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Frequently
Asked Questions Regarding Real Estate
1. Can you describe forms of ownership of
real estate in Virginia?
An "estate" in real property generally refers to the degree,
quantity, nature, and extent of interest that one has in real property.
The following are the primary types of estates in real property:
Fee Simple - sole ownership vested entirely in one person;
Tenants in Common - ownership vested in two or more persons who
own undivided interests in the property. Although a presumption
exists that all tenants in common own equal undivided interests,
the controlling agreement, which is generally contained in the deed
itself, may specify the ownership interest of each tenant. When
a tenant in common dies, the share of property he or she owned will
pass to his heirs or beneficiaries. Each tenant does have the right
under Virginia law to have the property partitioned in a court proceeding,
or subjected to a judicial sale, if a disagreement should arise.
Each tenant's share is subject to claims of creditors.
Joint Tenants With Right of Survivorship - ownership vested in two
or more persons where the document creating the tenancy (generally
the deed) specifies that the right of survivorship exists. When
a joint tenant who owns property subject to right of survivorship
dies, his or her interest passes in equal shares to the surviving
joint tenants. Each tenant's share is subject to claims of creditors.
Tenants By the Entireties - ownership vested in husband and wife
as tenants by the entireties. When the first spouse dies, the surviving
spouse is vested with sole ownership. In general, a creditor of
only one of the spouses cannot secure a lien against the property.
2. What is a deed?
A deed is a written document conveying an interest in real estate
from one person or entity to another. The person or entity conveying
the interest is the "grantor." And the person or entity
receiving the interest is the "grantee." The deed should
contain an accurate description of the property or interest being
conveyed, and it must be signed and witnessed properly.
A general warranty deed is a deed which conveys not only all the
grantor's interests in and title to the property to the grantee,
but also warrants that if the title is defective or has a "cloud"
on it (such as mortgage claims, tax liens, title claims, judgments,
or mechanic's liens against it) the grantee may hold the grantor
liable.
In a special warranty deed, the grantor guarantees to the grantee
that he has done nothing during the time he held title to the property
which has, or which might in the future, impair the grantee's title.
3. What is a deed of trust?
A deed of trust is a security instrument whereby real property is
given as security for a debt. By this instrument, the borrower transfers
the legal title to the property to a trustee or trustees who hold
the property in trust as security for the payment of the debt to
the lender or beneficiary. If the borrower pays the debt as agreed,
the deed of trust becomes void. If, however, he defaults in the
payment of the debt, the trustee(s) may sell the property at a public
sale, under the terms of the deed of trust.
4. What is a quitclaim deed?
A quitclaim deed is a deed that transfers whatever interest the
maker of the deed may have in the particular parcel of land. A quitclaim
deed is often given to clear the title when the grantor's interest
in a property is questionable. A quitclaim deed makes no warranties
as to the title, but simply transfers to the buyer whatever interest
the grantor has. For that reason, the buyer assumes the risk of
any defect in title.
5. What is a title examination?
Prior to the purchase of real estate, an attorney will conduct a
title examination on the subject real estate to certify that the
seller possesses good title to the property and can therefore convey
good title to the purchaser. In the course of this examination,
the attorney will also determine whether there are any liens existing
against the property or other matters that affect the title to the
property. A title examination is also done when a mortgage is refinanced
so that the attorney can determine whether any matters affecting
title have arisen since the previous loan was made.
The title examination involves several steps. First, the attorney
will review all records relating to the subject real estate found
in the circuit court clerk's office for the county where the land
is located. In doing so, the attorney will construct a chain of
title that includes the names of all individuals or companies that
have owned the property (generally going back 60 years). The attorney
will then check the land records for all conveyances made by persons
owning the real estate during the time of that ownership to ensure
that each owner possessed good title. In addition, the attorney
will identify and review covenants, easements, or restrictions on
the use of the property, as well as any real estate tax obligations
that have gone unpaid. The attorney will also check the records
of the clerk's office to determine whether there are any liens against
the property, or other matters of record, which would adversely
affect the quality, marketability, or value of title.
Once the attorney has completed the work of searching for such records
in the clerk's office, the attorney will examine and analyze all
of the documents found in the clerk's office, resolve any legal
issues involving the title, and finally form an opinion as to the
quality of the title.
6. What does it mean when there is a lien
against the property?
In general, a lien is a claim by one person on the property of another
as security for money owed.
There are several types of liens that can be placed against a specific
parcel of property. The most common type is the deed of trust, which
represents a mortgage holder's security instrument. Real estate
tax liens are liens that are automatically levied against the property
upon failure to pay real estate taxes when due. Mechanic's liens
give security to people who perform labor or furnish material to
improve real property. A homeowner's or condominium association
can also place specific liens against property if a member fails
to pay assessments or fail to comply with the covenants or restrictions
governing the property.
Other liens are identified by a person's (or entity's) name, and
are not filed against a specific parcel of property, but nevertheless
affect property held by such person. A judgment lien is placed when
a creditor secures a judgment against the defendant in court and
files or "dockets" it in the land records. This lien attaches
to any property that the defendant owns or acquires in the future
in the jurisdiction in which the lien is filed. Other non-specific
liens include income tax liens and estate tax liens.
When the attorney conducts a title examination, he or she will search
the records in the clerk's office to determine if any such liens
exist that would affect the subject real estate. If a lien does
exist that affects the property, that lien will have to be satisfied
or resolved in some manner, before good and marketable title can
be conveyed.
7. What is involved in a real estate closing?
The real estate closing is the event whereby (1) the execution and
delivery of the necessary sale and transfer documents takes place
and (2) the funds needed to fulfill the contract of purchase and
sale and loan commitment are obtained and disbursed.
Several days before the closing, all necessary parties are contacted
with a specific time and place for the closing. At the closing,
the attorney will give a brief explanation of the purpose and content
of the documents that will be executed. In general, these documents
include (a) the deed conveying the real estate, (b) the note which
evidences the loan, (c) the deed of trust/mortgage which secures
payment of the loan, (d) the settlement statements by which an accounting
is made of the transaction, (e) the truth in lending statement by
which the lending institution discloses all of the finance charges,
(f) any survey of the property which may show building restriction
lines, easements or other encumbrances on the property, and (g)
any other documents required by the lending institution or by the
particular requirements of that settlement.
The necessary
parties must sign the appropriate documents with some signatures
requiring proper notarization. At this time, the attorney's fees,
recording fees, real estate commissions and all other fees agreed
to in either the contract or the finance documents will be paid.
The purchasers of the property must bring to the closing the balance
of the down payment and required closing costs by certified or cashier's
check or wired funds.
Following the closing, the attorney will check the records of the
clerk's office to make certain that no matters affecting the title
have arisen since the date of the certification of title. Assuming
no defects or other matters affecting title are found, the attorney
will record the deed and deed of trust. The attorney will then deliver
to the lender the executed note, conformed copy of the deed of trust,
clerk's recording receipt, and other required loan documents. After
recordation of settlement instruments, all funds are disbursed.
In addition, liens that are satisfied will be released
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