TITLE INSURANCE BASICS
What is title insurance and why do I need it?
Do I have to purchase two different title insurance policies?
Title insurance seems expensive, can I get a better premium rate somewhere else?

TITLE & VESTING
What are the requirements on my title commitment for?
What is the difference between “tenants in common” and “joint tenants with full rights of survivorship?
I am a married man whose wife is not on the deed, why does she have to sign anything?
I understand dower, but what is Homestead?
I am divorced and my ex-spouse has deeded their interest to me, why are you asking to see my divorce judgment?

PROPERTY TAXES
Why are my property taxes due twice a year?
When do my property taxes become delinquent?
Why have my Summer taxes gone up?

CLOSINGS
I have sold my own home without an agent, What do I do after I get my title work?
Who schedules the closings and how far in advance do I schedule it?
When is the best day and time to close?
I work until 5:00 P.M., why can’t I get a later or earlier appointment to close?
My bank is open on Saturday and Sunday, can I close then?
What should I bring with me to closing?

CLOSING PROCEDURES
What are tax prorations?
What are tax escrows and how do they work?
Why do I have to file a property transfer affidavit?
Can I appoint a Power of Attorney to act on my behalf at the closing?
What is transfer tax?
If my water bill is a utility, why is it on the closing statement?
Why are you collecting so much interest on my mortgage payoff statement?
As a Seller, do I have to pay taxes to the IRS?

AFTER CLOSING
What is a rescission period for refinances?
Is there a rescission period for purchases?
What happens if either party receives a tax bill after the closing?
How long does it take to get my title policy?
How long should I keep my closing documents?

TITLE INSURANCE BASICS

1.    What is title insurance and why do I need it? 
Title insurance is NOT your homeowner’s insurance.  Title insurance protects the new homeowner from unforeseen or unknowable title defects and encumbrances.  You need title insurance to protect your investment.  In the event that a mortgage or another person claims a superior interest to your own, we as your agent, are able to help solve that problem. 
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2.  Do I have to purchase two different title insurance policies?
No you don’t. The seller of a property is required to pay for an owner's policy to insure to the buyer that they have clear title. The buyer is required by the mortgage company to buy a policy to insure that the mortgage company receives first lien status for the loan.  Who pays for these is determined by your purchase agreement.
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3.    Title insurance seems expensive, can I get a better premium rate somewhere else?
The insurance seems expensive but the rates are controlled by the state.  Every agent and underwriter is bound by controlled rates.  You may receive a credit by turning in an existing title insurance policy you may have.  We offer credits based on the age of the policy as well as the insured value. 
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TITLE & VESTING

4.    What are the requirements on my title commitment for?
Requirements are the documents required from the seller to clear the title.  Examples of these are deeds that may be in the possession of the seller that are not recorded, mortgages or liens that have to be paid off at the time of closing, as well as many other items we need, as your title agent, to make sure your title is as clear as possible.
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5.    What is the difference between “tenants in common” and “joint tenants with full rights of survivorship? 
There are significant differences between these tenancies. In the State of Michigan, if there is no tenancy mentioned on the deed, there is a presumption of a tenancy in common.  In order to take title as joint tenants with full rights of survivorship, you MUST notate that on the deed.  The most significant differences in these two tenancies occurs at the death of one of the tenants.  In the event that one of the tenants in common passes away, that tenants share of the property does not automatically pass to the other tenants.  The estate of the deceased tenant holds title until an order of the probate court determines who then owns that portion of property.  When a joint tenants with full rights of survivor ship passes away, that tenants interest automatically passes to every other joint tenant without an order of the probate court.  Before deciding on how you want to acquire title with others it is strongly recommended that you seek competent legal advice.
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6.    I am a married man whose wife is not on the deed, why does she have to sign anything? 
In the State of Michigan, a woman has a dower interest which gives her some rights in her husband’s property.  A man does not have dower. The only time a married man does not need his wife to sign a document is if he is purchasing a property, by himself and is giving a PURCHASE MONEY MORTGAGE to the other party.  That means that the mortgage is used to buy the property. 
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7.    I understand dower, but what is Homestead? 
In Michigan, a homestead is the fixed residence of the head of the family.  That means that if you and your spouse live in a home as your permanent residence, the spouse who is not on the deed must sign the mortgage.  This right cannot be waived.
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8.    I am divorced and my ex-spouse has deeded their interest to me, why are you asking to see my divorce judgment? 
Many times after a divorce, one spouse is ordered to deed to the other.  This does not mean that you, as the recipient of that property owns it free and clear.  Many divorce judgments contain stipulations for liens that do not appear in a deed.  As your title insurer we must verify that there are no outstanding liens of any kind.  The lien language in your judgment can appear anywhere within the judgment itself.  This is why it is imperative that we are able to examine the ENTIRE judgment.  Reviewing only the paragraph that covers the property settlement is not enough and might expose you, your buyer and us as your title agent, to the threat of a lawsuit.
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PROPERTY TAXES

