Description of Fees & Glossary
Settlement Fee
The settlement statement is a line-by-line, detailed document that outlines all the money involved in a real estate transaction. It is provided to both the buyer and the seller at the closing of a real estate deal and itemizes every charge related to the purchase or sale of the property, ensuring transparency. It may also be referred to as a HUD-1 or CD (Closing Disclosure). Settlement Statements are used in both commercial and residential real estate transactions
Transaction Coordination
This service is provided primarily in commercial transactions and covers items such as ordering surveys or other due diligence items, arranging for notarization and recording of documents other than those directly related to the transaction and facilitating closings among out clients and national title company offices
Update & Record
This refers to a brief examination of the land records from the date of the title commitment through the date the documents will be recorded. If the title is found to be clear and free of any and all encumbrances, the closing documents will be put to record. Title updates and recordings are performed for both residential and commercial transactions.
Commitment Fee
A title commitment is a legal document prepared by a title company on behalf of a title insurer that promises to issue a title insurance policy once specific requirements are met. After an examination of the title records has been ordered and received, the information is underwritten into a commitment for title insurance, typically containing the following 4 parts.
– Schedule A:
Basic facts — property address, legal description, proposed insureds (buyer/lender), and proposed policy amount.
– Schedule B-I (Requirements):
Lists what must be done before the title policy can be issued.
Examples:
- Pay off an existing mortgage
- Record the new deed
- Release a lien
- Obtain a death certificate or probate order
– Schedule B-II (Exceptions):
Lists items that will not be covered by the title policy.
Examples:
- Easements
- Restrictions and covenants
- Rights of tenants in possession
– Conditions and Stipulations:
Defines the legal terms and limits of the commitment.
Once in its final form, the title commitment is delivered to the buyer seller lender and closing agents for review prior to closing in order to clear any outstanding title issues and satisy all requirements. Commitments are issued for both commercial and residential title insurance policies.
Proforma
A pro forma title policy (sometimes written proforma) is a sample or preliminary version of a title insurance policy that shows what the final title insurance policy would look like if it were issued — but it is not an actual insurance policy and provides no coverage. It allows parties to the transaction an opportunity to preview coverage and exceptions before closing a real estate transaction and allows buyers, lenders, and/or attorneys to verify that title issues have been cleared and that the policy will match the agreed terms.
A proforma does not provide title insurance coverage and is for review pusposes only. A proforma may be requested before funding and/or closing to verify that the insured amount, proposed insured, legal description and exceptions and endorsement to the policy are all correct. Once closing occurs, the final title policy(ies) will be issued.
Proformas are almost always requested by lenders in commercial transactions.
Endorsement Package
A title insurance policy endorsement is a modification or addition to a title insurance policy that changes, adds, or removes coverage. It’s essentially an amendment that tailors the standard title insurance policy to address specific risks or circumstances related to a particular real estate transaction. There are many endorsements available however the most common are
- ALTA 3 (Zoning) – insures that the property’s current use complies with zoning laws.
- ALTA 4 (Condominium) – covers certain risks specific to condo ownership.
- ALTA 8.1 (Environmental Protection Lien) – protects against loss from environmental liens not listed in the policy.
- ALTA 9 (Restrictions, Encroachments, Minerals) – insures against losses from certain covenants, easements, or encroachments.
- ALTA 17 (Access and Entry) – insures that the property has legal access to a public street.
Endorsements to a title insurance policy can be issued for both residential and commercial transactions as well as for both lender’s and owner’s title policies.
Simultaneous Issue Fee
A simultaneous issue fee refers to a discounted premium charged when both an owner’s policy and a lender’s policy are issued at the same time for the same real estate transaction. The reduced fee applies to the first loan. Title insurance premium for additional loans is calculated at regular rates. Simultaneous issue rates are available for both commercial and residential transactions.
