The Process, Step-by-Step
The Initial Agreement and Deposit.
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:
- Keep written records of everything. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums and to convert them into written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your purchase and make sure that you have copies of everything.
- Stick to the schedule. Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements. During the process we will keep you constantly updated, so you will always be prepared for the next step.
The Closing Agent.
Either a title company or an attorney will be selected as a closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.
How to Hold Title in California.
Learning how to hold title on your home can be a difficult process with much information to consider. Before exploring the ways that ownership is vested, it is important to first understand what title is. Read on to learn how to obtain title in California.
What is Title?
Title in real estate refers to the actual ownership and rights that a person or persons has to a property. It is the actual legal ownership of the property, while a deed is a document that serves as a record of that ownership. The deed is not the actual ownership of the property. Consulting a title vesting chart can add additional information for California’s regulations.
Here are the 8 ways:
Sole Ownership of Real Estate in California
Sole ownership is when a single person or entity is vested title.
- Single Man or Woman / Unmarried Man or Woman
When a man or woman who is not legally married or in a domestic partnership acquires title. Widows/widowers and men or women who have been previously married and are now legally divorced are also included in this category.
- A Married Man or Woman as His/Her Private and Separate Property
A married man or woman may buy a house in his or her name alone and own all of the accompanying rights. In order for this to occur, legally the spouse must relinquish all rights and title to the property and also may sign a quitclaim deed.
- A Domestic Partner as His/Her Private and Separate Property
Very similar to the above case with married couples, a person in a domestic partnership may buy a property in his or her name alone. The non-vested partner will then sign to relinquish any rights and title of the property.
Co-Ownership of Real Estate in California
Co-ownership of a property is required when two or more people hold the title for a house together.
- Community Property
This is the form of title most commonly vested between a married couple or domestic partnership in California.
- It is assumed that this is the form of title that will be vested for a married couple or domestic partnership unless otherwise specified by a quitclaim or other agreement
- Each spouse has the rights to half of the property, so each will have to sign off on the selling of the property and taking out loans on it
- A spouse may choose to transfer his or her rights to the house to another person in his or her will
- Community Property with Right of Survivorship
The same form of title as above with the added benefit of the right of survivorship. The right of survivorship in California states that when one spouse dies, the title and ownership will remain with the living spouse instead of being passed on to their children.
- Joint Tenancy
A title between two persons that are not married or in a domestic partnership that vests equal shares and interests in the property.
- The right of survivorship is automatically awarded to the surviving person on the title
- This title must be created and vested for all parties at the same time and the document must expressly denote the intent of joint tenancy
7. Tenancy in Common
Tenancy in common is a form of title for two co-owners without equal shares or ownership in the property.
- One may have more than the other and it is agreed upon before signing the documents
- Each tenant may sell/lease or will their portion of the property whenever they please
- There is no right to survivorship in this title. If one tenant dies, the rights will go to the heirs of the deceased
- Trustees of a Trust
California allows co-ownership in the form of a trust arrangement. A trust is an agreement where a grantor allows a trustee to manage and hold the property in the best interest of the beneficiaries.
- The title is vested to the trustee while the trust holds legal title and rights
Title Knowledge as Preparation for Buying your Home in California!
The process of buying a home has many steps, long hours, and lots of paperwork. Learning which form of title is the best for you will simplify your property documentation and will give you peace of mind in knowing you made the best choice for your life and family.
Inspections.
Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
Appraisal and Lending.
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
Association Approval.
If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before move-in. Your closing agent will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.
Property Insurance.
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
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- Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
We will be happy to recommend experienced knowledgeable insurance agents for every property type.