search and Title Insurance

Title records are those documents which affect an owner's title, interest, or rights in or to real property, including deeds, mortgages, deeds of trust, liens, zoning and building ordinances.  By custom, all title records are open for anyone to inspect during normal business hours.  Typically, title records are kept in a courthouse and are under the direct control of the county or city clerk.  In order for a document to be recorded on the public record it must be drawn and executed in conformity with the provisions of the recording statutes of the state in which the land is located.

Recording acts specify what documents affect rights in land (deeds, mortgages, liens, etc.) and require that they be recorded in the city or county where the land is located.  Recording acts create a local public record available to property owners, prospective purchasers, and the general public.  Following the requirements of recording acts provides constructive notice of encumbrances to all interested parties, regardless of whether they actually examine the records. 

TITLE SEARCHES

When Chatham Title orders a title search, an individual known as an abstractor physically examines the public record.  This is done in order to determine whether title is marketable, or free from defects.  The book in which deeds are listed is called the Grantor-Grantee Index. Title examiners must research the public record back 40 years from the date of examination to ensure that there are no defects or encumbrances in title.

The results of the completed title research is documented in an abstract, a large portion of which is the chain of title. The chain of title traces back from the present owner to each previous owner who has had an interest in the property.  The abstract is then sent to Chatham Title where it is examined to make sure it is free of title defects.  Based on the title search and examination, Chatham Title will prepare an insurance binder and an insured closing protection letter for the lender.  These items are usually required by a mortgage company in order for the buyer to obtain a loan to purchase the property.

The chain of title must not be broken.  If a past owner's rights are questionable, then all subsequent owners have questionable title.  Any document, claim, unreleased lien, or encumbrance that makes clear title doubtful is a cloud on the title.  Some clouds are minor, while others can derail an entire transfer.  While the cloud remains, the current owner cannot transfer satisfactory legal title to a prospective purchaser. 

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TITLE INSURANCE

Chatham Title will issue title insurance which is underwritten by Stewart Title. Title insurance protects the policy holder against title defects or encumbrances that may be discovered after property is transferred.  In the event such defects are discovered, the insurer promises to reimburse the policy holder for the loss, if any.

If Chatham Title, after its investigation, feels that it has an insurable title, it will issue a policy that will protect against losses arising from title defects such as forged documents, undisclosed heirs, misfiled documents, confusion arising from similarity of names, and mental incompetence.  Title insurance policies include a list of exclusions.  These exclusions generally include rights of parties in possession (including unrecorded easements), any facts that an accurate survey would reveal, taxes and assessments not yet due or payable and zoning and government restrictions.

A "Lender's Title Insurance Policy" will be issued by Chatham Title in the amount of the 1st trust loan naming the lender as insured.  A lender's policy will be required as a condition of every commercial 1st trust loan.  Second trust loans may also require an insurance policy. 

An "Owner's Title Insurance Policy" will be issued by Chatham Title to protect the new property owner against undiscovered title defects.  The Owner's policy is in the amount of the purchase price which is the buyer's exposure should a claim be made against their right of ownership.  The premium for owner's coverage is a one-time expense and is only available when the property is purchased.  Owner's coverage is voluntary and may be waived by purchasers.  Purchasers should discuss title insurance coverage with their real estate agent, attorney or title insurance agent to make sure they fully understand the risk of waiving this option.   

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