Date Down Endorsement
A “date-down endorsement” is a type of endorsement that updates a title insurance policy to reflect changes in the title or liens up to a more recent date—essentially “dating down” (think, down the road) the policy to a later point in time. It updates the policy’s coverage to include the most recent date (usually the closing date or another agreed-upon date) and ensures that any title issues arising between the original policy date and the new date are also covered, so the buyer or lender has protection as of the actual closing date. Date down endorsements are most often used in construction loans, refinance situations, or delayed closings. It doesn’t replace the original policy, but modifies it. A date down endorsement is usually requested by lenders, because they want assurance that the title remains clear at the time of funding. An updated title search is often necessary to ensure no new issues have arisen.
Title Insurance Premium
A title insurance premium is the one-time fee you pay to a title insurance company to induce the company to issue a policy of title insurance when you purchase a property. This fee covers the cost of the title insurance policy, which protects you and/or your lender against financial loss from defects in the property’s title. Title insurance premiums are calculated for policies issued for commercial and residential transactions.
Title Search
A title search is a process used primarily in real estate to verify the legal ownership of a property and to ensure that there are no issues or claims (called encumbrances) that could affect the ownership. It’s an important step when buying, selling, or refinancing property. A title search checks for liens, mortgages, unpaid taxes, easements, or legal disputes that could affect ownership. A title search also confirms current ownership and the legal property description. A title search is required in order title issue title commitments, proformas and policies for commercial and residential transactions.
Closing Protection Letter (CPL)
Can also be called and Insured Closing Letter (ICL). A Closing Protection Letter (CPL) is a document issued by a title insurance company to protect a lender in a real estate transaction. It provides specific assurances about the conduct of the settlement agent who is handling the closing. The CPL ensures that the settlement agent will follow the lender’s instructions during the closing process and properly handle funds. It protects against losses caused by the agent’s fraud, dishonesty, or mishandling of closing funds. In short: A CPL is like a mini-insurance policy that guarantees the closing agent will handle the transaction correctly and safely for the lender, giving them extra protection against fraud or mismanagement however it does NOT cover title defects, general negligence by the parties, unless it involves mishandling of funds Issues that arise after the closing is complete, unless tied to the agent’s wrongdoing. CPL’s are issued to lenders for commercial and residential transactions.
Closing Package Processing
This fee is associated with the coordination and preparation of the Closing Disclosure (CD) in single family, residential property being financed by a traditional mortgage lender.
Cover Sheet
A cover sheet provides key information about the document(s) to ensure it is recorded correctly and efficiently in the land records. It identifies the type of document(s) being recorded and contact information for the submitter. Cover sheets are used for recording documents in commercial and residential transactions.
Electronic Fraud Prevention
Safe Harbor Title protects residential and commercial real estate transactions by investing in cutting-edge platforms designed to prevent fraud. This sophisticated electronic fraud prevention software actively stops industry-prevalent scams through two core layers of protection:
Wire Fraud Prevention: The software verifies individual identities and banking details to guarantee funds are safely sent to the correct recipient.
Seller Fraud Prevention: The system authenticates property owner identities to block fraudulent listings and unauthorized sales.
Safe Harbor Title uses CertifID to prevent various types of fraud prevalent within the real estate industry. The software allows us to verify the identity of individuals and bank details to ensure wires are sent to the correct people/bank. It also can verify the identity of property owners to prevent seller fraud. This software is used to protect residential and commercial transactions from fraud.
State & Local Transfer Tax
This is the tax charged by the State and Locality for the transfer of real estate. It is most often charged to the purchaser and is based on the purchase price or assessed value, whichever is higher. Transfer taxes are imposed, calculated and paid directly to the State and Locality and apply to both commercial and residential transactions.
Deed of Trust (Mortgage) Tax
Also called a mortgage recording tax or mortgage registration tax, it is a tax imposed by a state, county, or municipality when a mortgage is recorded with the local government as a fee for officially registering a mortgage on a property. It is usually paid for by the borrower and is charged for residential and commercial mortgage loans.
Conveyance Deed and Deed of Trust Recording
These charges are imposed to officially register a property conveyance (transfer) deed and/or to register a deed of trust (mortgage) with the government or relevant local authority. These documents must be recorded in public records to make the transfer and mortgage lien legally official and enforceable.