Buyers/Sellers – FAQ

What is a mortgage?

What is a lien?

A lien is a document recorded at the county clerks office, against a person OR against a piece of real estate, and it notes an amount of money due to the lien holder.  It signifies the lien holder’s right to stand in line to get paid the lien amount plus interest/penalties, when a property sells.  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. Attachment: When a lien is recorded at the county clerk’s office, against a person, that lien, automatically and instantly, 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.  This is why we have to search al buyers’ names in a purchase.  We want to make sure NO liens attach to the property of a buyer, before we record the lender’s mortgage.  We want the lender’s mortgage to always be recorded in first position.

3. Types – There are all types of liens: Mortgages, judgment liens, state/fed/local tax liens, unpaid child support liens, HOA liens, etc.  All have different expiration time periods. See #5 below.

4. Yes, a “mortgage” is a lien.  It’s 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 for the schedule of validity/expiration…or just call Jett Title.

6. Releases – Once a lien is satisfied (either paid in full, or when a partial payment is accepted in exchange for release), then a lien release must be filed at the county clerk’s office by the lien holder.  Releases are usually just 1 of 2 pages in length.

Title Search -Why do I need to do one?

Why do a title search on the property you’re buying; and, why do a search to see if there are any liens against the person who’s selling the property to you?

Read moreTitle Search -Why do I need to do one?

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

Sellers’ closing documents consist of:
1. Closing Disclosure and Settlement Statement – These summarize the transaction – they show who’s paying what and who’s receiving what.  These documents combined, are the key to the transaction, and are therefore usually reviewed first.  They show all the fees, payments, prices, concessions, deposits, taxes, rents, HOA dues, etc….and they show who is paying and who is receiving each of them.  Lastly, these 2 documents show your bottom line…the total amount you will be paying/receiving at the closing.
2. Deed – the document that transfers ownership of the property.  This is also referred to as the title.
3. The title company’s documents. Some are required by law, some are required by the title company.
Most common examples:
a) Privacy policy – says the title co. does;t share/sell any of your non-public financial information they may receive.
b) Document correction agreement AND its’ limited power of attorney– says you’ll help fix any typo errors in the docs. Cannot change any items material to the transaction – like rate, payment, loan about, etc. The POA states the title co. may make changes if non-material to the transaction.  Any changed doc must be mailed to all parties. Note – If you get a conventional loan to buy a property, you will always sign these in the U.S., regardless of the lender.
c) Seller’s affidavit – swears to: your marital status as listed on the deed, the completion of the property, no outstanding liens/lawsuits to your knowledge, etc.
d) List of services provided – defines what work/services the title co. performs/provides.
e) Proration agreement – shares the tax/HOA amounts that the prorations that are on the settlement statement are based upon, and that all parties agree these prorations are acceptable and final.
f) 1099 form – if certain IRS conditions are met in your sale, then we have to give you a 1099 for you to give to your tax preparer. This is for capital gains purposes – this does NOT necessarily mean you will pay capital gains taxes, it just means we are required by law to give you a 1099. Your tax preparer should tell you if you’ll have to pay capital gains taxes on it or not.  We are required by law to tell youth seek the advice of a competent CPA. We are prohibited form giving tax advice.
 4. Occasionally lenders will have a document(s) of their own 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 specific 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 in the county in which the property is located.  For these reasons, sellers (attorneys and non-attorneys alike) rarely ever prepare their own deeds – they want and need, the deed to be correct so they use a reputable settlement agent – like Jett Title.

There are a variety of types of deeds, for all sorts of situations – family, removing names, adding names, moving it into & out of a business name, correcting problems; Situations include is sales tax is required or not, and this depends upon the situations as defined by law – Kentucky Revised Statutes – and the correct statute must be cited in the deed.

Kentucky deeds also require the buyer to sign – which is different from most states.  This is to certify that the purchase price (“consideration”) is in fact accurate.

Jett Title’s legal team of on-staff attorneys is extremely experienced.

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

In closings, settlement agents (title co.) work for, and represent, the lender; not the buyers or the sellers.  The title co. is specifically hired by the lender to a) finalize the transaction, b) record the lender’s mortgage in 1st position at the clerk’s office, and c) issue the lender a title insurance policy.

