Title and Closing Questions You're Too Embarrassed to Ask

What's the difference between a deed and a title?

While people often use these terms interchangeably, a deed and title are two distinct concepts. A deed is a physical legal document that transfers property ownership from one party to another. It's a signed document that is recorded at the county courthouse and serves as proof of the transfer.

A title, on the other hand, refers to the legal ownership rights and interests in the property. It's not a document – it's the bundle of rights that comes with owning property, including the right to use, sell, or modify the property within legal limits. When you "have title" to a property, it means you have legal ownership rights, which the deed helps establish.

On a deed, who is the grantor and who is the grantee?

The grantor is the person or entity selling or transferring ownership of the property, while the grantee is the person or entity receiving ownership. On a deed, the grantor transfers their ownership rights to the grantee. In a typical real estate transaction, the seller is the grantor and the buyer is the grantee.

Multiple people can be grantors or grantees on the same deed. For instance, if a married couple sells their home, both spouses would be grantors on the deed. Similarly, if a couple buys a home together, both would be grantees. The names and roles of all grantors and grantees must be clearly stated on the deed for the deed to be valid.

Who needs to be present to sign paperwork at closing?

Anyone who holds title to the property must be present at closing to sign documents. If you're single and do not have another party co-signing your mortgage loan, only you need to sign the closing documents. If you're married, both spouses must sign, even if only one spouse is on the mortgage or deed. This requirement protects spousal rights under Alabama law.

For couples who are separated but not yet divorced, both spouses must still sign at closing. “Legally separated” isn’t a marital status: you are either married or divorced. Until there is a final divorce decree, both spouses must participate in the closing. If someone cannot be physically present at closing, they may be able to sign through a power of attorney, but this must be arranged and approved before closing day.

Is title insurance the same as homeowner's insurance?

No, title insurance and homeowner's insurance protect against different types of risks. Homeowner's insurance protects a property from physical damage or loss due to events like fires, storms, theft, or accidents. Homeowners pay for this coverage annually, and it protects against future events that might damage the home or property.

Title insurance, on the other hand, protects ownership rights to the property. It's paid once at closing and covers issues that originated in the past but weren't discovered before you bought the property. These might include forged documents, undisclosed heirs claiming ownership, recording errors, or undiscovered liens. While homeowner's insurance protects the physical property, title insurance protects the legal right to own it.

What happens to my title insurance if I refinance?

When you refinance your home, your lender will require a new lender's title insurance policy because they are issuing a new loan. Loan policy coverage extends for the life of the loan. However, you won’t need to purchase a new owner’s policy. Owner's title insurance coverage lasts for as long as you or your heirs own the property, regardless of how many times you refinance.

Are encumbrances, easements, and encroachments all the same thing?

No, while these terms all affect property rights, they represent different types of limitations. An encumbrance is any claim or limitation on a property that affects its use or value. Easements and encroachments are two specific types of encumbrances.

An easement gives someone else the right to use part of your property for a specific purpose, such as a utility company's right to access power lines. An encroachment occurs when someone else's structure or improvement extends onto your property without permission - like a neighbor's fence that crosses the property line.

Do I need to order a survey for every transaction?

While a survey isn't always required, it provides valuable information that property tax records and deed descriptions can't tell you. A survey shows the exact location of property lines, improvements, easements, and encroachments. It can reveal potential issues like a fence built on a neighbor's property, structures that violate setback requirements, or access problems.

Without a survey, you're relying on assumptions about property boundaries and features. Many title companies exclude coverage for issues that a survey would have revealed unless you get one. While surveys add to closing costs, they can help prevent expensive disputes and provide peace of mind about the purchase.

Is earnest money refundable if the deal falls through?

Whether earnest money is refundable depends on the terms of the purchase agreement and why the deal falls through. If the buyer backs out of the purchase during the contract's inspection or financing contingency periods, the earnest money is typically refundable. These contingencies protect buyers by allowing them to withdraw from the contract for specific reasons without losing their deposit.

However, if a buyer cancels the contract after contingency periods expire or for reasons not covered by contingencies, they may forfeit their earnest money to the seller.

Is title insurance necessary for a cash purchase?

While the homebuyer won’t need a lender’s title insurance policy for cash purchases, an owner’s policy is still recommended. Without a lender involved, the buyer may actually have more at risk - they’re investing their own money without the protection a lender typically requires. Title issues can affect any property, regardless of how that property is purchased.

Hidden title problems like forged deeds, undisclosed heirs, or recording errors can emerge years after purchase and threaten ownership rights. Since title insurance is a one-time premium that protects homeowners for as long as they own the property, many cash buyers choose to purchase it for peace of mind.

Can my client bring a check for funds for closing?

No, personal checks cannot be used for closing funds. For security and fraud prevention, South Oak requires either a wire transfer through their secure CertifID platform or certified funds like a cashier's check from your bank. This ensures all funds are verified and secured before closing proceeds.

Does the title company need to review a Power of Attorney before closing?

Yes, any Power of Attorney (POA) must be reviewed and approved by both South Oak and the mortgage lender before closing. POAs need to be submitted well in advance - never wait until closing day to present one. This allows time to verify the document meets all legal requirements and includes the necessary language for real estate transactions.

A POA presented for the first time at closing will likely cause delays or even prevent closing from occurring. Your closer can provide guidance on what specific POA documentation is needed. South Oak also recommends against using online POA forms or templates, as these may not include all required elements for real estate transactions. To avoid any issues, always inform your closing agent early in the process if a POA will be needed.

How soon after closing will the seller receive their proceeds?

Sellers typically receive their proceeds within 48 business hours after closing, once all documents are signed and funds are properly secured. For example, if closing occurs on Friday afternoon, the seller should expect proceeds by Tuesday, as weekends don't count toward the 48-hour window.

While South Oak aims to distribute proceeds as quickly as possible, we implement several security measures to protect sellers from wire fraud, which has become increasingly common in real estate transactions. For example, CertifID verifies the seller’s banking information before completing the wire transfer. Sellers should complete any required verification steps promptly to avoid delays in receiving their funds.

Who should I talk to if I have questions during the title or closing process?

Contact your closer at South Oak for any questions during the title and closing process. They serve as your main point of contact and can assist with specific questions about your file, required documentation, or closing requirements.

South Oak uses Qualia Connect, a secure portal where you can track your closing's progress and communicate directly with your closing team. This platform provides real-time updates and a secure way to share sensitive information.

At South Oak, we love answering our clients’ questions and we’re here to support you before, during, and after your real estate transactions. Contact us with your questions, or order a title and schedule a closing today.