Confused on what some things mean in Real Estate?
Please, allow me to explain…
What is Title?
Title insurance is a form of insurance that protects the holder from financial loss sustained from defects in a title to a property. The most common type of title insurance is lender’s title insurance, in which the borrower purchases coverage only to protect the lender. Owner’s title insurance is often paid for by the seller to protect the buyer’s equity in the property, and is available separately. Title insurance is a form of indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property. The most common claims filed against a title are back taxes that had been missed by a title company, liens (from mortgage loans, home equity lines of credit, easements, and conflicting wills). A one-time fee paid for title insurance covers pricey administrative fees for deep searches of title data that could go back to the early 1800s!
What is Escrow?
Escrow is the use of a third party, which holds an asset or funds before they are transferred from one party to another. The third party holds the funds until both parties have fulfilled their contractual requirements. Escrow is associated with real estate transactions, but it can apply to any situation where funds will pass from one party to another. The escrow agent holds the funds until it receives appropriate instructions or until predetermined contractual obligations are fulfilled. Money, securities, funds, and other assets can all be held in escrow.
What is Supplemental Tax?
When properties change ownership, the state law requires the Assessor to reappraise property upon a change of ownership or new construction. The supplemental assessment reflects the difference between the new assessed value and the old or prior assessed value.
What is a Contingency?
Essentially, a contingency clause gives parties the right to back out of the contract under certain circumstances that must be negotiated between the buyer and seller. Criterias to be met by either buyer or seller before the deal can close. Such as Home Inspection, Appraisal, Buyers Loan, Title search, are all contingencies of a Real Estate transaction.