Question 1

What is title insurance and why do I need it?

Accepted Answer

Title insurance protects you from financial loss if a problem with the title is discovered after closing. Even after a thorough title search, issues can surface that weren't in the public record, like forged documents, clerical errors, or claims from unknown heirs. Unlike other types of insurance that protect against future events, title insurance protects against past events that could affect your ownership rights. You pay a one-time premium at closing and the coverage lasts as long as you or your heirs own the property.

Question 2

What is the Homeowners’ Title Insurance Policy?

Accepted Answer

As previously stated, Homeowners’ Title Insurance has certain provisional coverages (along with some standard exceptions); however the Homeowners’ Title Insurance Policy has the flexibility to have these exceptions deleted thereby providing extended coverage protection for zoning code violations, etc. The traditional Owner’s Policy only looks backwards in time to see what has happened and then insures against loss. With the Homeowners’ Title Insurance Policy protection, we also look ahead. This means we are giving coverage for things that may have happened but are not known, as well as things that have not yet occurred but, if and when they do, will leave the property owner wondering what to do and how he or she is going to pay for it if they don’t have the Extended Policy Protection.Some of the Post-policy protections are as follows:Post-policy protection for covered risk which means that some defects in title that did not exist at the time the insured purchased the property, but are now asserted by others, are covered.Post-policy forgery which means the homeowner is covered when someone forges the insured’s signature to a deed or mortgage in an effort to sell or impose a lien or restriction on their home.Post-policy encroachment coverage protects the homeowner if, after his or her purchase, someone else builds a structure (excluding boundary walls and fences) which encroaches on the homeowner’s land.Post-closing easement by prescription covers the homeowner in the event another party claims to have the right to use a part of the insured’s land as an easement because of continuous use over time.Post-policy building permit and zoning violations which would extend coverage to a homeowner who is forced to remove or correct existing structures that were build with a building permit or that violate an existing zoning law or zoning regulations.In addition, the Homeowners’ Title Insurance Policy contains graduated liability coverage, which many buyers have expressed a desire to have in the past. This means the amount of insurance (Policy Amount) will automatically increase ten percent each year for the first five years following the issuance of the policy. This adds up to 125% coverage for only 15% more in premium.Also, even if the insured transfers the title to the property to a trust for estate planning purposes, where the insured is the trustor/settlor of the trust, the policy continues in force as of its original effective date. This is not expressly allowed under any other policy. Under the terms of all other policies, a transfer of the title usually terminates coverage. With all other policies the only way the insured can be sure he or she has not lost their coverage when transferring to their trust is to obtain a special endorsement. This costs extra money.Please contact us at Sterling Land Title and we can tell you more about the remarkably innovative range of features and benefits creating the protection every homeowner needs with the Homeowners’ Title Insurance Policy.

Question 3

Who pays for what?

Accepted Answer

SELLERBUYERReal estate agent compensation (if agreed upon in purchase contract)Down paymentMortgage payoffEarnest Money (credited at closing)County conveyance fee / transfer taxLoan origination feesDeed preparationAppraisalProperty tax prorationsCredit reportHOA dues through closing (if applicable)Home inspectionHOA transfer fees (if required by HOA)Pest inspection (if desired)Seller-paid repairs (if negotiated)Survey (if required)Owner's title obligations/customary title charges (varies by county)Lender's title insuranceAny negotiated buyer closing cost creditsOwner's title insurance (when negotiated or customary)Recording releases for existing mortgageRecording fees for new mortgage & deedUtility prorationsHomeowners insurance premiumHome warranty (if seller agrees to provide one)Prepaid property taxes & insurance escrowRemaining closing costs assigned by contractRemaining lender & closing costs

Question 4

What is a Tax Proration?

