For those unfamiliar with what title companies do, the services they provide and how they can be a benefit to you in your purchase of vacant land, we’ve provided the following list of answers to questions we often get from buyers confused about the process.
What does a title company do?
A title company acts as a third-party intermediary handling both the drafting and recording of the conveyance documents as well as the disbursement of funds. Primarily, however, they investigate title history to make sure there are no breaks in the chain-of-title and that the seller can convey the property to the buyer free and clear of all back taxes, liens or other encumbrances.
Doesn’t Hemingway Land do this same research and make these same guarantees?
We do. The difference, however, is that we don’t have an underwriter insuring our properties. This means our guarantees matter less to banks and lenders than the guarantees of a title company.
Why do you recommend closing through a title company for properties in a certain price range?
A few reasons…
First:
It’s our assumption that most people purchasing expensive properties will want to one day build on them and may require a loan to do so. This buyer may also want to use the property as collateral for a future loan. Either way, should a bank or professional lender one day become involved, neither of those parties will loan money on a property that doesn’t have title insurance.
Second:
As we do not anticipate that the average person would want to pay tens of thousands of dollars over the internet, we recommend the title company – again, a third-party intermediary – to help provide an extra degree of peace of mind for you, the buyer.
Third:
In the event you one day discover a “title defect”, title companies will work to remedy it. In some cases, this could mean spending not insignificant sums of money to “cure” said defect.
Is it mandatory that I close through a title company?
Not at all. You can pay us directly either with a credit/debit card, cashier’s check or wire transfer and we will prepare and record all the conveyance documents for you as we do with all of our other properties.
When will the title/escrow process begin?
After you place the non-refundable earnest money deposit through our website, we will email you a sale/purchase agreement within 24 hours. As soon as you sign and submit the contract to either our company or the title company, the title company will begin doing their research and preparing the documentation to insure and convey the land to you.
Please Note: Title companies will not do anything until they have a signed contract from buyer and seller “demonstrating intent.” The sooner this get submitted, the sooner they can begin their work. As title companies require a month or more to do their work, this is something we will insist you sign and submit within 96 hours of the initial deposit.
For those curious about the terms of the sale/purchase agreement they’ll be asked to sign, click here to review a generic copy of one of our standard Sale/Purchase Agreements.
Are there any drawbacks to closing with a title company?
In a word: Time.
If the transaction is time-sensitive, you should know that the average title company will take thirty to forty-five days to complete their work. These businesses service entire counties and hence, insure the sale of every home, condo, office building, farm, ranch, vacant land and every other type of real estate transaction that takes place in their localities. Because of this, they tend to have a long list of deals they are working on at any one time. Additionally, their system is similar to that of deli counters where you take a number and wait your turn. Even on properties we have already closed on and insured with title companies (where presumably their job would be easier because they wouldn’t have to “start from scratch” with the research), they will take a month or more to complete. This can be the biggest, and most frustrating part of acquiring title insurance.
Additionally, if money is an issue, potential buyers should realize that aside from the purchase of the land, there will be closing costs which they will be required to pay at close of escrow.
What should I expect the closing costs to be?
Closing costs are usually contingent on the purchase price of the land or the value you’re insuring it for. This means that the more expensive the property is, the higher those costs will be.
For title companies in the continental United States, it’s safe to budget $750-$1,000.
For title companies in Hawaii the pricing is more expensive, and buyers are advised to budget between $1,500-$2,000.
These costs will obviously differ company to company and state to state and may increases depending on the amount you’re insuring the land for. For a precise sense of what title/escrow fees will cost, it’s recommended you contact the title company early in the process and ask them for a quote.
What do the closing costs entail?
Closing costs cover all the research the title company does to guarantee the property can be conveyed to you with “clear and marketable title.” It also covers the costs involved in drafting all the documentation needed to convey the property. In addition, you’re paying for the title insurance as well as the escrow team’s effort during what usually ends up being a month-long process.
I live in Omaha. Can we use a title company in my town?
Unless we’re selling you property in Omaha, the answer is most likely ‘No.’
Title companies tend to serve very specific geographic regions – a county or two neighboring counties at most – and they never cross state lines. While some may have offices in multiple states, those offices will only handle the business in their given locality.
I live out of state. Do I need to travel to the title company’s offices to finalize this deal?
Not at all. In fact, our company purchases hundreds of properties each year and we never set foot in a title company’s office.
Most all of this transaction can be done using email, phone and fax. The only exceptions include one or two documents the title company may require a “wet signature” on or notarization of. For those you’ll have to leave your house. Additionally, the eventual wiring of the money may require you to visit your local bank if you don’t have the ability to enact wire transfers online.
I don’t have email. Can the title company mail me all the documents?
They can. Though because that documentation will almost always require review and revisions, we’d encourage you to create a temporary email for the purposes of this transaction.
Do I wire the money to your company or to the title company?
Aside from the initial non-refundable earnest money deposit paid through our website, all remaining funds will be wired to the title company at the close of escrow. Wiring instructions will be provided by the title company when that time comes, usually in a secure email or in documents sent directly to your home address.
Can I wire the money when we open escrow?
Most title companies will not allow this and prefer you wait until they’ve had a chance to calculate all the assorted fees, deductions and disbursements that go with a given transaction. Only when those numbers have been finalized will the title company request the funds from you.
Do I have to pay with a wire transfer?
You don’t. In fact, many title companies will either encourage or accommodate the use of a cashier’s check. If you have some issue with either of these forms of payment, it’s best you speak to either a representative from our company or the title company as early in the process as possible.
Can I pay with a credit card?
We have yet to encounter a title company that will accept a credit card as a form of payment.
If you need to pay for the property with a credit card, it may be best to close outside of escrow and pay our company directly. If you insist on paying with a credit card and acquiring title insurance, there are ways to do it, but both our company and the title company will need to be made aware of this as early in the process as possible. Please be advised, however, that while it’s possible to pay for the property with a credit card and simultaneously acquire title insurance, it will require you to pay our company directly outside of escrow.
How soon after I wire the funds will the transaction be completed, and the property recorded into my name?
Usually within a day or two. A representative of the title company will normally alert you once the transaction has been completed and the property is officially yours. If you receive no notification of this, simply contact our offices or the title company and inquire with either one directly.
When do I receive a copy of the deed?
The deed will typically arrive in a packet along with the insurance documents and the owner’s policy a month later. Please be aware, however, that our company has no control over how fast or slowly a title company’s corporate office is able to get this to you. Any questions about this should be addressed directly to the title company.
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