9.    Why are my property taxes due twice a year?
There are two separate taxes, payable to two different entities, one the city, village, township or school district the other being the county in which you reside. In most areas, city taxes, village taxes and school taxes are due and payable July 1st, and cover the fiscal year to the following June 30. These are your Summer taxes. County taxes are due and payable December 1, and cover the fiscal year to the following November 30. These are your winter taxes. Some cities and schools send their taxes to be collected in the winter.
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10.    When do my property taxes become delinquent?
Taxes are due and payable July 1st for Summer, and December 1st for Winter. The summer taxes must be paid by the first week of September, before a penalty attaches.  The winter taxes must be paid by the first week of February.   You may want to check your bill or call the treasurer for the municipality or county that you live in to verify the delinquent status.
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11.    Why have my Summer taxes gone up?
The Michigan Legislature has passed a law that gradually shifts the Winter tax amounts into the Summer billing cycle. Over the course of the next three years, the County taxes, which are now due in December, will gradually move 1/3 at a time, to become due in July. After three years, you will only have ONE tax bill due July 1st.
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CLOSINGS

12.    I have sold my own home without an agent, What do I do after I get my title work?
You should be certain that your title company has all of your buyer’s contact information, especially the name and phone number of the buyer’s mortgage company. You should contact your buyer and provide them with a copy of your title work.  If there are any title issues, you should be working with us to resolve them.  Colonial Title Company can help you to get mortgage payoffs, condominium letters, tax bills and other items ready for your closing. To schedule your closing, you must co-ordinate with your buyer.  If your buyer is working with a mortgage company, or a real estate agent, all parties involved must agree upon a closing date and time.
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13.    Who schedules the closings and how far in advance do I schedule it? 
The Listing Agent typically schedules the closing.  If there are no agents involved, then the seller or loan officer schedules the closing.  Closings should be scheduled 5 days in advance, although this is not always possible.  The sooner you schedule the closing, the quicker we can process your closing package.
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14.    When is the best day and time to close? 
This is really a personal preference. Many people like to schedule their closing at the end of a month.  However, the best time to close is really within the first week of any month.  Many lenders are willing to work with a new purchaser and give them and interest credit and reduce their cost at closing.  It is also best to close earlier rather than later in the day.  This assures you that your mortgage company or bank will be open and will be able to solve any problems that may come up in closing and assures you that the bank’s money will be wired in time.
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15.    I work until 5:00 P.M., why can’t I get a later or earlier appointment to close? 
Most banks, mortgage companies, financial institutions and home owner’s insurance companies close at 5:00 P.M.  A closing after 5:00 P.M. could mean complications in the funding of your loan as well as other unforeseen problems.  We urge sellers and buyers to take the morning off.  A transaction that probably represents the largest, single investment of your life needs to be done right and with the respect it deserves.
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16.    My bank is open on Saturday and Sunday, can I close then? 
Your branch might be open but nearly every mortgage and property division of financial and lending institutions are closed.  The same problems that may arise with a late closing are present with a weekend closing.
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17.    What should I bring with me to closing? 
Every closing is a little different.  For every closing you will need state-issued picture identification.  It may also be a good idea to have your last pay stub if you are purchasing with a mortgage.  If you just sold your house you may need proof that your old mortgage was paid off  when you buy your new house.
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CLOSING PROCEDURES

