Three days prior to settlement, the Buyer or Seller casually informs you (the real estate agent or loan officer) that he will not be in town for closing. He wants his best friend to represent him (as attorney-in-fact) at settlement and asks you whether the Power of Attorney he purchased at Office Depot will satisfy the settlement company or the lender. The following list of “essential elements” typically required in an enforceable power of attorney should help you answer his question with reasonable confidence:

1. Most settlement companies prefer (if not require) that the power of attorney be a “specific” power of attorney as opposed to a "general" power of attorney. This means that the duties and powers of the attorney-in-fact as set forth in the instrument specifically relate to the purchase (or sale) of the subject property. This differs from a general power of attorney through which the principal vests the attorney-in-fact with broad and unlimited powers that may touch upon all or many aspects of business and personal life.
2. The power of attorney should be dated.
3. The power of attorney should clearly set forth the name of the individual who has been chosen to represent the principal at settlement. Note that the attorney-in-fact named in the power of attorney cannot transfer his power to yet another party.
4. The Seller’s power of attorney should contain, specifically, the power to sign a deed.
5. The power of attorney should contain a legal description of the property that is the subject of the transaction and should set forth the street address as well.
6. The power of attorney should contain a disability clause which provides that the power of attorney will remain effective despite the fact that the principal may later become disabled, or incompetent.
7. The power of attorney must bear the original signature of the principal and this signature must be notarized. If the power of attorney is signed outside of the United States, additional certifications will be required.
8. Note that in cases where a purchaser uses a power of attorney, the lender may require a copy to be submitted for approval. In some cases—i.e., VA loans—the lender may require the use of a specific format for the power of attorney that includes terms such as loan amount, interest rate, loan term, and other items.
9. If your client does indeed provide his own power of attorney, it is critical that you have both the settlement company and the mortgage lender review it as soon as possible. Should either the settlement company or lender reject the document that your client has produced, you may still have enough time prior to settlement to have an acceptable power of attorney drawn up and signed. In such a case, feel free to call Beltway Title for assistance.

What Dictates Whether We Need A Survey Affidavit Or No Survey At All On A Particular Case?

Typical of most residential real estate settlements in Maryland is a review of a survey of the property by both the settlement attorney and mortgage lender. The primary purpose of the survey review is to enable the attorney to confirm that the home and any related improvements lie within the established property lines. The survey is, typically, ordered by the settlement attorney several weeks before settlement. The attorney will be concerned primarily about the following items:

• The legal description and address of the property designated on the survey should match that which is set forth in the deed vesting title in the current owner.
• No part of the home and no related structures such as sheds, garages or surrounding fences should “encroach” beyond the property lines.
• No part of the home, sheds or other structures, though located within the designated property lines, should lie beyond the “minimum building restriction lines” located upon the property. Typically, these lines are established to guarantee that there exists a minimum amount of clear space between one home and other.
• No fence or structure owned by a neighbor should be found to encroach upon the property which is the subject of sale.
• No unusual easement or right of way should exist which may prevent an owner from typical use and enjoyment of the property.

The settlement attorney’s review of the survey is a very important component of his title examination. For example, a neighbor’s fence which encroaches upon the subject property may indicate a title problem: if the neighbor has been treating that area of the subject property up to the fence as his own, he may have thereby acquired ownership. This is but one of the many types of title problems which would be disclosed through the survey review.

The good news is that, with respect to a refinance settlement, an owner of property may be able to use the survey he acquired at the time he purchased the home and thereby avoid the cost of a new survey. Typically, the settlement attorney and mortgage lender will accept the old survey provided, however, that the survey is not more than a specified age. In addition, the owner will have to sign an affidavit to the effect that no changes (i.e. any new decks, patios, fences, etc.) have occurred since the time of the last survey.

Frequently Asked Questions

1. WHAT DOES A TITLE COMPANY DO?
   Think of a title company as the final stop on the road to a real estate or refinancing settlement. We oversee the interests of all parties — buyers, sellers, lenders, real estate agents — and coordinate the transfer of money and property at the time of closing. Prior to settlement the title company will research the ownership history of the property (title examination) to determine that the title is free of any liens or claims. At the settlement table, the title company collects and distributes funds from the transaction, transfers ownership of the property, and issues title insurance.
   
   
2. WHAT IS TITLE INSURANCE, AND WHY DO I NEED IT?
   Title insurance protects you, the property owner, and the lending institution that holds your mortgage from unforeseen claims that may arise against your property. The policy provides protection from financial loss and payment of legal costs associated with such claims. For more information click "Why buy title insurance?".
   
   
3. BUT IF THE TITLE COMPANY DOES ITS JOB RIGHT, WHY WOULD I HAVE TO BE CONCERNED ABOUT CLAIMS AGAINST MY PROPERTY?
   The title examination performed by the title company is thorough, but limited to public records. Suppose a prior owner of your property recorded a forged deed. There would be no way for the title company to know that this document was a fake. At some point, the rightful owner could come forward to claim ownership of the property. Without title insurance, your investment is at risk.
   
