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Harlan and Associates: Real Estate Investor Blog

Acceleration Clause

Acceleration Clause. A provision in a loan which, upon certain events such as a default or a transfer of the property in violation of the due-on-sale clause, allows the lender to demand all sums owed by the borrower to be immediately due and payable.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Ad Valorem Tax

Ad Valorem Tax. A tax levied against real property based upon its assessed value.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Adjustable Rate Mortgage

Adjustable Rate Mortgage (ARM). A mortgage loan which allows the lender to adjust periodically the interest rate. Such changes generally come after some initial time period during which the rate is fixed, and are tied to an index such as the Treasury Bill rate or the six-month LIBOR.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Agent

Agent. A person legally authorized to act on the behalf of another.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Assignment Fee

Assignment Fee. A fee paid when the rights under a purchase and sale agreement are transferred from one person to another.

In practice, an assignment fee is paid when one investor gets a property under contract and then transfers that contract to another investor. The second investor then purchases the property pursuant to the terms of the assigned contract. The fee is either paid at the time of assignment or at closing.

Assignment fees are typically only paid in investor-to-investor wholesale deals which are funded either by hard money or cash.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Closing

Closing. The ceremony during which all of the documents effecting the transfer of real property from one to another are signed.

Typical documents to be signed during closing include the deed, a promissory note and deed to secure debt in favor of the lender, and a number of other documents which may be required by the borrower’s lender.

In Georgia, closings must be conducted and supervised by a closing attorney.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Closing Attorney

Closing Attorney. The attorney responsible for all aspects of the closing. In most cases, the closing attorney represents the lender and prepares all of the documents to be signed by the buyer and seller at closing. The closing attorney is also responsible for the preparation and recording of all deeds as well as handling the monetary disbursments in conjunction with the closing.

In Georgia, all closings must be supervised by an attorney.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Closing Protection Letter

Closing Protection Letter (also known as Insured Closing Letter, CPL, or ICL). A document issued by the title insurance company which sets out the that company’s responsibility for negligence, fraud, and other errors that might be committed by a closing agent. In practice, almost every lender requires a CPL for each closing.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Deed

Deed. A written document which transfers legal ownership of real property from one person to another. Deeds need to be recorded in courthouse of the county in which the property is located.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Due-On-Sale Clause

Due-On-Sale Clause. A provision in a loan allowing the lender to call the balance of the loan due if there is a transfer of ownership of the collateralized property. The Due-On-Sale clause is a standard provision in most mortgages.

The current Fannie Mae/Freddie Mac Georgia Due-On-Sale Clause reads as follows:

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, “Interest in the Property” means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to a purchaser.

If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law.

If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

FiFa

FiFa (Fi. Fa. or Writ of Fieri Facias). A writ issued by a court pursuant to a judgment in a civil lawsuit. Once recorded in the General Execution Docket, the FiFa becomes a lien against all real property owned by the judgment debtor in the county where the FiFa has been recorded.

In most typical transactions, all FiFas must be collected for and paid in full at or before closing.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

HUD-1

HUD-1 (HUD, Settlement Statement, Uniform Settlement Statement). A form prepared by the closing attorney which itemizes and discloses all financial details of a real estate transaction.

Charges that are listed on the settlement statement include real estate agent commissions, lender charges, initial escrow reserves, title charges, and any other charge affecting the transaction.

The HUD is required for all transactions which involve a federally-related mortgage loan. As a practical matter however, every closing will have a HUD.

A sample HUD for a sale transaction may be viewed here. Please note, though, that the figures used are for example only.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Intangible Tax

Intangible Tax. A tax the state of Georgia imposes on loans with terms of three years or longer which are secured by real property. The amount of the intangibles tax is $1.50 for each $500.00 of the loan amount and is disclosed in line 1203 of the settlement statement.

For example, the intangles tax due on a $150,000.00, 30-year loan would be $450.00.

The intangible tax is collected at closing and paid by the closing attorney.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Joint Tenancy With Rights of Survivorship

Joint Tenants with Rights of Survivorship (JTROS, JTWROS). Co-ownership of real property by two or more persons where each owner holds an equal interest in the property; and upon the death of one owner, their interest automatically passes to the survivors without probate.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Mortgage

Mortgage (Deed to Secure Debt. Security Deed). A common term used to refer to a loan that is secured by real property. The mortgage is a legal document which creates in the lender a right of foreclosure in case of default.

