BLG TITLE, LLC

Seller decides to sell a house.

The seller will contact a real estate agent who will list the house, or the seller will attempt to sell the house themselves. There are many steps a seller may take, but this guide focuses on the buyer (may also be referred to as a “Borrower” or "Purchaser").

 

Buyer hires real-estate agent or searches themselves.

Usually, the buyer will also pre-qualify at a bank with a lender at this point in the timeline, so they know how much they may be able to borrow to buy a house or condominium. Please understand that a lender’s prequalification letter does not necessarily mean the lender or bank will loan that amount to the buyer. It is at best an estimate.

 

Buyer finds a house.

A contract is drafted and, the buyer makes an earnest money deposit and sends the contract to the seller or his agent. It is very important to note that at this point, the buyer and not the seller chooses the settlement agent. A settlement agent must be registered in Virginia to settle the transactions. Settlement agents can be attorneys or non-attorneys. The buyer’s real estate agent may suggest title companies and settlement agents, but you are under no obligation to go with their suggestion. Keep in mind that title insurance companies are for-profit companies and can be owned by the real estate agents who represent you and is suggesting you use their company. BLG Title, LLC can serve as your settlement agent, and by choosing BLG Title, LLC, you will have attorneys conducting the closing. Attorneys can draft the contract. However, most real estate agents are granted that ability under their license. The attorney can offer a varying perspective on the transaction.

 

Parties sign a contract.

This is a ratified contract, and the date of the last signature constitutes the date of ratification unless agreed in writing to be a different date. The contract will include:

• the price of the property

• how the property will be paid for

• when the property will close

• when the seller will leave the property and the buyer can enter the property

• what constitutes a breach of the contract

• what constitutes a default in the contract

• what remedies exist if either party breaches or defaults

• who will be the buyer’s closing agent

 

The contract may contain contingencies.

These contingencies may be based on the buyer obtaining financing, the home passing an inspection, the sale of an existing property owned by either party, the property appraising in value, or based on a court approval.

 

Buyer meets with a mortgage lender. 

The mortgage lender will give a loan estimate (LE) of the costs of closing the real estate transaction.

• The LE will state the origination charge. These charges are the bank’s processing fee, application fee, administration fee, underwriting fee, document preparation fees, wire fees, broker fee, lender inspection fee, yield spread premium and similar charges.

• The lender may also select companies that can do for you the appraisal, credit report, flood certification, as well as the title company, closing attorney or closing agent.

• The lender will also tell you services they require, but you’re allowed to shop around for. These services can be the title company, closing attorney, the survey, the home warranty, termite inspection, and a couple others.

• The LE will also inform you of your state and local recordation taxes, transfer taxes, initial deposit for your escrow, daily interest charge and homeowner’s insurance (hazard, flood, earthquake, etc.).

• The lender must give you an LE within three business days after applying for a loan. The buyer can take this LE from the lender and go to any other lender and compare the costs that each lender has (origination costs or other loan requirement costs) as well as the costs for the services that the lender suggested to the buyer. The LE will state how long these terms are open, and if the buyer accepts the LE within that time period and the services suggested, then the lender’s origination costs, credit for the interest rate chosen, adjusted origination charges, and transfer taxes are fixed and not subject to change. However, some costs can change by up to 10 percent, such as the services they suggested and you approved, title’s services and lender’s titles insurance (if lender selected them or if you chose a company they identified), owner’s title insurance and government recording charges. When the buyer chooses a company not recommended by the lender, the cost may increase or decrease by any amount: this would depend on the negotiating skills of the buyer or their agent. If you request a change to the loan amount or interest rate, the lender may have to issue you a new LE and the fees may have changed.

• The buyer chooses a lender (unless you are paying all cash). The lender will have the buyer go through an extensive underwriting process. The underwriting process conducted by the lender is a process that at its simplest is the lender’s calculation as to how much you can afford to pay on a mortgage, and whether the property is worth the contract price. The bank will look at your sources of income, your credit, your employment, and your other assets. The bank will also look at your expenses for grocery, clothing, utilities, association dues, taxes, and other miscellaneous costs. No bank is forced to lend money to a risky applicant. A buyer (also referred to as “borrower”) will have to supply countless documents to the lender proving they are qualified. At a minimum, a lender requests several years of tax returns, current wage statements, permission to run a credit report, bank and brokerage statements. If you are self-employed, the process is even more tedious, and the requests for information are a greater burden. Organizing your finances ahead of time is key.

 

Lender communicates with the title company and settlement agent.

The settlement agent, if also licensed as an attorney, will order and obtain a title search, review the title search, order a survey of the property (if requested), review the survey, request a payoff on any liens shown on the title examination, draft the deed of conveyance, powers of attorney, and, if necessary, prepare a binder for the title insurance. The settlement agent checks to see if there are any judgments or liens against the property and that there is a marketable and insurable title. The settlement agent also checks for easements or other irregularities with the property. The settlement agent will arrange a time to close in accordance with the contract and the parties. If the settlement agent is not an attorney, then the settlement agent cannot give legal advice or draft legal documents. Non-attorney settlement agents must have an attorney draft the deed and other legal instruments. In addition, a non-attorney settlement agent cannot give legal advice or tell a buyer any defects on a title as that is the unauthorized practice of law. What happens if a non-attorney settlement agent gives advice anyhow? They may be committing a misdemeanor, but that will not compensate the buyer who may be without a home. There is no insurance to cover bad legal advice from someone that is not an attorney licensed to practice law in Virginia.

• Settlement agent assists in preparation of the Closing Disclosure (commonly abbreviated and referred to as a “CD”) If there is no lender, and the buyer is purchasing the property in cash, a settlement statement may be used instead of a CD (these transactions are not really paid in $100 or $20 dollar bills, but the term is used to describe a purchase without the use of a Note [a promise to pay in the future]). The CD will then be sent by the lender to the borrower at least three days prior to closing. At that time, you have the opportunity to discuss the bank’s charges and compare to the LE given to you by the lender earlier in the process.

• Seller signs the deed conveying the property to the buyer. The buyer signs all the paperwork that the lender requires as part of the closing. At this moment, the buyer will sign the CD previously sent by the lender.

• Settlement agent takes the deed to the courthouse. The settlement agent or a title examiner will search the land records to make sure the seller has not conveyed the property to anyone else, received any new judgments or liens since the title search. If there are no such adverse findings, the settlement agent will record the deed with the land records clerk.

 

Making the smart choice. 

Choosing an attorney-operated title company to serve as the settlement agent and conduct the settlement is the smart choice. An attorney is a licensed professional registered with the Virginia State Bar and subject to its disciplinary action. The attorney should have malpractice insurance and ask them to make sure. The attorney not only spends the time to understand the law, but the attorney can give legal advice: legal advice that you can count on or sue them for malpractice. An attorney can explain the difference between the various forms of ownership. An attorney can review your survey and inform you of encroachments and easements and what your rights are.