Therefore, if, and whenever, an attorney happens to be the closer administering any closing, he/she is prohibited by law from providing any legal advice to buyers/sellers at the closing table.  The closing attorney must advise the buyers/sellers that he/she cannot provide them advice – that the buyers/sellers will have to seek their own independent 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 most in your choice of settlement agents is competence, character and service.  Jett Title!

Kentucky attorneys tried to corner the real estate closing market to keep fees to themselves, limit competition and to raise their fees (as done in Georgia and other states).  In 1993 the KY Bar Association was humiliated in a unanimous defeat, 11-0 ruling, by the Kentucky Supreme Court.

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

In closings, settlement agents (title co.) work for, and represent, the lender; not the buyers or the sellers.  The title co. is specifically hired by the lender to a) finalize the transaction, b) record the lender’s mortgage in 1st position at the clerk’s office, and c) issue the lender a title insurance policy.

Therefore, if, and whenever, an attorney happens to be the closer administering any closing, he/she is prohibited by law from providing any legal advice to buyers/sellers at the closing table.  The closing attorney must advise the buyers/sellers that he/she cannot provide them advice – that the buyers/sellers will have to seek their own independent 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 most in your choice of settlement agents is competence, character and service.  Jett Title!

Kentucky attorneys tried to corner the real estate closing market to keep fees to themselves, limit competition and to raise their fees (as done in Georgia and other states).  In 1993 the KY Bar Association was humiliated in a unanimous defeat, 11-0 ruling, by the Kentucky Supreme Court.

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 happen to bring.

Ex: You may bring the full proceeds check you got 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? 

You must bring to closing:

a. Your unexpired, government-issued photo-IDs.  One 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 the link below for Who must attend closing? Marital Rights.

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.
5. If you have an attorney-prepared DURABLE power of attorney, send it to us ASAP for review.  If acceptable, we will need the ORIGINAL at closing – yes we know its important, but is the LAW – it must be recorded with the deed.

What documents do buyers sign?

About:  They are regulated by state and/or federal governments:  They are not negotiable and you cannot make any changes to them.  You have to sign them exactly as they are, and you have to sing all of them if you want the loan.  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 get, 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 to be able to legally go after you in the event that you have (or will) commit mortgage fraud that causes them a financial loss.

Buyers’ closing documents consist of:
1. Closing Disclosure and Settlement Statement – These summarize the transaction – they show who’s paying what and who’s receiving what.  These documents combined, are the key to the transaction, and are therefore usually reviewed first.  They show all the fees, payments, prices, concessions, deposits, taxes, rents, HOA dues, etc….and they show who is paying and who is receiving each of them.  Lastly, these 2 documents show your bottom line…the total amount you will be paying/receiving at the closing.
2. Deed – the document that transfers ownership of the property.  This is also referred to as the title.
3. The title company’s documents. Some are required by law, some are required by the title company.
Most common examples:
a) Privacy policy – says the title co. does;t share/sell any of your non-public financial information they may receive.
b) Document correction agreement AND its’ limited power of attorney- says you’ll help fix any typo errors in the docs. Cannot change any items material to the transaction – like rate, payment, loan about, etc. The POA states the title co. may make changes if non-material to the transaction.  Any changed doc must be mailed to all parties. Note – If you get a conventional loan to buy a property, you will always sign these in the U.S., regardless of the lender.
c) List of services provided – defines what work/services the title co. performs/provides.
d) Proration agreement – shares the tax/HOA amounts that the prorations that are on the settlement statement are based upon, and that all parties agree these prorations are acceptable and final.
f) Notice the owners title insurance is available to you, and what 5 scenarios in which is is strongly recommended.  See article on Owners Title Insurance on this site.
 4. Loan documents
a) First payment letter – show payment breakdown and first payment’s due date.
b) Promissory Note – says you promise to pay the lender back the amount that you’re borrowing – shows interest rate, 1st and last payment dates.
c) 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.
d) The rest of the documents. Includes document correction agreement and its limited power of attorney, same-name affidavit, etc.

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.  Please arrive at the start of the closing.  Thank you!

How long does a closing last? 

Jett Title’s closings 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. 

Both buyers AND sellers need to arrive at the start of the closing.  In the old days, sellers would sometimes arrive late – but now, this only delays closings and can cause significant problems.  So, sellers, please arrive on time. Thank you!

Location of closing?

Purchase closings usually take place in the office of the lender, the Realtor or the title company…dependent upon all parties’ schedules.

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