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Buying a home is an exciting milestone, but it comes with a myriad of steps and costs that can be overwhelming. One crucial aspect of the home-buying process is the role of a closing attorney. These legal professionals ensure that the transaction is smooth, legally sound, and that all necessary documents are properly executed.
What are closing costs?
Closing costs are essentially the fees and expenses that come with finalizing your real estate transaction. These aren't included in the price of the property but are essential for the legal transfer of ownership.
Q: What do closing costs typically cover in Georgia? Closing costs in Georgia can include:
Loan Origination Fees: These are fees paid to your lender for processing your mortgage.
Appraisal Fees: Paid to a licensed appraiser to determine the value of the property.
Attorney Fees: In Georgia, having an attorney oversee the closing is required by law. This fee covers their services.
Recording Fees: Fees for recording the deed with the county.
Escrow Fees: These cover the cost of setting up escrow accounts for property taxes and homeowner’s insurance.
Title Insurance: A one-time fee to protect you (and the lender) from potential claims against the title of the property.
Prepaid Costs: These might include homeowner's insurance, property taxes, and mortgage interest that you'll need to pay upfront.
What is title insurance?
Title insurance is a form of indemnity insurance that protects both the buyer and the lender from financial loss due to defects in the title of a property. In essence, it ensures that you’re receiving a clean title, free of any encumbrances or disputes.
Q: Do I really need title insurance? Yes, title insurance is crucial. Although it’s often a one-time cost, it safeguards you against potential claims on your property. Issues like undisclosed heirs, forgeries, or even mistakes in public records could affect your ownership. While the chances of such issues may seem slim, the financial fallout can be significant if they arise.
Q: When can I purchase title insurance?
You can only purchase title insurance at closing. That is because the title insurance is protecting against past title issues. The title company does not want to insure against anything that a current owner might encumber their property with. That is why it is so important to get it at closing because once you decline it, you cannot purchase it later unless you buy new property!
Q: How is title insurance different for the buyer and the lender?
Lender's Title Insurance: This is typically required by the mortgage lender to protect their interest in the property until the loan is paid off. The buyer usually covers this cost.
Owner's Title Insurance: This is optional (but recommended) and protects you, the homeowner, from potential title issues that could threaten your ownership.
Why does Georgia require an attorney for closings?
Georgia has decided that performing a real estate closing is practicing law, and therefore a Closing Attorney is required. Real estate transactions involve a complex web of legal documents, including the deed, promissory notes, and security deeds. The attorney's role is to ensure that the transaction is legally sound and that the rights of all parties—buyer, seller, and lender—are protected.
Who does the Closing Attorney represent?
There are different scenarios as to who the Closing Attorney can represent in any given real estate transaction. For example, if a lender is involved in the Closing Attorney represents the lender. In a cash transaction, the Closing Attorney represents the Buyer or the party that is paying the fee to the Closing Attorney. Because real estate transactions usually involve so many people, it is often difficult for everyone associated to understand this distinction. Attorneys are duty bound to represent each client to the best of their abilities and to advocate for their clients’ interests.
What does the Closing Attorney do?
The closing attorney is responsible for:
Reviewing the title: They perform a title search to confirm that the title is clear of any liens or disputes, ensuring that the buyer can take full ownership of the property.
Communication: The attorney must coordinate with all of the parties involved in the transaction. All of the parties include the Buyers, Sellers, Mortgage company, Real Estate Agents, Tax Officials, Homeowners Associations, and various others.
Preparing documents: The attorney drafts and reviews all necessary legal documents, such as the deed, security deed and the settlement statement.
Facilitating the closing: The attorney manages the signing of documents, ensuring that all parties understand what they’re signing. They also oversee the disbursement of funds.
Recording the transaction: After the closing, the attorney records the deed and mortgage with the county, officially transferring ownership.
What is a deed?
A deed is the legal document that transfers ownership interest from one party to another.
What is a security deed?
A security deed is how the mortgage company holds a secured interest in the property of another. This document is used to secure the property as collateral for the loan.
Navigating Georgia’s closing process requires attention to detail and an understanding of the fees involved. While closing costs might seem like an added burden, they are essential to ensuring that the legal transfer of property ownership is handled correctly. Title insurance, on the other hand, offers peace of mind, protecting your investment in your home from hidden legal concerns
By R. Carleton Sweatt
Law Offices of Robert C. Sweatt, LLC
P: 912-729-3700
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