   
4. DO TITLE COMPANIES CHARGE DIFFERENT RATES FOR TITLE INSURANCE?
   Title insurance rates are set by state insurance commissions and are based on the purchase price of your property (owner's policy) and the loan amount (lender's policy).
   
   
5. AM I REQUIRED TO PURCHASE TITLE INSURANCE?
   Most lenders will require that you purchase a lender's title insurance policy. This protects their investment in your property. You are not required to purchase an owner's policy; however, your one-time payment will protect your property for as long as you own it.
   
   
6. I KEEP HEARING ABOUT SETTLEMENT COSTS. BESIDES PAYING FOR TITLE INSURANCE, WHAT OTHER FEES WILL THE TITLE COMPANY CHARGE?
   You will probably be asked to pay for the title examination, as well as fees for handling the settlement and document preparation, as well as out of pocket expenses.
   
   
7. WHY TITLE INSURANCE IS NEEDED WHEN REFINANCING A MORTAGE LOAN.
   Today's lower interest rates have spurred you to refinance your mortgage. Now you can expect to reap the benefits of substantially reduced monthly mortgage payments, but you can also expect to pay the lender the typical closing costs associated with any mortgage loan.
   
   Why? Because from the lender's standpoint, a refinanced loan is no different than any other mortgage loan. So be prepared for service fees or points and other expenses including a new charge for title insurance.
   
   Title Insurance is Important When Refinancing
   Why do you need to buy title insurance again even though you purchased a policy when you first bought your home and there is no change in ownership? It's because a separate policy is needed by the lender insuring the validity of your mortgage when it is made. For as long as you own the property your mortgage is valid, but it doesn't insure the new mortgage created when you refinance, and it doesn't provide protection against events that may have transpired between the time you purchased the property and when it is refinanced.
   
   For example, you may have taken out a second mortgage on the home that could threaten the priority of the new lender's mortgage. Or, there could be legal judgments against you or a mechanic's lien against the property by a supplier who wasn't paid for home improvements.
   
   Lenders also insist on a new title policy because many mortgages are packaged as securities and sold to investors in the secondary mortgage market. Title insurance is the only practical way to provide the assurance investors demand and to ensure that the mortgages backing these securities are valid and enforceable.
   
   
8. DO ALL TITLE COMPANIES CHARGE THE SAME FEES FOR THEIR SERVICES?
   Fees may vary from company to company. All reputable companies will supply you with a good faith estimate of their fees and the cost of title insurance prior to settlement.
   
   
9. WHO CAN I CALL IF I HAVE OTHER QUESTIONS?
   Call any of Beltway Title's conveniently located offices throughout Maryland, and Virginia. Our expert staff will be happy to assist you.
   
   
10. WHAT ARE THE PURCHASER(S) RESPONSIBILITIES AND COSTS?
    The purchaser(s) are responsible for delivering to the closing a cashiers or certified check and policy for homeowners insurance. The costs associated with the buyer include the recording of closing documents, mortgage closing costs and the balance of sale between buyer and seller. The balance of sale costs is itemized in the Closing Statement prepared the Beltway Title and Abstract, Inc. The mortgage costs must be obtained from the purchaser(s) mortgage company.
    
    
11. WHAT ARE THE SELLER(S) COSTS?
    The costs to the seller(s) are deducted from the proceeds of the sale. Examples of the costs are as provided in the Contract of Sale, transfer tax, commission, mortgage payoffs, etc.
    
    
12. HOW MANY DAYS IN ADVANCE DO I NEED TO SET UP MY CLOSING?
    By submitting all of the necessary information for closing, Beltway Title and Abstract, Inc. can close your transaction at your convenience but, at least a few days are necessary for Beltway Title to order and receive a title abstract and payoff information from existing lenders.
    
    

13.  WHAT ITEMS ARE NEEDED AT CLOSING?
You will want to have these items complete or in hand when you come to the closing:

Buyer 

-Buyer's copy of purchase agreement
-Certified or Cashier's check(s) to make all payments
-Proof of purchase of insurance for fire, casualty, etc.
-Photo identification (passport, driver's license, or state-issued identification card)

Seller

-Seller's copy of purchase agreement
-Invoices for any unpaid taxes, utilities, assessments, and latest
utilities meter readings
-Receipts for last payment of interest on mortgages
-Any unrecorded instruments that affect the title
-Proof of satisfaction of any mechanics' liens, chattel mortgages, judgments, or mortgages that were paid prior to the closing
-Photo identification (passport, driver's license, or state-issued identification card)

14.  CLOSING PROTECTION LETTERS: WHAT ARE THEY AND WHY DO LENDERS REQUEST THEM?
Many lenders routinely request closing protection letters. A closing protection letter, sometimes referred to as an insured closing letter, is a document issued by title insurance underwriters that sets forth an underwriter's responsibility for negligence, fraud and errors in closings performed by agents and approved attorneys. It indemnifies the Lender against loss or damage arising from a breach of certain fiduciary duties owed by the closing agent to the parties to the transaction. This document is necessary because the agency /principal relationship between an underwriter and a policy issuing agent or approved attorney is limited to the issuance of a policy and does not extend to escrow functions.