In other words: the mortgage is the actual document which pledges the real property as collateral for a loan.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Owner’s Title Insurance

Owner’s Title Insurance (Owner’s Policy). A policy of title insurance issued to the owner of the property. Owner’s title insurance ensures that the purchaser is the vested owner of the property free and clear from any covered defect, lien, or encumbrance to the title.

An owner’s policy protects the property owner from any financial loss from claims to the title which cannot be discovered through a title examination. Title insurance will defend the insured’s title in court, if necessary, and bear any and all costs in settling that claim.

The title insurance premium is a one-time charge, typically collected for and paid at closing.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Planned Unit Development

Planned Unit Development (PUD). A subdivision of individually-owned property lots maintained by a mandatory homeowner’s association.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Planned Unit Development

Planned Unit Development (PUD). A subdivision of individually-owned property lots maintained by a mandatory homeowner’s association.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

POC

POC (P.O.C., Paid Outside of Closing). Items disclosed on the settlemet statement which are paid outside of the closing. POC items are shown for informational purposes only and are not included in the overall settlement statement totals.

For example: if a borrower paid for an appraisal before the closing, the charge of that appraisal would appear on the HUD in the POC column.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Promissory Note

Promissory Note (Note). The written agreement by which one person promises to pay a sum of money to another. Typically, in a closing, the obligation of the borrower to pay arises from the repayment of the loan granted to the borrower by the mortgage lender. The note is one of the most important documents to be signed by the borrower at closing.

The crucial terms of a note include the principal amount to be paid, the interest accruing on that principal, and the maturity date by which the entire principal must be repaid.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Title

Title. Ownership of real property. Title is shown by a deed which has been recorded in the real estate records of the county in which the property is located.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Title

Title. Ownership of real property. Title is shown by a deed which has been recorded in the real estate records of the county in which the property is located.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Title Insurance

Title Insurance. An insurance policy protecting against loss arising from defects in the title to real property, title insurance is meant to safeguard the insured’s financial interest in the property against title defects, liens, and other matters.

Risks covered by title insurance include:
- Identity theft and forged signatures on prior deeds in the chain of title;
- Fraudulent mortgage cancellations;
- Documents signed under a false or expired power of attorney;
- Wills that have not been admitted to probate, and the interests of undisclosed or missing heirs;
- Deeds and other documents signed by someone legally incapable, such as a minor;
- Mistakes made by the clerk in the indexing of documents affecting title; and
- Liens, judgments, and other matters filed for record after the title search is completed, and before the new deed is recorded.

There are two types of title insurance: lenders title insurance and owner’s title insurance.

In Georgia, the closing attorney acts as an agent of the Title Insurance Company and is responsible for issuing the actual title policies.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Transfer Tax

Transfer Tax. A tax imposed when title is transferred from one party to another. The amount of the transfer tax is $1.00 for every $1,000.00 of actual consideration received by the seller.

The transfer tax is a seller charge and is not considered a closing cost. It is shown in line 1203 of the settlement statement.

Transfer tax is collected at closing and paid by the closing attorney.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Wholesaling

Wholesaling. Traditionally, wholesaling is a system of real estate investing in which a property goes from one investor to another.

In a typical wholesale deal, one investor purchases a property with hard money or cash, does minimal rehab work, and then sells the property at a below-market price to another investor, who also pays with hard money or cash.

An alternate method for wholesaling involves one investor entering into a contract to purchase a property and then assigning for a fee that contract to another investor. The second investor then purchases the property with hard money or cash. This type of wholesaling is also known as “bird-dogging.”

Wholesaling does not involve ultimate owner-occupants or traditional lender-financing.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!

Wraparound Mortgage

Wraparound Mortgage (Wrap Mortgage or Wrap). A form of owner financing whereby the seller of real property extends to the purchaser a junior mortgage which wraps around and exists in addition to the seller’s own mortgage.

Typically the new purchaser makes monthly payments to the seller, who is responsible for making the monthly payments on the underlying mortgage. If the purchaser then defaults, the seller then can foreclose and take back the property.

Because title transfers from seller to purchaser, most wrap mortgage transactions will violate the due-on-sale clause of the seller’s mortgage.

At Harlan and Associates, we would love to be your Atlanta closing attorneys. Want to know more? Contact us and we will be happy to discuss how we can be of service to you!