Buyers/Sellers – FAQ

What is a mortgage?

What is a lien?

A lien is a right to stand in line when a property sells, to get paid back the lien amount, plus interest/penalties.  Liens stack up in chronological order.  The first lien to be recorded at the clerk’s office is in “first position”. 2nd is in 2nd position, and so on.

1. A lien on real estate, must be recorded at the county clerk’s office, in the county in which the property is located.

2. Whenever a lien is recorded at the county clerk’s office, against a person, it automatically attaches to all pieces of real estate that person owns in that county.  The same lien may be recorded in multiple counties, in order to have it attach to all real estate the person owns in those counties – especially when a property is known to span county lines.

3. Types – There are all types of liens: Mortgages, judgment liens, state/fed/local tax liens, unpaid child support liens, HOA liens, etc.

4. Yes, a mortgage is simply a lien held by a lender.  It essentially states, that if you pay you stay, and if you don’t, you won’t = meaning, if you default on your loan, you’ll be foreclosed upon and your home will be repossessed by the bank.  The bank will then sell the house and pay off/down your loan with the sales proceeds.  If there is not enough sales proceeds to pay off your loan (a “shortfall”), then the lender will file a default-judgment-lien against you, and you will not be able to buy another house without first paying off that shortfall, plus legal fees, interest and penalties.  You may be able to negotiate some settlement that is less than the full amount owed, in exchange for release of this default judgment lien – you may even get the lender to foreclose on you withOUT a default judgment for any shortage.

5. Expiration – Different liens are valid for different lengths.  Some do not have expiration dates. Call your local county clerk’s office.

6. Releases – Once a lien is satisfied (either paid in full, or when a partial payment is accepted in exchange for release), then a 1-page lien release must be filed at the county clerk’s office by the lienholder.

Buyers – How do I choose Jett Title for my closing(s)?

Cash Purchases – Who does what and how it works.

Property Taxes in Kentucky and Fayette Co.

What documents do sellers sign?

In these documents you are usually either a) agreeing to something; b) swearing that something is true, or c) acknowledging receipt of the document and/or that you understand the document.

Actual:
a. Closing Disclosure and Settlement Statement – These summarize the transaction – show who’s paying what and who’s receiving what.  The are the key to the transaction and are usually reviewed first.
b. Deed
c. Title company’s few documents.
d. Occasionally lenders will have a document(s) of theirs that the sellers must sign as well – the most common one is where you swear that you have not lent the buyers any money in this transaction.

What are “prorations” that are on the Closing Disclosure?

HOA dues Example: The seller has paid the Homeowners Association Dues all the way thru the end of the year.  But you are buying the house today, and will own if through the end of the  year, so you own the seller back the amount of HOA dues form today through the end of the year.  On the closing disclosure, we will show a deduction from the buyer’s side of that pro-rated amount of HOA dues, and a credit to the sellers’ side.  That si an example of a pro-ration.

Taxes Example: If the seller has already paid taxes, then you as the buyer owe the seller back the prorate share of taxes for those number of days left in the year.

Rents example: If you’re buying a rental property and close on day 10 of the month, the seller gets the amount of that monthly rent equal to the first 10 days, and you as the buyer get the rent amor the 11th-the end of the month. 

The bottom line of pro-rations is, that they make sure that each party (buyer and seller) only pay for the fees/taxes/etc. associated with the home, for the portion of the year in which they own that home.  The settlement agent enters the amounts and periods into its’ software, and it makes these pro-ration calculations and prints the resulting, accurate-to-the-day pro-rations on the closing disclosure.  They are labeled and the dates are shown as well.

Can anyone prepare a deed, or do I have to use a title co.?

The deed preparation is a seller-expense and seller-responsibility in Kentucky.  

Technically, any seller (attorney or non-attorney) can prepare their own deed; however, it must contain all the correct language, for the situation, in order for it to do what you want it to do…and in order for it to be acceptable for recording by the county clerk’s office.  For these reasons, sellers (attorneys and non-attorneys) rarely ever prepare their own deeds – they want and need their deed to be correct so they use a reputable settlement agent – like Jett Title.

Why is there no advantage of having an attorney as my closer? Per the KY Supreme Court, 11-0

The title co. works for, and represents, the lender and not the buyers or the sellers.  The title co. is hired by the lender to finalize the transaction, record the lender’s mortgage in 1st position at the clerk’s office, and issue the lender a title insurance policy.

Therefore, if an attorney happens to be the closer, he/she is prohibited by law from providing any legal advice to any party at the closing table.  The attorney must refer the parties to seek their own competent legal counsel.  The Kentucky Supreme Court ruled 11-0 that there is no advantage to having an attorney at the closing table versus a non-attorney.  What matters is competence, character and service.

Why does the settlement agent (title co.) represent the lender and not the buyers or the sellers?

The title co. works for the lender and not the buyers or the sellers.  The title co. is hired by the lender to finalize the transaction, record the lender’s mortgage in 1st position at the clerk’s office, and issue the lender a title insurance policy.

Therefore, if an attorney happens to be the closer, he/she is prohibited by law from providing any legal advice to any party at the closing table.  The attorney must refer the parties to seek their own competent legal counsel.  The Kentucky Supreme Court ruled that there is no advantage to having an attorney at the closing table versus a non-attorney.  What matters is competence, character and service.

