Introduction and overview: Title Companies are typically hired by the mortgage company/lender to represent its interests in closing the loan and handling other ancillary matters.

A. Three Primary Functions of the Title Company/Agent

1. Search the title to the subject property and issue a title insurance policy to the lender and/or owner.
2. Process, prepare and execute closing documents/lender's loan package, including recording and disbursement.
3. Serve as the settlement agent for the buyer, lender, seller and brokers.
   

B. Organization of the title company

1. Data Entry/Input

1. Receives the title request from the lender which typically consists of the P & S and initial loan structure
2. Creates file and orders the title search from appropriate registry

2. Scheduler

1. Receives the clear to close approval from the lender
2. Sets up a closing date and time with all parties
3. Assigns the file to a processor
   

3. Processor

1. Initial phone calls to municipality for tax information, water and sewer charges (if applicable)
2. Orders the sellers' mortgage payoffs
3. Receives closing instructions from the lender that will detail remaining fees, such as appraisal, underwriting, credit report, origination/discount fees, etc.
4. Prepares the settlement statement and sends out for review
5. Prepares a portion of the closing package, including the transfer documents and the title insurance affidavits
6. Receives the loan package from the lender and assembles file for closing
   

4. Title Abstractors/Reviewers

1. Title search is completed by an abstractor who prepares a summary that is then reviewed in the office by the title manager
2. Title manager will address any outstanding issues or problems
3. Once the title work is approved, staff member will prepare a written title commitment for the lender
4. Information is also shared with the processor to insure all mortgages, liens or other items requiring payoff are accounted for in the settlement statement.
   

D. Title Insurance

1. Definition: Title insurance is an agreement to indemnify the insured for any loss sustained as a result of defects found in the title to the insured premises, which were in existence on the date of the policy, yet were not excluded from coverage by the policy terms.

1. matters excluded from coverage are those matters that are discovered in the course of the title search, including easements, restrictions, subdivision plan notes
   

2. The date of the policy will generally be the exact date and time the instrument creating the insured's interest was recorded, as in the recording time of a deed or mortgage.

3. Important distinction with title insurance is that it generally insures back in time from the date of the policy.

4. Benefits of a title policy for your client

1. The lender's policy will primarily be utilized in a foreclosure situation and does not protect the owner.
2. By executing the mortgage, the buyer/borrower is giving the lender warranty covenants as to the title to the property.
3. Cure problems to accommodate closing/saves time and expense.
   i. survey example.
   ii. undischarged mortgage example.
   
4. Duty to defend as well as to indemnify, therefore even if someone asserts a claim with little or no basis, the insurer will be obligated to represent your client.
5. Eagle/enhanced policy vs. standard ALTA policy.

5. Purpose of the mortgage loan survey.

1. Tells the lender if there are any encroachments or zoning problems.
2. It is not a boundary survey.
3. Allows the title insurer to delete the survey exception on title insurance policy.

6. Claim examples-claims are not always the product of bizarre or unusual circumstances

1. Intervening matter of record
2. Paid off, but unclosed line of credit
3. Human error at various times in the closing process
   

   i. title company
   ii. town office
   iii. abstractor

7. First American

1. Local office handles underwriting and claims
2. Eagle enhanced policy appears to be most favored policy among buyer attorneys
   

E. Practical considerations

1. Types of Deeds-general definitions

1. Warranty Deed: The grantor, and his or her heirs, will defend the grantee's title against lawful claims and demands of all persons. Also conveys any after acquired interest of the grantor.
2. Quitclaim Deed with Covenant: The grantor, and his or her heirs, will defend the grantee's title against lawful claims and demands of all persons claiming by through or under him or her.
3. Quitclaim Deed without Covenant/Release Deed: The grantor conveys whatever interest he or she may have with no representation whatsoever with respect to the title.
   

2. Types of Estates

1. Joint Tenancy: The interest of the first joint tenant to die terminates at death, leaving remaining joint tenants as the owner(s). Referred to as right of survivorship. The deed must specifically grant "as joint tenants."
2. Tenants in Common: At death, the holder's interest passes to his or her estate.
   

3. Hints/Reminders for the Listing Broker

1. If the seller is a surviving joint owner, review the deed to make sure the property was owned as joint tenants. If the property was held as tenants in common, heirs other than the spouse of the deceased owner may have rights to the property.
2. Insure that the contract has most accurate book and page information, particularly if the property has either been subdivided or consists of more than one parcel. Assists in the title search.
3. If the sale is only a portion of what your sellers own, try to get a legal description to the title company for purposes of the title search and survey.
4. Make sure company has complete mortgage information and account numbers for sellers' mortgages.
5. If the seller is not a Maine resident, remember the 2.5% withholding requirement and if possible obtain a waiver or partial waiver from the state prior to closing (contact at the State is Linda Cyr, phone 626-8473).
6. Review the proposed deed prepared by the closing agent.
7. Multiple sellers/multiple checks/divorce situation-inability to disburse separate checks
8. If a power of attorney is to be used, it should be prepared by an attorney (due to specific Maine requirements) and provided to the closing agent as soon as possible for review.
   
   i. Two-year capital gain exclusion for personal residences up to $500,000 per couple.
   

4. Hints/Reminders for the Selling Broker

1. At contract time be aware of the distinction between marketable and insurable title.
2. Request and review the proposed deed and a copy of the mortgage loan inspection prior to closing.
3. Buyer's closing figure: If no final figure is available have the client base his or her check on the lender's good faith estimate and add a cushion-client will always get a check back at closing for any overpayment.
4. If a power of attorney is to be used, it should be prepared by an attorney (due to specific Maine requirements) and provided to the closing agent as soon as possible for review.
5. Make homeowner's insurance binders a priority for multi-units.