Wednesday, May 09, 2007

query: when to order a date down for title commitment

If your underwriter has no specific guideline, 30 days is a good rule of thumb. It's more of an art than a science. You are balancing the unique risks of the title with the risk that something may have been filed in the interim. So, if I have a high risk seller, pending issues, I'm more likely to do interim checking if a closing is delayed. If the seller is low risk I may wait.

In any case, under no circumstances should you record documents without a final bringdown. (That's what I call a date down.)

On that subject, you should have procedures in place to deal with last minute surprises. What do you do if the abstactor finds something? Who is notified and whose job is it to immediately resolve the matter?

We're a table-funding state. We disburse at the closing table before recording in most transactions. We use a strongly worded disbursement affidavit to tie up loose ends with the sellers in exchange for the check. If they won't sign the affidavit, they don't get their check until the documents have been recorded.

High risk sellers don't get the choice. We won't give up the money until the final bringdown has been completed and documents are safely recorded.

There are still some unexpected surprises like new mortgages that the seller forgot to tell us about. When the abstractor calls our office with that kind of scenario, we consider it a "stop, drop and roll" procedure. FIRST, we protect the money. If the money is out the door, our bank is notified to stop payment on the proceeds check. We have 24 hours to undo a stop payment and that gives us time to work out a resolution.

Take a moment to consider how your office handles this kind of crisis. Thinking through the possiblities while you are calm is much better than when a problem arises. Also, giving your staff clear instructions now will help them to face the problem head on when it happens so they will not be tempted to hide the facts. Remember you are working as a team and you need everybody working together to mitigate damages.

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