Advantage Title, LLC.
Frequently Asked Questions

Lower interest rates have motivated you to refinance your home. The lower rate may save you a tremendous amount of money over the life of the loan, but you should also expect to pay the lender then typical closing costs associated with any new loan including service fees, points, title insurance protection and other expenses.

To the lender, a refinance is no different than any other home loan. Your lender will want to insure that its new loan is protected by title insurance just as the original lender required. Therefore, when you refinance you are buying a title insurance policy to protect your lender for this specific transaction.

Most lenders generate loans and then immediately sell those loans to secondary market investors, such as FannieMae. FreddieMac. In order to protect its security interest in the loan, the investor requires title insurance coverage. Even those lenders who keep original loans in their portfolio are wise to get a lender’s policy to protect its investment against title related defects.

Perhaps. Who pays for the lender’s policy on a purchase loan varies regionally and by the terms of individual contracts. However, even if you did buy a lender’s policy when you purchased your home, the lender’s policy remains in force only during the life of the loan that was insured. If you refinance, the old loan is paid off (the “life” of the loan expires) and a new loan is issued for with the lender will require a new title insurance policy.

When you bought your home, you may have purchased a homeowner’s title policy. The homeowner’s policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect its new security interest in the property. Thus, you are buying a policy to protect your lender for this transaction, not a new homeowner’s policy.

Since the time that the original loan was made, you may have taken out a second mortgage on the house or had mechanic’s liens, child support liens or legal judgments recorded against you – events that could result in serious financial losses to an unprotected lender. Regardless if it has been only 6 months or less since you purchased or refinanced your home, a myriad of title defects could have occurred. While you may not have any title defects, many homeowners do. The only way for a lender to adequately protect itself is to get a new lender’s policy each time you purchase or refinance your home.

An insured closing letter (ICL), also called a closing protection letter (CPL), is issued for an agent by the title insurance underwriter to your lender prior to your closing. This letter is for lender purposes only and is usually not issued to individuals for owner’s title insurance.

The letter is from the underwriter to the lender stating the underwriter will insure the lender against any title claims arising due to the title agent’s non-compliance with the lender’s loan instructions. The premium, if any, is paid directly to the insuring title underwriter.

In other words, prior to the lender’s instructions being issued, the title agent provides to the lender a letter stating the underwriter for the title agent will insure any title-related issues arising out of the settlement that directly affects the loan as a lien against the property being used as collateral for the loan.

(There are some exceptions, i.e. perpetration of fraud, certain lender instructions directing the agent to change terms in the policy, etc.)

As the lender must make sure the closing agent is insured and able to provide title insurance for the loan, this letter must be sent to the lender prior to issuance of the lender’s closing package.

Once the letter is issued and the loan is ready to be closed, the lender provides instructions to the title agent along with the documents for the borrower to sign. This letter does not protect the title agent from recourse – it gives the lender another avenue to recover for any claims arising from the title agent’s action or inaction.

Quitclaim Deed

First of all, it’s called a quitclaim deed, not a quick claim deed. You’re welcome.

A quitclaim deed is an instrument that transfers any interest the grantor has in the property to a recipient.

Warranty Deed

A Warranty Deed is an instrument that transfers real property from one person to another and in which the grantor promises that the title is good and clear of any claims and promises to defend the title against all claim made by anyone.

Special Warranty Deed

A Special Warranty Deed is an instrument that conveys real property in which the grantor (original owner) only covenants to warrant and defend that neither he nor anyone claiming under his has encumbered the property and that he will defend the title against defects arising under and through him, but no others.

Marital Deed

A Marital Deed can be any of the above types of deeds, is normally used in a divorce or separation issue and usually contains specific language referring to any division of the property or settlement agreement issues still outstanding. This deed transfers from one spouse to another.

When a title deed is written for real property, ownership is described using the name of the owner(s), and often a phrase which describes the legal relationship between multiple owners or married persons. The way the names are shown is what the term vesting means.

For multiple ownership, there are three basic ways in which title can be taken. This may vary slightly from state to state. Vesting decisions should always be made with the help of a real estate lawyer.

For a Lender, vesting is very important. The vesting, or how the names are shown on the deed, is how the mortgage must be also vested. If the names or tenancy is not exactly the same, this can cause a default in the security and foreclosure might be impossible.

Joint Tenancy

Joint tenants all own equal interest in a property and have equal rights of possession, and if any joint tenant dies, that tenant’s share is automatically transferred to the surviving tenants. Thus, a joint tenant’s share cannot be inherited. Joint tenants must all take title on the same deed at the same time.

Tenancy in Common

Tenants in common may have different interests (i. e. 30% and 70%, etc.), different rights of possession, and may take title at different times. They may will their share of the property to their heirs.

If a joint tenant sells his share of a property, the new tenant usually takes title as a tenant in common, unless all the previous tenants renew the title with the new tenant as joint tenants. The new tenant in common may will his interest in the property to his heirs.

Community Property

Unless married persons specify otherwise, it is usually assumed that they take title as community property, whether it is stated on the deed or not. A married person may specify on the deed that he or she owns the property sole and separate in order to circumvent this.

Characteristics of community property vary from state to state. Sometimes there is a right of survivorship, as in joint tenancy, and sometimes there isn’t. Some married couples choose  to take title as joint tenants in order to preserve the right of survivorship.

Right of Survivorship

Only offered in a select number of states, such as California, Nevada, North Carolina, Arizona, Alaska, Texas and Wisconsin. In the event of the death of one spouse, Right of Survivorship transfers the property automatically to the surviving spouse.

Probate Required – In all other states that do not offer “Right of Survivorship”, the property must go through a probate process in the event of the death of a spouse.

Living Trust

A living trust is a set of instructions that outlines what to do in the event of the death of the vested owner. It is part of your living trust estate planning tool that outlines instructions and bypasses the probate process. The property must be transferred into a living trust in order for this benefit to take effect.

For Refinance purposes, the underwriter may require the property be transferred from the Living Trust into the individual owner’s names. The Owner’s may then transfer the property back to the Trust post-closing.