Key Takeaways
- Title searches trace 40-60 years of public records to confirm clear, marketable title.
- Both owner's and lender's title insurance policies are essential for investment property acquisitions.
- Four deed types offer different warranty levels—general warranty provides the most protection.
- Escrow manages the complex fund flows at closing and ensures all conditions are satisfied before disbursement.
This lesson recaps the structural frameworks from Track 1: the closing process framework, title search mechanics, title insurance structures, deed types, and the escrow fund management workflow.
Key Stakeholders
Title and Insurance Structures Recap
The title search traces 40-60 years of ownership history through public records. Four categories of defects (lien, ownership, encumbrance, survey) each require different resolution strategies. Owner's policies protect buyer equity while lender's policies protect the mortgage. Extended ALTA coverage adds off-record protection for 10-20% additional premium. The title commitment must be reviewed within the objection period.
Escrow and Closing Recap
Escrow opens with the executed purchase agreement and earnest money deposit. The escrow agent tracks all conditions and manages fund flows at closing. The settlement statement itemizes every charge and credit and must balance to the penny. Prorations for taxes and rents are calculated based on the closing date. General warranty deeds provide the highest protection; quitclaim deeds provide none.
Key Takeaways
- ✓Title searches trace 40-60 years of public records to confirm clear, marketable title.
- ✓Both owner's and lender's title insurance policies are essential for investment property acquisitions.
- ✓Four deed types offer different warranty levels—general warranty provides the most protection.
- ✓Escrow manages the complex fund flows at closing and ensures all conditions are satisfied before disbursement.
Sources
Common Mistakes to Avoid
Reviewing only the title commitment summary page without reading Schedule B exceptions in detail
Consequence: Easements, restrictive covenants, and encumbrances that limit property use or value go undetected until after closing
Correction: Read every Schedule B exception in full and obtain copies of all referenced documents (easements, CC&Rs, prior liens) for legal review before the objection deadline
Assuming the escrow agent independently verifies compliance with all contract terms
Consequence: Escrow agents are neutral stakeholders who follow instructions; they do not verify that inspection, financing, or title contingencies have been properly satisfied
Correction: Maintain your own closing checklist and verify each contingency independently before instructing the escrow agent to release funds
Test Your Knowledge
1.What is the key difference between an owner's title policy and a lender's title policy?
2.Which deed type provides the highest level of buyer protection?
3.What must the settlement statement achieve at closing?