5 Factors That Can Impact Your Clear to Close Timeline

As you begin to scale your business, it’s important to understand that not every transaction will have the same level of complexity. Being aware of potential roadblocks and proactively communicating them to your team and/or your borrowers can lead to fewer headaches down the road.

Simple Vs. More Complex Title Records 

On every transaction, a title company will do a thorough search of the property records to ensure a clean title before moving files into clear to close. In some instances this is a simple and speedy step. Key components that could lead to an easier file include:

  • One open lien (mortgage or deed of trust) of record
  • Tax information attached – no delinquencies
  • All vested parties match info provided on the order

But, there are many factors that could make a file more difficult and therefore take longer to close.

Here are some of the top factors that could contribute to a more complex file.

                                                                         

Certain liens on record

Although most liens are resolvable, they still tend to be time consuming. The process of removing different types of liens varies state by state, and the majority of issues occur when a lien is contested or when the issuer fails to update a file.

Eg. federal tax liens, solar panel liens

                                                             

Vesting discrepancy

During a title search, certain discrepancies arise when there are vesting changes or when more than one name appears on the title. While most investigations are cleared before the closing, title agents may have to redraw documents, make sure probate processes have cleared or the buyer/seller may need to discuss proceedings with an attorney.

                                                 Eg. property vested in a trust, trust/LLC vesting, death,                                                  divorce, marital status, adding additional buyers

                                                                                                                     

Foreclosures

When a property undergoes foreclosure most liens are eliminated prior to close but complexity occurs when certain ones survive. Buyer’s may be financially responsible for liens that were not cleared during a foreclosure. One can undergo a “quiet title” action to remove the lien through the court. This process will involve usage of attorney’s, money and especially time.

                                                             

Bankruptcies

Lenders can not disregard a discharged bankruptcy by the borrower. This only removes the liability of the debtor. Going back to lien survival, certain judgments can surpass the responsibility of the previous owner. Therefore, your title provider must make sure that these complexities are released from record prior to closing, which will in turn, delay the process.

                                                                                     

Surveys

Surveys are helpful to all parties involved in the real estate transaction. An accurate and timely survey, provided far in advance of the closing, assists the title agent in proactively tackling possible issues (encroachments, encumbrance and violations). In states where surveys are required, the title agent diligently reviews any exceptions or discrepancies. For example, if legal descriptions are not reflected correctly, a title agent must allocate their time in issuing an equivalency endorsement.

If these types of issues arise, transparent communication with your team or borrower from the outset can help set appropriate expectations for scheduling, which ultimately results in fewer surprises and happier customers.

Questions to ask when vetting a title and closing provider

When shopping around for a title and closing provider, it’s a good idea to ask about their process for determining simple vs. complex files. Sometimes if a closing is getting down to the wire, rather than clearing more difficult items from the report, a title company will issue a commitment with special exceptions.

Exceptions are items that will not be covered by the title insurance policy and there are a few standard exceptions that most title companies apply to every property, such as:

  • Rights of parties in possession (this exception would include, for example, the rights of a tenant with an unexpired lease term)
  • Encroachments, boundary issues, and other matters that an accurate survey would disclose
  • Any easements not shown by the public records
  • Construction and worker's compensation liens

But, special exceptions will appear after the standard exceptions on Schedule B, Section II of the title commitment. If a special exception (e.g., an unpaid child support lien from the seller) doesn’t get settled at closing, the homeowner who acquires the property is ultimately responsible for paying the debt. This sort of situation leads to dissatisfied customers and can also unfairly target lower income homebuyers with fewer resources to refute exceptions to their title policies.

Spruce’s approach to providing a faster, more transparent clear to close process

At Spruce, this quest for a faster, more predictable clear to close aligns with our mission to make real estate transactions easier for everyone involved. Through our proprietary technology, we have created a system in which we can easily identify simple files and fast track them to closing. We also flag complex files from the outset, so we can assign hands-on resources via our team of title experts to move items through your pipeline in the most efficient manner possible. Some examples include:

Spruce’s Open API

Partners who integrate with Spruce get real-time updates in their system when a title search is complete––including a summary of how simple or complex the file will be to close. Our partners can use this information to proactively communicate to their team or borrowers and set reasonable timelines.

Automated Underwriting Model

In certain markets, Spruce’s exclusive automated underwriting model provides a fully underwritten title commitment in as little as minutes instead of days, saving you precious time on each transaction without sacrificing quality or security.

Centralized Team

Spruce’s centralized operational model provides exceptional, consistent and fast service, while Spruce’s dedicated client success specialists act as a singular point of client contact that can easily track your transactions and workflows across geography.

Interested in learning more about Spruce’s products and services? Set up some time to chat with our team here.

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