FREQUENTLY ASKED QUESTIONS

1. Why do I need a title company?

   The title company researches and investigates information affecting the title to the property you are purchasing starting with the public land records.

2. What does the investigation show?

   This investigation will ensure that the seller of the property is the legal owner. All liens, judgments and open mortgages are taken care of before title is transferred to you. There are no restrictions or easements which may limit your right to the use of the property or that grant rights to non-owners.

   It will show the status of property taxes on other public and private assessments. Procurement of a property location survey to show the location of the dwelling and other structures within the property lines.

3. What is the purpose of the title search or abstract?

   To transfer the property's title on ownership free and clear from the seller to the buyer.

4. Who will do my settlement or closing?

   The title company also conducts the closing or settlement; handling the transfer of funds between the buyer, seller and lender. The title company also prepares and records all documents necessary for clear title transfer.

5. How is the lender involved in the settlement?

   The lender prepares and sends the title company a Lenders closing package which includes the deed, mortgage, deed of trust, promissory note, settlement statement with instruction, and all other related papers required for completion of the settlement transaction.

6. When do I need a title company?

   When you have a ratified contract or an agreeable contract which accepted and is signed by the seller(s) and you the buyer(s).

7. Who chooses the title company?

   By law you have the right to choose the title company of choice who would conduct your settlement.

8. When is a title company needed?

   Usually when someone is buying a home or refinancing they notify the title company who will immediately begin to examine the property's title.

9. What is title insurance?

   Title insurance protects the new owner's rights for the duration of ownership and guards against any possible losses due to problems such as forged wills or deeds undisclosed heirs; clerical error, invalid court proceedings, hidden marriages, divorces, defective deeds and other problems that cannot be determined from a search of the public records.

10. How does the title insurance policy protect against all the dangers?

    If a claim is made against your title as insured, the title company protects you by: Defending your title, in court if necessary, completely at our expense.

    Bearing the cost of settling the claim. If it proves valid, in order to perfect your title and keep you in possession of your property.

11. Do I have to get the title insurance?

    There is a Lender's Coverage and an Owner's coverage- most lenders require you to take out lender's coverage to protect them against any possible problem on title. However, the Owner's coverage is optional.

12. What happens after settlement?

    The title company prepares and records the Deed, Deed of Trust and all necessary documents that must be recorded. The title company will get the original document back from the courthouse, and send you the Deed with your policy and send the Lender the Deed of Trust with their title policy. Again the role of a title company is to handle the entire settlement process from providing the title search and issuing the title insurance to providing final closing prior to settlement right up to conducting the final settlement.

13. What is ground rent?

    In Maryland, a ground rent is established on a lot and all of the improvements on it for a lease of 99 years. The rent is usually payable semi-annually with the lease renewable forever. The most important thing to know when you buy a house subject to a ground rent is that you are not buying the property in fee simple, which is the most absolute and unconditional form of private property ownership.

14. What are the types of Deeds?

    LEASEHOLD DEED - to convey property that is subject to ground rent.

    FEE SIMPLE DEED - to convey property that has no ground rent.

    GROUND RENT REDEMPTION DEED - used by the leasehold owner of the property to redeem the ground rent from the ground rent holder so that the leasehold owner no longer has to pay ground rent; the property then becomes owned in fee simple. The redemption price is based on statutory law (how much the ground rent is, how long ago it was created).

    GROUND RENT DEED - used to convey the ground rent interest in the property so that instead of "Mr. Smith" being paid ground rent every 6 months by the leasehold owner, ground rent instead is paid to "Ms. Jones."

    NO CONSIDERATION DEED - used to convey property where no consideration is involved. If the transfer of property is between close family members (mother, father, brother, sister, child) there is no transfer tax. If the transfer is between other people the transfer taxes are based on the amount of any outstanding mortgage or appraised value of the property.

    SUBSTITUTE TRUSTEE'S DEED - used by a Substitute Trustee in a foreclosure action to convey property that was foreclosed.

    WARRANTY DEED - convey title with full warranty that title is good and marketable.

    QUITCLAIM DEED - no warranties as to title; you convey only whatever interest you may have.

    LIFE ESTATE DEED - the property is conveyed to someone for life (usually with the full power to sell, transfer, borrow, etc.), and upon death the property automatically goes to the remainderperson specified in the deed.

15. What are the types of tenancies?

    SOLE OWNER - one person in title

    TENANTS IN COMMON - more than one person in title; each person has a percent interest (10%, 90%, etc.) that can be conveyed to anyone else. If no percent interest is specified, it is assumed each has an equal interest in the property. Each tenant in common can convey his/her interest separately to someone else without the consent of the other tenants in common.

    JOINT TENANTS - more than one person in title; each person has an interested in the whole property. Upon the death of one joint tenant the property automatically passes to the joint tenants. The last surviving joint tenant can convey the property to whomever he/she wants. (To convey the property requires the consent/signature of all joint tenants.)

    TENANTS BY THE ENTIRETY - only for spouses; upon the death of one spouse the property automatically passes to the other spouse.

    Each of the above has different tax consequences upon the death of one of the parties to the deed, and different consequences for the purpose of collecting on judgments.