What is Title Insurance?
When you buy a home you want to be sure that no one else has an ownership, interest, or claim on your new property. Title Insurance gives you that assurance for a one time fee and protects you from any claims against the property for the duration of the time you own that property.
Title insurance protects against:
- Forgery, false impersonation, and incorrect legal descriptions
- Deeds delivered after death, by persons of unsound mind, minors, or those not properly delivered
- Misinterpretation of wills, deeds, or marital status of grantor
- Undisclosed or missing heirs
- Wills not properly probated, mistakes in recording legal documents
- Record defects, liens, encumbrances, adverse claims or matters not known or disclosed to the new owner that attach before the date of policy Legal right of access
These are just some of the possible defects title insurance will protect you against. There are also extended policies you can get to protect yourself further.
If a claim is made against you, once you have notified the title company of the claim, they will take care of it for you. This includes negotiating the claim, defending the claim in court, all legal costs incurred, and paying the amount necessary to satisfy the claim. You get a lot of peace of mind and security for a small price!
What is Escrow?Escrow is the closing of the real estate transaction. It involves the signing of documents, recording various documents, and distributing the money.
What happens at closing?
Ownership of the property is transferred, title insurance is issued and coverage begins.
- Depending on state and local laws, you may have to pay: Title costs – fees for the title search and owner's or lender’s title insurance. Your own title insurance is an additional fee.
- Title costs are set by the underwriter and are controlled by state regulators. These are set prices based on a percentage of the cost of the property and/or loan. (Title costs are set by the underwriter and are controlled by the state regulators) Re-issue credits are available for anyone who has had title work done within the last two years.
- Settlement fees – costs for the escrow closing usually handled through a title or escrow compnany. Please contact us for a fee quote for your transaction.
- Loan charges – including origination, appraisal and survey fees.
- Taxes and government fees – transfer taxes, buyer’s share of yearly property taxes
Before you authorize the final closing you should review the HUD-1 Settlement or Closing Statement, which provide an itemized list of all closing costs. Be sure you understand them. This is your chance to verify fees, check procedures and terms, and ask any questions.
What is a 1031 Exchange?Section 1031 of the Internal Revenue Code allows a taxpayer to defer capital gains tax normally due on the sale of a property held for investment or used in business or trade by exchanging for another “like kind” investment property.
Why do I need accommodator?
According to regulations, in order to defer the tax liability, at no time can you, the exchanger be in receipt of the proceeds from the sale of your original property. A qualified third party, an “accommodator”, must hold the proceeds during the exchange period. Sun Valley Exchange will prepare the exchange documents and coordinate your transaction with the closing agent or both “legs” of the exchange and maintain your proceeds in an interest-bearing account during the exchange period.
What kind of properties are not eligible?
Primary residence, foreign real property, securities, inventory, vacation homes, and partnership interests.
How much time do I have to complete the exchange?
You have 45 days from the date of transfer of your existing property (relinquished property) to formally identify property to be acquired (replacement property). You have until the earlier of 180 days from that transfer date or until your next tax filing deadline (including extensions) to complete the exchange.
Can any of the proceeds from the exchange account be used for something other than closing on the replacement property?
The accommodator can advance funds from the account for such things as earnest money deposits, appraisal costs, or repairs to the replacement property. It may also be possible to use the funds to construct a replacement property, but these transactions are more complex and require careful structuring and coordination. Please contact us if you are interested in initiating a 1031 Exchange.