Accepted Answer

Visit our Customer Center to see our proration calculator.Real Estate Taxes are collected by the County Treasurer twice a year in all Ohio counties.  The payment due dates vary but are traditionally due in February and July.  Real Estate Taxes are billed in a current year, but represent the taxes for the PREVIOUS calendar year.  Therefore, the February Tax Bill that comes due in any given year represents the taxes for the PREVIOUS year’s first six months.  Likewise, the July Tax bill for any given year represents the PREVIOUS year’s second six months period.  Once both half tax bills are paid for the given year, the taxes are paid as current as they can be, even though that means only the PREVIOUS year’s taxes have been paid.With real estate taxes being a year behind in their collection, purchase transactions require the Seller to provide a proration to the Buyer towards future tax bills that will come due after closing, that will be the Buyer’s obligation to pay, but represent a period the seller owned the real estate.There are two basic proration types used in residential real estate transactions.  These two types of proration methods are referred to as LONG proration and SHORT proration.  The type of proration used in a transaction is predicated by the Purchase Contract provision regarding real estate taxes.The local Board Purchase Contract provides these two options and a simple rule to follow is:If the Closing takes place in the first Six Months of the Year:SHORT:  The Seller pays the FEBRUARY tax bill and pays the Buyer a proration from January 1 of that year to the date of closing.  Buyer is responsible for the JULY tax bill and all future bills.LONG:  The Seller pays the FEBRUARY tax bill and pays the Buyer a proration from July 1 of the previous year to the date of closing.  Buyer is responsible for the JULY tax bill and all future bills.If the Closing takes place in the second Six Months of the Year:SHORT:  The Seller pays the FEBRUARY tax bill and pays the JULY tax bill and pays the Buyer a proration from July 1 of that year to the date of closing.  Buyer is responsible for the tax bills that will come due the next year and all future bills.LONG:  The Seller pays the FEBRUARY tax bill and pays the JULY tax bill and pays the Buyer a proration from January 1 of that year to the date of closing.  Buyer is responsible for the tax bills that will come due the next year and all future bills.While by no means a fast and hard “rule”, and since the Purchase Contract determines the proration method used, here is a quick guide to the various local counties and their traditional proration methods:“Short” Counties:  Montgomery & Miami“Long” Proration Counties:  Clark, Champaign, Greene, Shelby, Preble, Butler, HamiltonFor example… When a property is sold, real estate taxes are prorated between the buyer and seller based on each party's period of ownership. Because Ohio property taxes are paid in arrears, the seller typically provides the buyer with a credit for the taxes attributable to the seller's ownership period.Example: A home with annual property taxes of $7,300 closes on June 1, 2024. Since Ohio property taxes are paid in arrears, the seller credits the buyer for the portion of the year the seller owned the home before closing.Ohio's property tax year is divided into two cycles:First Cycle: January 1 – June 30Second Cycle: July 1 – December 31Short proration is the most common method used in many Ohio counties. The seller credits the buyer for the portion of the current tax year they owned the property, from the beginning of the tax period through the closing date.Example (Closing Date: June 1):Annual Property Taxes: $7,300Daily Tax Rate: $20 ($7,300 ÷ 365)Seller Credit: 152 days × $20 = $3,040Buyer Responsibility: Remaining 213 days = $4,260

Question 5

What is 1031 Exchange?

Accepted Answer

A 1031 exchange is an IRS-approved strategy that allows real estate investors to defer capital gains and depreciation recapture taxes. By selling one investment property and reinvesting the proceeds into a similar ("like-kind") property, investors can delay their tax burden and roll their equity into larger or more profitable assets.

Question 6

What does "like-kind" mean?

Accepted Answer

The property being sold and the one being purchased must be of the same nature or character. Almost all real estate qualifies, meaning you can trade an apartment building for raw land, or a retail space for a rental house. Personal residences do not qualify.

Question 7

What is the standard turn around time on title?

Accepted Answer

Our standard turnaround time on title examination is 7-10 business days. Please note, this is not the turnaround time on closing a transaction.

Question 8

What is a title search and what does it look for?

Accepted Answer

A title search is a review of public records going back through the history of a property to make sure the seller has the legal right to sell it and that no outstanding issues could affect your ownership. We look for things like unpaid liens, back taxes, judgments, easements, boundary disputes, undisclosed heirs, and errors in prior deeds. The goal is to make sure the title you're receiving is clean before you close.

Question 9

What do I need to bring to closing?

Accepted Answer

Two things: A valid government-issued photo ID and your closing funds. We prefer two forms of ID if you have them. Your settlement statement will show the exact amount due, and please review the Ohio Good Funds Law FAQ above to make sure your funds are in the right form before closing day.

Question 10

What is the Ohio Good Funds Law and what does it mean for you?

Accepted Answer

Ohio law requires that all funds needed to close a real estate transaction be "good funds" before closing can be completed and proceeds can be disbursed. This means the money must be confirmed as available or guaranteed by the sending financial institution before we can close.At Sterling, here is what we accept based on the amount:Personal checks up to $1,000Cashier's checks up to $10,000Wire transfer for anything over $10,000Your settlement statement will outline the exact amount due at closing so you know what to bring and how to get it here.For sellers, this means your proceeds cannot be disbursed until all funds from the transaction have been received and confirmed. In most cases, proceeds are wired to you the same day as closing once everything clears.

Question 11

Can we sign remotely?

Accepted Answer

Yes! Mobile notary signings must be scheduled at least 48 hours before closing. We’ll prepare documents, then a notary will meet you, complete the signing, and return the documents via FedEx. There is an additional fee for this service. -Where do I find your wiring instructions? Our wiring instructions are available in our secure portal, Qualia, under the Documents tab. For security reasons, we do not email them due to the risk of wire fraud.

Question 12

Can Sterling Title hold earnest money?

Accepted Answer

Yes. Sterling Land Title Agency can hold earnest money as a neutral third party escrow agent. Once received, funds are held in our escrow account until closing or until both parties provide written authorization directing us on how to disburse them.To make it easy, simply include Sterling Land Title Agency as the escrow holder in the purchase contract. Once we receive the contract, we will reach out to collect the earnest money directly.You can also submit earnest money anytime through our secure Qualia Payment Portal using the link below. This is our preferred method as it provides a digital record for all parties and eliminates the risk associated with checks or wire instructions being intercepted.https://connect.qualia.com/pay/sterlinglandtitle If you have questions about submitting earnest money or need help getting funds to us, contact our office directly.

FAQs

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