SETTLEMENT AND YOUR SETTLEMENT A TLEMENT AGENT OR ESCROW The actual sale between seller and buyer takes place at a “closing,” which is also called a settlement. Settlement refers to the process of transferring ownership of real estate from one person or entity to another. Ownership in real estate is determined by who is on the title. Title is a legal term for a bundle of rights in a piece of real estate in which a party owns a legal interest. The rights in the bundle may be separated and held by different parties. Title also refers to a formal document providing evidence of ownership. Settlement or closing refers to the process of transferring ownership of real estate from one person or entity to another. At the closing, the buyer will sign many documents related to the purchase of the home. These documents will include the ALTA (American Land Title Association) settlement statement, the note, the deed of trust or mortgage, and several others. To prepare your property for closing, the settlement company will order a title search and updated lien payoffs. A title search is a process by which the settlement company researches the history of the property through the land records to ensure you are the actual owner and there are no complications in the current ownership and titling of the property. They also request updated lien payoffs which means they request a final payoff amount from your mortgage company and any other liens attached to your house. The payoff is the exact dollar amount required to be paid off on the day of settlement. Sometimes, upon performing this due diligence, the settlement company will discover things you, as the owner never knew existed, or they will encounter mistakes made by other banks or companies. The settlement company is usually able to get information easily and schedule your settlement for the date originally planned.
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