15.  WHAT IS A TITLE SEARCH?
You've decided to purchase a home and hope to take possession as soon as possible. The terms have been agreed upon and all the financial arrangements have been made. But there's one important detail remaining. Before the transaction can close, a title search must be made.

The most accurate description of title is a bundle of rights in real property. A title search is the process of determining from the public record just what these rights are and who owns them.

A title search is a means of determining that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property (title) that he or she is paying for.

The title company in those jurisdictions can undertake the search process where the company maintains offices. In some areas, however, only practicing attorneys make searches. However the search is performed, in most real estate transactions today a title insurance policy is purchased to assure the buyer that he or she has purchased a valid title.

In those transactions where title insurance is involved, the title company must determine insurability of the title as part of the search process. This leads to the issuance of a title policy, which insures the existence or non-existence of rights to the property.

The title insurance company will, at its own expense, defend the title and will pay losses within the coverage of the policy if they occur. But what exactly, is involved in a title search? Beltway Title and Abstract, Inc. provides the following step-by-step review:

Chain of Title
This is simply a history of the ownership of a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records usually a County Clerk's or Recorder's Office or obtained from title plants privately owned and maintained by title companies. There are great varieties of such plants index cards, punch cards, tract books, and even sophisticated computerized plants. However, they all contain essentially the same information from which the history of the title may be secured.

Tax Search
This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due.

A due and unpaid tax or special assessment can be a prior lien or claim on the property above all others. If a buyer purchases property with unpaid and past due taxes or assessments against it, he or she is likely to find a government body, the village, county or state placing the property up for sale to pay those taxes or assessments. A tax search reveals the status of the taxes. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

Judgment and Name Search
One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners, which were in existence while they owned the title. A judgment is a general lien against the debtor's real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.

It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So all possible variations of the name must be examined.

Rights established by judgment decrees, unpaid federal income taxes, and mechanic's liens all might be prior claims on the property, ahead of the buyer's or lender's rights. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

Commitment
When these searches have been completed, the title company issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title, which may have been uncovered by the search and examination.

The mortgage lender is as concerned as the buyer about the quality of the title because the property is to be security for the new mortgage loan. The mortgage lender requires assurance that it has a valid first (or another acceptable priority) mortgage lien on the property. This is not only common sense, but generally is a legal requirement of regulated mortgage lenders.

The lender's title insurance, however, doesn't protect the new buyer of the property. Although the land is the same, the interest of the buyer and the interest of the lender are very different. The provisions of a lender's title insurance policy are very different from those of a buyer's policy, so the buyer should obtain his own policy, often issued simultaneously with the lender's policy.

Why Buy Title Insurance?

Your title insurance policy protects you from additional hazards which may not be revealed in the records:

• Marital status of owner incorrectly given
• Deeds, wills, and trusts that contain improper vesting and incorrect names
• Transfer of property by a mental incompetent or minor
• Property line disagreement (i.e. a neighbor builds a fence over your property line)
• Confusion due to similar or identical names
• Outstanding mortgages, judgments, and tax liens
• Easements
• Incorrect notary acknowledgments
• A forged deed that transfers no title to real estate
• Previously undisclosed heirs with claims against the property
• Instruments executed under expired or fabricated power of attorney
• Mistakes in the public records

Under the terms of a title insurance policy, you are protected against risks and insured against loss by provision of legal counsel to defend your rights under the policy, or by being reimbursed for any loss sustained. The original premium is your only cost as long as you or your heirs own the property. You really can't afford not to be protected!

When you buy an ordinary article like a coat, a television or a watch, you do not need to know whether the former owner is married, single or divorced. You may buy a share of stock or a bond without being concerned whether the seller has a tax bill due. You may buy another person's car without being concerned whether there are any suits or judgment against the person. But when you buy a condominium, a house or any other type of real property, it is vital to know all of these things - and many others, too. You should have a search of the real property records or you may discover that the property you bought and paid for is not actually yours at all. And even after the investigation, you will need protection in the event that someone makes a claim against your property based upon information that was not discovered during the title search or based upon an interest that was not discoverable (see list above) from the title search. This is the protection afforded by a title insurance policy.

Many special laws have been enacted for the protection of real estate - laws so strict and far-reaching that real estate is more strongly safeguarded than any other form of property. As a result, the owner of land has exceedingly strong rights, as do the family and heirs of the owner. Others have "rights" in the property, as well: mortgagers and leasehold rights, liens for unpaid taxes or others to whom the owner owes money, mining, oil or air rights, etc. Any who has such a claim is, in a limited way, a part owner and can only be deprived of their interest through settlement or release of the claim. The claim is still valid even if the property is sold without their knowledge. As a new owner, you may know nothing about these risks, but you are still vulnerable to such claims on your property. You need title insurance to protect you.