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Florida Real Estate Broker Chapter 13 - Closing Real Estate Transactions

Terms in this set (52)

Except for principal payments on the mortgage most real estate expenses such as insurance and Homeowners Association payments are paid in
Advance
to make sure that the property does not have an undisclosed encumbrance., Almost all lenders want a
survey
If the title is broken anywhere on the way back to the beginning (for example, divorce or death in which the heir is not clear), the title company attorney usually
will order
a Suit to Quiet the Title in a special court to clarify any previous claims on the property.
A title search would show that the seller is the
legal owner, and there are no outstanding liens or other claims against the property.
a written history of the property since its beginning
Abstract of Title,
a legal opinion that certifies that the title is valid and correct.
Certificate of Title,
the written opinion of an attorney, based on the attorney's title search into a property, describing the current ownership rights in the property, as well as the actions that must be taken if any, to make the stated ownership rights marketable.
Title Opinion
The opinion of the title can only be provided by
an attorney.
a clear title for the buyer, free from encumbrances, i.e., liens, taxes, HOA fees, etc.
Title insurance ensures
There are two main types of title insurance
owner's title insurance
lender's title insurance
title insurance that protects the property owner from title issues
owner's title insurance
title insurance that protects which protects the mortgage company.
lender's title insurance
owner's title insurance policy, also referred to as the mortgagor's policy is usually based on the
purchase price and will pay for all claims made against the property up to the face amount of the policy. An owner's policy is non-transferable.
A lender's policy is
transferable.
The title search will list all of
the existing liens on the property that are to be paid off at closing on a Title Binder, and it will list any encroachments known by the title company.
A title company will execute a
Title Opinion
Sales commissions are typically paid by the:
seller.
the ability of the owner to transfer the property to the buyer.
mar-ketability of the title
restrictions that regulate the use of the land and the common areas
Covenants, Condition, and Restrictions (CC&Rs)
Since every association is unique, the instances when HOA approval must be sought, and the approval process itself, varies by community. However, the specifications are always outlined in these important governing documents:
• Covenants, Conditions & Restrictions (CC&Rs) stipulate when approval must be obtained.
• Rules & Regulations outline the type of changes that can be made to a property and the specific guidelines under which they must operate.
• Architectural Guidelines provide information regarding architectural changes. Architectural guidelines are usually laid out in a
a commercial real estate closing will include
an assignment and assumption of leases.
an assignment and assumption of leases.
explains that the benefits of any lease transfers from the seller to the buyer. It also transfers future liability for breaches of the lease from seller to buyer and details responsibility for lease breaches prior to the sale. This document also notifies tenants of the change in ownership.
Parties Prior to Closing
The primary parties at the closing are normally buyer, seller, and a closing agent or escrow officer. Other parties who might be present include the title officer, attorneys, brokers or agents, and the lender's representative. It is not necessary for any of these parties to attend the meeting
Performing a _______ search will aid title agents in removing the standard exception for special assessments, service charges, and waste fees from the title insurance policy thereby providing better insurable coverage
municipal lien
A typical municipal lien search involves research into three areas that a typical title search does not cover
(a) unpaid utilities,
(b) code enforcement issues/violations, and
(c) permit issues
a permit lien search for
open and/or expired permit
Florida municipal lien search will uncover code violations. Some of the most common of these unrecorded assessments and liens are:
• Unsafe Structures
• Property Maintenance Violations
• Uncut Lawn Violations
• Abandoned Vehicles
• Illegal Building
• Work without Permits Violation
• Illegal Parking
• Illegal Water Usage
• Meter Tampering
• Environmental Hazards
• Dirty Roof Violations
• Animal Service Violations
Hazard insurance protects you, the homeowner, against
structural damage caused by natural disasters
homeowners' insurance is
financial protection against theft and damage to your home and be-longings sustained in more mundane ways.
documents must be checked for accuracy and delivered. during a closing
• Deed
• Any restrictive covenants of land use
• Mortgage loan documents
• The satisfaction of any existing liens
• Existing leases, if applicable
• Title Insurance documents; binder, commitment, and exceptions
• Home Association and Condominium documents, if applicable
recording the document of conveyance, usually with the
county recorder
Constructive notice
notice given to the public by the records available.
actual notice
express notice of information given in fact
An acknowledgment
is a formal declaration made by the grantor before a duly authorized public official (such as a notary public), that states that the grantor voluntarily signed the deed and that the signature on the deed is the grantor's
if the conveyance is not recorded
it will be considered void as against subsequent purchasers or encumbrancers who act in good faith without actual knowledge of the prior, unrecorded conveyance.
A 3-inch by 3-inch space at the top right-hand corner on the first page and a 1-inch by 3-inch space at the top right-hand corner on each subsequent page are reserved for use ________+
by the clerk of the court; and
Generally, agents are required to report any transaction that consists in whole or in part of the sale or exchange for money, indebtedness, property, or services of any present or future ownership interest in any of the following.
• Improved or unimproved land, including air space.
• Inherently permanent structures, including any residential, commercial, or industrial building.
• A condominium unit and its appurtenant fixtures and common elements, including land.
• Stock in a cooperative housing corporation (as defined
FIRPTA, the Foreign Investment in Real Property Tax Act, was enacted in 1980 and provided that if the seller of real property is a foreign person, the buyer must withhold
a tax equal to 15% of the gross purchase price unless an exemption applies. (Property of less than a $300,000 purchase price is exempt.)
The CFPB is divided into several units:
research,
community affairs,
consumer complaints, the Office of Fair Lending,
and the Office of Financial Opportunity
The Good Faith Estimate and the Truth in Lending disclosure have been replaced by the
Loan Estimate
the loan charges listed on the loan estimate must come within
10 percent of the actual costs
Lenders are required to issue the loan estimate within ______ days of a home loan application or ______ days prior to closing
three , seven
HUD provides specific criteria for what constitutes a complete loan application. It should include:
• The borrower's name, income, and social security number
• The property address
• The estimated value of the property
• The loan amount
• Anything else the lender deems necessary or that was agreed upon with the buyer
• The loan estimate is standardized, and lists services you are allowed to shop for. You may not be able to shop for an appraisal fee or a credit report fee, but be able to shop for a land
The HUD-1 Settlement Statement and a separate Truth-in-Lending disclosure have gone away, replaced by the
Closing Disclosure
FIRPTA, the Foreign Investment in Real Property Tax Act, was enacted in 1980 and provided that if the seller of real property is a foreign person, the buyer must withhold a tax equal to
15% of the gross purchase price unless an exemption applies. (Property of less than a $300,000 purchase price is exempt.)
Lenders are required to issue the loan estimate within ______ days of a home loan application or _______ days prior to closing
three , seven
The Good Faith Estimate and the Truth in Lending disclosure have been replaced by the
Loan Estimate
loan charges listed must come within 10 percent of the
actual costs
Loan Estimate must be given within three days after six items of information are collected
the consumer's name, income, social security number, property address, estimated property value, and the loan amount.
HUD provides specific criteria for what constitutes a complete loan application. It should include
• The borrower's name, income, and social security number
• The property address
• The estimated value of the property
• The loan amount
• Anything else the lender deems necessary or that was agreed upon with the buyer
• The loan estimate is standardized, and lists services you are allowed to shop for. You may not be able to shop for an appraisal fee or a credit report fee, but be able to shop for a land survey and title insurance. Lenders will vary in their requirements.
The HUD-1 Settlement Statement and a separate Truth-in-Lending disclosure have gone away, replaced by
the Closing Disclosure
the person responsible for closing the transaction is responsible to file Form
1099-S.
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