18.   What are tax prorations?
Tax prorations are charged to the Purchaser on the Settlement Statement and the Seller is credited with the same amount.  The amount represents the Purchaser’s share of this tax bill.  The actual amount of the proration depends on the type of tax and the period covered by the bill.  Prorations are usually based upon the current year’s tax amounts.  Your purchase agreement dictates if and how your taxes are to be prorated.
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19.    What are tax escrows and how do they work? 
Each month, when you make your mortgage payment, part of it is placed in an escrow account managed by your mortgage company. When your taxes are due, they are paid from this escrow account. Depending upon the date you close, there may not be enough time to build up an adequate amount to pay the entire tax bill. Therefore, the mortgage company may request that a number of months of escrow be collected from you at your closing, to ensure that there will be enough money to pay your taxes.
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20.    Why do I have to file a property transfer affidavit? 
Failing to file a property transfer affidavit promptly can result in a fine. Also, the affidavit triggers the assessment of the property, and sets the amount of your property taxes for the future year. It is possible for the taxes to be increased retroactively with penalties and interest when an affidavit is not filed timely.
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21.    Can I appoint a Power of Attorney to act on my behalf at the closing?
It depends, if you are the Seller, the title company must approve the Power of Attorney prior to the closing date and they generally need the original Power of Attorney to record along with the Warranty Deed. If you are the purchaser, the title company must approve the Power of Attorney prior to the closing date and, if you are obtaining financing from a lender, they must approve the Power of Attorney as well.   We will need the original Power of Attorney to record. Power of Attorneys can be rejected if not property prepared and executed.
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22.   What is transfer tax?
Transfer tax is based on the selling price of the property and is paid by the Seller. The seller pays the transfer tax usually because the purchase agreement states so. There are two types of transfer tax:  state and county.  Both of these taxes are paid to the Register of Deeds when recording the Deed.  State transfer tax is .0075 X the sales price – rounded up in increments of 500.  County transfer tax is  .0011 X the sales price – rounded up in increments of 500.  Transfer tax is determined by an act of the state legislature.
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23.    If my water bill is a utility, why is it on the closing statement?  
The purchase agreement usually states that all water bills must be paid at closing.  As your closing agent, we do our best to make sure the final water charges are paid.  If not, the water may be cut off and the bill added to next years taxes. 
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24.    Why are you collecting so much interest on my mortgage payoff statement?
Our procedure is to collect two additional working days after the date of closing for interest on a mortgage that is being paid off at the closing.  This additional interest allows 1 day for internal processing and overnight services.  The mortgage company that is paid off will refund any overage on the account to the seller within 14 days.
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25.    As a Seller, do I have to pay taxes to the IRS?
Only a competent tax advisor or CPA can answer that question.  Usually, if you sell your principal residence we do not report that information to the IRS.  If you are selling an investment property, we will report your gross sales price and tax proration to the IRS.
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AFTER CLOSING

26.   What is a rescission period for refinances?
The Right of Rescission for primary residences is a non-waivable federal law that allows a borrower to cancel a refinance decision anytime within three business days of the closing, excluding Sundays and sometimes Saturdays.    If you are refinancing an investment property, there is no Right of Rescission.  It is an immediate disbursement at the time of closing.
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27.    Is there a rescission period for purchases? 
No.  There is no right of rescission on a purchase.  Colonial Title Company strongly recommends the use of competent legal counsel BEFORE you sign your purchase agreement.
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28.   What happens if either party receives a tax bill after the closing?
If you sold the property and receive a tax bill, contact the purchaser and the title company and forward both a copy of the bill. The sellers are responsible for property tax bills that are due as of the date of closing.  If property taxes become due after the closing date, it is the purchaser’s responsibility to pay the due taxes. For example, if you are the seller, and you close November 30th, the Winter taxes that are available on December 1st are the sole responsibility of the purchaser. 
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29.    How long does it take to get my title policy?
How quickly you receive your owner’s policy depends on how quickly the Register of Deeds can record and post the recording information for your documents.  All documents sent for recording must be properly recorded and returned to the title company before we can issue the title insurance policies.  Sometimes delays can occur if the seller’s mortgage company is slow to record a discharge.  The typical wait is 4 months.
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30.    How long should I keep my closing documents?
You should keep your closing documents in a safe place – preferably, the same place you keep all other important paperwork.  The Seller should retain their documents for at least 7 years for IRS/tax purposes.  The Purchaser, however, should hold onto their closing documents for as long as he or she owns the property.  There are many occasions when trying to resolve title matters/discharge problems, when a subsequent Title Company will want to know information about the purchase.  Was a mortgage paid off?  Who was the Title Company that handled the closing?  Was Owner’s Title Insurance purchased? 
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