FIRST TIME HOME BUYERS
What is title insurance?
Title insurance is an insurance that is issued by the title attorneys to protect the client's ownership interest from any title defects that may exist in the title history, that has not been discovered Title insurance, unlike other insurance, protects the homeowner’s investment from preexisting issues, that have not yet been discovered. Title Insurance is a one-time fee, paid at the time of purchase.
There are two types of Title Insurance:
Lenders Coverage - required at the time of purchase and the premium charged is based on the loan amount. This insurance protects the lender from any undiscoverable title defects and will last for as long as the mortgage is held.
Owners Coverage – optional policy issued to protect the homeowner's equity interest from an undiscoverable title defect. The premium charged is based on the sales price, minus the amount of coverage being issued for the lender, allowing a discount to homeowners that obtain a simultaneous owners’ policy at the time of closing with a mortgage. The owner’s policy will protect the homeowner for as long as they own the property.
Do I need title insurance if I’ve had a title search?
Yes, we get this question all the time but it is highly recommended that a title policy is issued for every purchase. The reason that you still need a title policy is because a title search can only discover title issues that exist within the town records. Often times defects are a result of mis-indexed documents or mistakes made by the town which are not discoverable through normal due diligence. Further, fraud is not discoverable unless or until a claim for ownership has been made against the property. In fact, more than 50% of all title insurance claims paid out, on a national basis, are a result of fraud, and therefore despite the thorough title review conducted prior to closing there may still be a number of title defects that could come up late, thus necessitating the need for title insurance.
Can I choose my own lawyer?
Yes, Rhode Island law protects you to select your own attorney to search your title. If you are working with a Lender, then the Lender may have a restricted list of attorneys that can close the loan; known as “Closing Attorneys” you may still select your own Title Attorney to represent you in the transaction. Our office represents hundreds of Lenders and often handles real estate transactions in a dual capacity as a Closing Attorney for the Lender & Title Attorney for the Buyer, thus avoiding any additional costs associated with having multiples lawyers involved in a transaction. .
What can I expect from my real estate agent:
Your real estate agent is a professional who will be equipped to oversee your house hunt, negotiations, and the overall purchase process. Currently, realtors draft the Purchase & Sales Agreement on behalf of buyers and assist with connecting buyers to other industry professionals, such as home inspectors, mortgage lenders, and real estate attorneys.
Should I have a home inspection or other tests?
Home purchases in Rhode Island are “AS IS” and as such the state legislature wants to protect consumers, before purchasing. RIGL 5-20.8-4 provides all buyers with the right to conduct home inspections within 10 calendar days, exclusive of holidays and weekends. This protection automatically applies to all purchases, unless this requirement is waived within the Purchase & Sales Agreement. There are a number of tests that can be completed, including but not limited to; pest inspections, radon testing, flood inspections, and structural reviews. It is strongly recommended that all Buyers conduct all tests available to ensure a thorough understanding of the potential investment.
What can I expect at closing?
All parties usually attend a closing and sign the Settlement Statement which is a shared financial disclosure identifying all costs, and monetary adjustments associated with the transaction. It is also important that a final walkthrough of the property is completed prior to the closing to confirm that the condition of the property is acceptable.
At closing the Seller typically will sign the deed transferring ownership to the new buyers. The Buyers are responsible for singing all of their loan documents and for bringing the balance of their down payment and closings costs, as may be applicable, to the closing in certified funds. All monies are paid to the Closing Attorney who then makes all disbursements consistent with the Settlement Statement to the Sellers, Agents, municipality, banks, and other applicable parties.
What is a recording?
All title documents are required to be recorded in the Land Evidence Records in the respective town (or county for Massachusetts property) in order to be deemed complete. The land evidence clerks' role of recording all original documents presented is how title is officially impacted. Therefore it is when the Deed is presented for a recording that ownership is officially transferred, and upon the recording of the Mortgage interest is when a new lien will arise against the property. It is the title attorney’s responsibility to ensure that all documents are recorded in a timely fashion. Generally, real estate transactions are recorded the same day.