Some people ask about the difference between a “title” and a “deed.” In Tennessee, these terms mean the same thing and are used interchangeably.
Ownership of a property can include a series of small caveats that impact decisions and legal rights. These caveats include easements — which allow an outside party access to a piece of the land associated with the title. It could also include previously unpaid taxes on the property. Liens — a means of securing payment to a financial institution — can also be included on a property’s title.
Issues with the title can create large problems, and even financial responsibility for costly considerations. However, there are processes in place prior to closing on a property that are meant to address these issues and save the buyer and lender from legal liability.
And these processes will come with potential fees.
So what are these title fees and how are they calculated?
- Owner’s Title Insurance
- Lender’s Title Insurance
- Closing Protection Letter
- Recording Fees
- Release Tracking & Search Fee
- Title Services
Owner’s Title Insurance
Title insurance is an important aspect of closing on a real estate transaction. There are two common types of title insurance and both offer specific forms of protection.
Owner’s title insurance is often an optional consideration, but it’s recommended.
Title insurance — both forms — will begin with a deep dive into the public archives to find any of the previously-listed potential issues with the title. This search will also use legal documents to verify the person or entity selling the property has the legal right to do so.
Owner’s title insurance protects the buyer should any title issues come to light after the purchase.
The cost of the policy is determined using the total cost of the property in question.
Lender’s Title Insurance
Lender’s title insurance performs the same services as a buyer’s policy, except the protections extend to the financial institution responsible for the loan.
These policies are often required by the lender in order to protect their investment.
Unlike a buyer’s title insurance policy, the cost of loan title insurance policies are based on the total loan amount received by the buyer.
Closing Protection Letter
The financial institution responsible for the loan is putting a lot of money into a real estate transaction. Along with the lender’s title insurance, the lender wants to have protections in place for its contribution.
The closing protection letter is another layer of protection for the lender. It is drafted by the title company’s underwriter and states that the title company will compensate the lender for any losses caused by certain types of misconduct on behalf of the closing agent.
The fees for this letter will depend on the amount of entities involved in the transaction, as well as the type of transaction. Generally, the fee will be $50 for each lender involved.
The title search aspect of receiving a title insurance policy sorts through available public records to find information on the property in question. Recording fees relate to how this information gets there in the first place.
A recording fee is the cost charged by a government agency for processing and registering information related to the sale or purchase of real estate. The act of recording this information is what includes it into public records.
The cost of recording the various documents such as the Deed of Trust and Warranty Deed will depend on the county. Davidson County’s itemized list for recording fees can be found here.
Release Tracking & Search Fee
The fulfillment of a loan or lien is an important aspect in the ownership of a piece of property. This information will be reflected in the real estate title as well as the public records associated with that property.
The lender will release a borrower upon completion. Release tracking ensures this information is recorded.
This tracking release fee is often paid by the seller in a real estate transaction, but will be included in your closing fees during a refinance. The cost will vary by location, but it is often around $35.
The title company will provide a variety of services throughout the process. This includes assistance with closing, managing escrow funds, researching the title, and more. These services will be charged along with the other fees.
The cost of this service will depend on what your particular scenario dictates. Speak with your title company upfront to receive an estimate on what these fees might cost.Another option is to get an estimate through a title fee calculator. Rochford Law & Real Estate Title offers an easy title fee calculator right here. Simply enter your information and receive an immediate quote for your title fees.