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Contract To Close Process

 

Luxury Real Estate Advisors Closing Process Explained

 

Summary/Glossary

Disclosures Explained

The following is a list and brief description of disclosures that may be required for your transaction:

Duties Owed By a Nevada Real Estate Licensee

The purpose of the Duties Owed form is to make the buyer or seller aware of obligations owed by a real estate licensee to all parties involved in the transaction.

Seller’s Real Property Disclosure

The purpose of the Seller’s Real Property Disclosure form is to make the buyer aware of the overall condition of the property before it is transferred. This disclosure is not a guarantee nor does it take the place of an inspection. In some cases, a Seller has never lived on the property and may have no knowledge of the condition of the property. The Buyer is advised to obtain an independent inspection performed by a properly licensed home inspector. This form is not required for new home sales.

Common-Interest Communities and Condominium Hotels

The purpose of the information statement required when purchasing a home or unit in a common-interest community or a condominium hotel is to make the buyer
aware of all rights, obligations and other aspects related to owning a unit within a common-interest community (also known as a homeowner’s association) or a
condominium hotel. The statement makes buyers aware that the use of their units can be restricted by the Declaration or CC&R’s. It also alerts buyers that foreclosure of the unit is possible for failure to pay assessments.

Resale Package

In transactions involving the resale of a unit previously sold by the developer, a resale package must be provided to the buyer at the expense of the seller. In addition to the information statement, the resale package includes the following: the declaration, bylaws, rules and regulations, monthly assessments, unpaid assessments of any kind, current operating budget, financial statement, reserve summary, unsatisfied judgments, and status of any pending legal actions.

Construction Defects

The purpose of disclosures relating to construction defects is to make the buyer aware of any construction defects in
the property.

If there is a construction defect, the contractor must disclose the information in understandable language that is underlined and in bold-faced type with capital letters. If the property is or has been the subject of a construction defect claim or lawsuit, the seller must provide the
following information to the buyer:

  • Copies of all notices given to the contractor
  • Expert opinions obtained by the claimant
  • Terms of settlement or order of judgment
  • A detailed report of all repairs

Home Inspections

Luxury Real Estate Advisors strongly suggests the buyer obtain a home inspection to evaluate the physical condition of the property prior to purchase. The form is entitled, “For Your Protection: Get a Home Inspection.”

Title Report Explained

The Preliminary Report is an offer to issue a policy of title insurance covering a particular estate or interest in land subject to stated exceptions.

Since these exceptions may point to potential problems with your intended purchase, it is important for all parties to review the report once it is received.

A Preliminary Report provides a list of the matters which will be shown as exceptions to coverage in a designated policy or policies of title insurance, if issued currently, covering a particular estate or interest in land. It is designed to provide an interim, or “preliminary” response to an application for title insurance and is intended to facilitate the issuance of the designated policy or policies. It is normally prepared after application (order) for such policy(ies) of title insurance on behalf of the principals to a real property transaction, for the purpose of facilitating requirements relative to closing and policy issuance in form and content approved by those parties.

If a title policy is not contemplated, a Preliminary Report should not be ordered. Instead, consideration should be given to requesting a Condition of Title Report or other similar title product.

The Preliminary Report states on its face that it is made solely to facilitate the subsequent issuance of a title insurance policy and that the insurer assumes no liability for errors in the report. Accordingly, any claim arising from a defect in the title must be made under the title policy and not the Preliminary Report.

After a title order has been placed, matters relative to the title policy coverage on the subject property are assembled in a title search package and examined by skilled technicians. This is when the Preliminary Report is prepared and sent to the customer. The report contains relevant information so that the parties to the transaction will become aware of matters which will not be insured against by the title company. This report is issued before the title policy, hence the name Preliminary Report.

Content Of The Report:

  • The estate of interest covered.
  • The owner of the estate or interest.
  • The parcel of land involved.
  • The exceptions, liens, encumbrances and other risks will not be insured against if a title policy is issued.
  • Other requirements and provisions are reflected as “Notes” in the Preliminary Report which are removed if and when a title policy is issued.

Title Insurance Explained:

There are two types of title insurance – owner’s title insurance (an Owner’s Policy), which protects the buyer, and lender’s title insurance (a Loan Policy), which protects the lender. In a typical residential transaction, the title policy often required by the mortgage lender will not safeguard the rights and interests of the homebuyer, therefore, a separate Owner’s Policy is necessary. An Owner’s Policy is typically issued in the amount of the real estate purchase price and remains in effect for as long as the owner, or his or her heirs retains an interest in the property. In addition to identifying risk before a transaction is completed, the Owner’s Policy will pay valid claims and all defense costs against attacks on the title.

A Loan Policy assures the lender of the validity, priority, and enforceability of its lien (mortgage) – serving as protection for the lender’s security interest in the property. A Loan Policy is issued in the amount of the loan, and liability decreases as the mortgage debt is reduced. Among the many risks covered by title insurance are:

• Mistakes in the interpretation of wills or other legal documents
• Impersonation of the owner
• Forged deeds, mortgage releases, etc.
• Instruments executed under fabricated or expired powers of attorney
• Deeds delivered after death of seller or buyer
• Undisclosed or missing heirs
• Wills not probated
• Deeds or mortgages by those mentally incompetent or of minor age (or supposedly single but actually married)
• Birth or adoption of children after dating of the will
• Mistakes in public records
• Falsified records
• Confusion from the similarity of names
• Transfer of title through foreclosure sale where requirements of foreclosure statue have not been strictly met

Information deemed reliable, but not guaranteed, contact the Escrow Officer for confirmation. 

Wire Fraud Prevention

From day one, inform your client on how you will be communicating with them throughout the real estate transaction and how any other parties involved in the
transaction (i.e. title company) will be contacting them. Let them know you will never ask them to send sensitive information via email.

  • Do not open suspicious emails, click on any links or open attachments.
  • Be wary of emails purporting to send new wire instructions or demanding funds several days or even weeks before closing.
  • Make sure to change your usernames and passwords frequently and never use passwords that are easy to guess like password or 123456.
  • Do not save wiring instructions on your desktop and send to the client. Land Title always sends the instructions via a secured email.
  • Always double-check and verify the phone number contained in the email for the intended recipient of the wire.
  • If in doubt call the title company directly using a known number, such as the number on the title commitment.

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Call/Text: 702.482.8885 [email protected]

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