What is a settlement agent, title company, real estate attorney? 

What about extra funds I may bring to closing?

We give you a check back at the closing table for any excess funds you may bring.

Ex: You may bring the full proceeds check you got earlier that same day from the sale of your prior home…and that check may total more than you need for our closing with you.  You will endorse it to us AT THE CLOSING TABLE, not before. This is for your protection.

Ex: You happen to bring a cashier’s check for an over-estimated amount.

No problem for either of these examples.  Please let us know in advance if you know the amount you’ll be bringing to our closing, so we can already have your refund check ready for you when you arrive at our closing.

Funds to close – Cashier’s Check, Wire? How do I send a wire?

Your funds to close:  

Must be either in the form of a

1. A cashier’s check payable to Jett Title, OR

2. An electronic wire to us – Call Jett Title for our wire instructions, then take these instructions to your bank in person (most banks do not allow phone-in wires!!)…and wire funds the day BEFORE closing.  Wired funds must show in the title company’s account before a closing is permitted to take place.

What do I need to bring to closing? 

a. Your unexpired, government-issued photo-IDs.  1 form of ID, per person, is all we need.

b. Your legal spouse – even if he/she is not going to be on the deed or the loan. State law forces spouses to sign a few disclosures for their protection. See this link for Spousal Rights –

Who has to attend closing.

c. Your funds needed to close:  A cashier’s check payable to Jett Title OR you may electronically wire the funds to us – Call Jett Title for our wire instructions, then take these instructions to your bank in person…and wire funds the day BEFORE closing. Wired funds must show in the title company’s account before a closing is permitted to take place.

Who must attend closing? Marital Rights. Dower/Curtesy

What if a buyer or seller can’t attend the closing?

If you just need to come earlier or later to sign your part, usually that’s not a problem, but you must call to arrange this.

If you will be out of town, or if a buyer is unable due to health/other, then call the title co. ASAP to arrange someone to sign for you using our special/specific/limited power of attorney (POA) – cheapest and easiest solution, for about $100; OR we can arrange a mobile notary closer to come to you at the time and location of your convenience, anywhere in the U.S. for about $175 – requires several days’ advance notice.

1. A seller POA can be done easily, and we need as much lead time as possible to prepare it, get it to you, have you sign/notarize, and return it by FedEx
2. A buyer-POA, however, is time consuming and must be approved by the buyer’s lender first! Need at least a week for this to happen.  
3. Most lenders do NOT permit buyer-POAs unless there are serious circumstances – “work” does not qualify.  
4. You must use the title company’s specific/limited power of attorney format – never use templates from the Internet – they normally never have the needed language in them.

What documents do buyers sign?

About:  They are regulated by state and/or federal governments.  You cannot make any changes to them and you have to sign them exactly as they are.  There are only 6 things that differ from your loan and everyone else’s loans in Kentucky: Names, dates, dollar amounts, interest rates, property address and the length of your loan.  That’s it.  Everything else is boiler plate and identical all across Kentucky.  On conforming loans, the type most borrowers choose, 98% of the docs are the same all across the U.S.  In these documents you are usually either a) agreeing to something; b) swearing that something is true, or c) acknowledging receipt of the document and/or that you understand the document. The lender has to have you sign many of these documents in order to be able to go after you in the event you have (or will) commit fraud that causes then a financial loss.

Actual:
a. Closing Disclosure and Settlement Statement – These summarize the transaction – show who’s paying what and who’s receiving what.  The key to the transaction and usually reviewed first.
b. Title company’s few documents. 
c. Promissory Note – says you promise to pay the lender back the amount that you’re borrowing – shows interest rate, 1st and last payment dates.
d. Mortgage – Says if you don’t pay, you don’t stay – gives the lender the right to repossess your house if you default on your loan.
e. The rest of the documents.

Do buyers and sellers need to arrive at the closing at the same time?  

Yes.  Sellers AND buyers need to arrive at the start of closing.  In days gone by, sellers would not show up until later – however, this now only complicates and delays the closings.

How long does a closing last? 

Ours last an average of 40 minutes – they range from 30-60 minutes. Sellers only sign about 14 documents. Buyers sign from 50-70 times, depending on the lender and loan type. 

Location of closing?

Usually they take place in the office of the lender, the Realtor or the title company.

Refinances, however, can also take place in the borrowers’ home or office, depending upon all party’s schedules.

What is a closing?

It is the 30-60 minute meeting of buyers, sellers, realtors and loan officer, led by the title company’s “closer”.  In this meeting, document explanation/signing takes place to make the transaction official and finalized…or “closed”.

The title company collects all monies form the buyer and the buyer’s lender at closing.  Then, out of those funds, the title company pays all the other 3rd parties who helped make the transaction possible for their services (Lender, realtors, appraiser, home owners insurance company, tax authorities, etc.); the title company also pays off all the sellers’ liens, and then gives what’s left over (the “sellers proceeds”) to the seller.  The buyer walks out as a new homeowner with keys, and the s. Sellers leave to go to the closing of their new home with the sales-proceeds check they just received.