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What can Contracts2Keys do for me?

Contracts2Keys is a service of the Law Offices of Bradley Morris, so you are working with a law firm. Contracts2Keys is a practice area within the law firm that focuses on real estate transactions. Through our experienced staff, we have developed a system to streamline the closing process to make it fast, uncomplicated and cost-effective for buyers and sellers, as well as the real estate agents and mortgage brokers involved.

Contracts2Keys coordinates all the work necessary for the closing, including preparing, reviewing, and filing all the necessary documents such as the contract and deed, reviewing title and obtaining title insurance, working with your bank to prepare loan documents and/or obtain loan payoffs, as well as negotiating with the attorney representing the other party to resolve any issues that arise. In short, we handle all aspects of the closing process from preparing the contract, to making sure the buyer gets the keys to the front door.

What is a closing and what is the process?

Basically, the closing is the time when the buyer pays the seller the money for the home or property, and the seller gives the buyer the deed showing that the buyer is the new owner. It all sounds simple, but there is a lot of work leading up to that event and taking place afterwards. All that work is part of the closing process, and it starts with preparing the contract and usually ends when the deed to the property is recorded on the land records.

What is the contract and who prepares it?

After the parties agree on the basic terms of a real estate transaction, a contract is prepared that puts those terms in writing. Typically, the seller’s attorney will prepare the contract, but in some parts of Connecticut the custom is that the real estate agent prepares the contract if the transaction is for residential real estate.

The contract spells out the basic terms the parties have agreed on, and includes many other very important terms that the parties may not have thought about. In a contract for the sale of a home, the contract typically include terms such as the purchase price, when deposits have to be paid, how title will be conveyed, dates for inspections and obtaining a mortgage, how problems that arise will be handled prior to closing, and the anticipated date of the closing. In a contract for the purchase of raw land, a business, commercial or industrial real estate, the terms vary greatly depending on the nature of the transaction. No matter who prepares your contract, always read it and, most importantly, make sure you understand it. If you have any questions, ask a Contracts2Keys attorney to explain it.

What is title insurance?

If you are getting a loan to buy real estate, then the bank will most likely require you to purchase for them what is called title insurance. A title insurance policy is a type of insurance policy, like a car insurance policy or home owner’s insurance policy. Unlike car and homeowners insurance policies, a title insurance policy insures you against certain losses that may arise relating to the title to your property. A policy of title insurance insures that you actually own the property, and you are not subject to the interests of another person.

For instance, suppose you receive a letter or a knock on your door and someone tells you that the deed to your home is a forgery. Or suppose you receive a letter from the local taxing authority informing you that they are about to auction off your home, because the prior owners failed to pay their real estate taxes. What if you learn that your neighbor's fence or garage is actually built on your property, or vice-versa?

Title insurance protects you against having to make expenditures on your own if any of these or similar events occur, provided that your policy contains no exceptions or exclusions for those events. If the information upon which the title insurance is based is incorrect, and a claim is asserted against your ownership of the home, then the policy indemnifies or protects you from experiencing a financial loss directly attributable to the covered claim.

Why is title insurance important?

With auto insurance, you protect yourself against experiencing financial consequences of an automobile accident. With homeowners insurance, you protect yourself and your family against having to shoulder the full cost of rebuilding if your home and possessions are destroyed by fire or by another catastrophe. When you buy an owner's title insurance policy, you are protecting yourself and your family against claims to the title (ownership) of your home. Your home will be there for you and your family - a place to live, and a guaranteed investment for your retirement and future.

Does the bank's policy cover me?

The short answer is "No."

There are two kinds of title insurance policies: a fee or owner's policy and a mortgagee or lender's policy. If a claim arises from a covered loss, the bank or lender will be paid in accordance with the terms of the mortgagee or lender's insurance policy. However, just as a life insurance policy on someone else's life does not provide any coverage to your family, the bank's title insurance policy will not protect you if there is a loss.

For example, if your deed turns out to be a forgery, the mortgage policy will cover the bank and pay off your mortgage. Unless you have purchased a fee or owner's title policy, you will not be paid anything for the loss of your home, your largest financial asset for a single. For a one-time premium, you are covered for as long as you own your property. Contracts2Keys highly recommends that its client's purchase an owner’s title insurance policy to protect them from potential loss.

How do I purchase title insurance?

Before you close on the purchase of your home or real estate, Contracts2Keys will ask a title company to examine or search the title. The searcher or examiner looks at the public records in the local courthouse, and various municipal and local governmental offices having jurisdiction over the real property to determine the status of the property's title. This search or examination will uncover any judgments, mortgages, taxes, assessments, charges, or other liens which may encumber or adversely affect the property's title. In particular, a historical search or examination will be made of the prior owners of the property. This will determine whether they had "good" title to the property, or whether they did anything during their ownership of the real property to encumber or adversely affect the property's title.

Once the examiner or searcher has completed this process, the title company will compile the information and prepare a Certificate or Commitment that reports on the status of title. The Certificate or Commitment will list as exceptions or exclusions to title all encumbrances, liens, or other adverse matters that were found. This process is completed before you purchase the property. If these matters are not cleared up or resolved by the end of the closing or settlement, the matters will be excepted from the coverage provided by the title policy, and the policy will not cover any loss caused by or arising from the excepted matters.

Unless the title company takes a specific exception in the title policy, the policy will protect you from having a financial loss because of, or arising from, matters such as someone else owning your home, a forgery or fraud in the prior title, lack of legal access to the property, or the existence of undisclosed liens such as taxes, mortgages, assessments or charges, as well as many other matters which affect the ownership of the property.

If someone makes a valid claim under the policy, the title policy company protects you by defending your interest in any court case and paying the costs, attorney fees and expenses incurred in that defense. If the court finds the claim valid, and there is coverage under the policy for the claim, the title company will pay the cost of your claim up to the amount of the policy or will undertake, at its own expense, the responsibility of correcting the problem.

Unlike all other forms of insurance, for title insurance you pay only one premium at the time of closing or settlement. In addition, if you purchase an owner's and mortgage policy at the same time, you may be entitled to a substantial discount in the cost.

What is the APR?

The APR, Annual Percentage Rate, is the annual rate of interest that is charged for borrowing, expressed as a single percentage number, that represents the actual yearly cost of the money you borrowed over the term or life of a loan. This includes any fees or additional costs associated with the transaction.

What is Private Mortgage Insurance?

Private mortgage insurance, PMI, is a type of insurance that allows mortgage lenders to recover part of their financial losses if a borrower fails to fully re-pay a loan. PMI is usually only required if the down payment is less that 20% of the appraised value of the mortgaged property.

What is a Prepayment Penalty?

A prepayment penalty is money charged for an early repayment of debt.

What is an Origination Fee?

An origination fee is a payment associated with the establishment of a new loan. This fee is paid to the bank or the mortgage broker that provides the loan or services associated with taking out a loan.

What are typical closing costs for a purchaser?

Typical closing costs for a purchaser might include title search, title insurance, recording fees, survey fee, mortgage application fee, points, appraisal fees, inspection fees, home warranties, property insurance; pro-rated property taxes, and pro-rated homeowner association's dues.

What are typical closing costs for a seller?

Typical closing costs for a seller might include transaction stamps and/or taxes and brokerage commissions.