Serving King and Snohomish Counties

For more information please contact:

Ryan Kalalau
Ticor Title Company
Account Manager
253-951-8122
Ryan.Kalalau@TicorTitle.com

WHY USE TICOR?

WHAT'S IN A TITLE SEARCH

You’ve decided to purchase a home and hope to take possession as soon as possible.  The terms have been agreed on and all financial arrangements have been made.  But one important detail remains.  Before the transaction can close, a title search must be made.

The most accurate description of title is “a bundle of rights in real property.”  A title search is the process of determining from the public record just what these rights are and who owns them.

A title search is a means of determining that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property (title) that he or she is paying for.

In those transactions where title insurance is involved, the title company must determine insurability of the title as part of the search process.  This leads to the issuance of a title policy, which insures the existence or non-existence of rights to the property.

The title insurance company will, at its own expense, defend the title and will pay losses within the coverage of the policy if they occur.

But exactly what is involved in a title search?  Ticor Title Company provides the following step-by-step review as follows:

Chain of Title 
Tax Search 
Report on Possession 
Judgment and Name Search
Commitment

CHAIN OF TITLE
This is simply a history of the ownership for a particular piece of property, telling who bought and sold it, and when.  The information may be derived from public records — usually a County Clerk or Recorder’s Office — or obtained from title plants privately owned and maintained by title companies. 

There are great varieties of such plants — index cards, punch cards, tract books, even sophisticated computerized plants.  They all contain essentially the same information from which the history of the title may be secured.

TAX SEARCH
This is a search to determine the present status of general real estate taxes against the property.  The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years.  In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due.

A due and unpaid tax or special assessment is a prior lien or claim on the property above all others.  If a buyer purchases property with unpaid and past due taxes or assessments against it, he or she is likely to find a government body — the city, county or state — placing the property up for sale to pay those taxes or assessments.  A tax search reveals the status of the taxes.  Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

REPORT ON POSSESSION
In many places where it operates, Ticor Title Company may send inspectors to look at the property to verify the lot size, check the location of improvements, and look for evidence of easements that are not shown on the record.

The purpose of this is to supplement the information learned from the title search.  In the eyes of the law, any buyer of real estate is assumed to have notice of all matters properly shown in the public records for that real estate, as well as any information that an actual inspection may reveal.

If the inspector detects an unrecorded easement or other evidence of outstanding rights that could affect the owner’s title and possibly the value and intended use, the company will disclose these matters before the closing of the purchase.  Those matters must then either be disposed of or shown as exceptions in the title insurance policy.  Sometimes when an acceptable survey and appropriate affidavits are received, an inspection will not be made.

JUDGMENT AND NAME SEARCH
One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title.  A judgment is a general lien against the debtor’s real estate and constitutes security for any money owed under the judgment.  The real estate can be sold to satisfy the judgment.

It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners.  Title insurance provides this protection.  A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person.  All possible variations of the name must be examined.

For example, the name Smith might be spelled Schmidt, Schmid, Schmidtt, Schmidz, Schmied, Schmiedt, Smid, Smythe, and so on.  The name Nichols can be spelled 73 different ways, from Nachols to Nychals.  The task is to determine which of these applies to the owner in question.  First names have to be checked, too.  There are 25 foreign forms of John, including Johann, Jehan, Hans, Shaun, Gudi, and Efom.

Rights established by judgment decrees, unpaid federal income taxes, and mechanic’s liens all may be prior claims on the property, ahead of the buyer’s or lender’s rights.  If a judgment is discovered that constitutes a defect in the title, it is pointed out.  The seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

COMMITMENT
When these searches have been completed, the title company issues a commitment to insure, stating the conditions under which it will insure the title.  The buyer, seller and mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the search and examination.

The mortgage lender is as concerned as the buyer about the quality of the title because the property is to be security for the new mortgage loan.  The mortgage lender requires assurance that it has a valid first (or another acceptable priority) mortgage lien on the property.  This is not only common sense, but generally a legal requirement of regulated mortgage lenders.

The lender’s title insurance, however, does not protect the new buyer of the property.  Although the land is the same, the interest of the buyer and the interest of the lender are very different.  The provisions of a lender’s title insurance policy are very different from those of a buyer’s policy.  The buyer should obtain his own policy, often issued simultaneously with the lender’s policy.

WHAT HAPPENS IN ESCROW

WHAT IS ESCROW AND WHY IS IT NEEDED?
Escrow is an arrangement in which a disinterested third party (an escrow holder), holds legal documents and disburses funds on behalf of a buyer and seller, and distributes them according to the buyer and seller’s instructions.

People buying and selling real estate often open escrow for their protection and convenience. 

The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. 

The seller can instruct the escrow holder to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. 

Both rely on the escrow holder to faithfully carry out their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.

Escrow is convenient for the buyer and seller because both can move forward separately but simultaneously in providing inspections, reports, loan commitments, funds, deeds, and many other items, using the escrow holder as the central deposit point. 

If the instructions from all parties to escrow are clearly drafted, fully detailed and mutually consistent, the escrow holder can take many actions  without further consultation.  This saves much time and facilitates a smooth closing of the transaction. 

WHAT EACH PARTY DOES IN THE ESCROW PROCESS

The Seller
• Deposits the executed deed to the buyer with the escrow holder.
• Deposits evidence of pest inspection and any required repair work, per the
  purchase and sale agreement.
• Deposits required documents such as addresses of mortgage holders,
  homeowner association contacts, and lien holders.

The Buyer
• Deposits the funds required, in addition to any borrowed funds, to pay the
  purchase price with the escrow holder.
• Deposits funds sufficient for home and title insurance.
• Approves any inspection reports, title insurance commitments, etc. called for by
  the purchase and sale agreement.
• Fulfills any other conditions specified in the escrow instructions.

The Lender (if applicable)
• Deposits proceeds of the loan to the purchaser.
• Directs the escrow holder on the conditions under which the loan funds may be
  used.

The Escrow Holder
• Opens the order for title insurance.
• Obtains approvals from the buyer on title insurance report, pest and other
  inspections.
• Receives funds from the buyer and/or any lender.
• Prorates insurance, taxes, rents, etc.
• Disburses funds for title insurance,  recording fees, real estate commissions, lien
  clearance, etc.
• Prepares a final statement for each party, indicating amounts to be disbursed
  for services and any further amounts necessary to close escrow.
• Records deed and loan documents, delivers the deed to the buyer, loan
  documents to the lender and funds to the seller, closing the escrow.

CLOSING THE ESCROW
Once all terms and conditions of the instructions of both parties have been fulfilled, and all closing conditions satisfied,  the escrow is closed and the safe and accurate transfer of property and money has been accomplished.

IN SUMMARY
The escrow process was developed to help facilitate the sale or purchase of your home.  The escrow holder accomplishes this by:
• Acting as the impartial “stakeholder,” or depository of documents and funds.
• Processing and coordinating the flow of documents and funds.
• Keeping all parties informed of progress on the escrow.
• Responding to the lender’s requirements.
• Securing a title insurance policy.
• Obtaining approvals of reports and documents from the parties as required.
• Prorating and adjusting insurance, taxes, rents, etc.
• Recording the deed and loan documents.
• Maintaining security and accountability of monies owed and owing.