American Land Title Association Statement (“ALTA”): This is the closing statement showing all closing costs and payments for buyer and seller; but without listing the buyer’s loan terms, like the interest rate. Buyers, Sellers, and the real estate agents will receive an ALTA statement at closing.
Closing Disclosure (“CD”): Often referred to as the CD and is used in residential real estate transactions when the buyer has a mortgage. The CD will include loan terms, costs, and final buyer’s figures for the transaction. The lender will send a CD to the buyer a few days before closing. The final CD is signed at closing by the borrower. Also called the “closing statement” or “settlement statement”.
Easement: An Easement is a right to access property for a specific purpose. It can be for ingress and egress, installing/maintaining a sewer, or utilities. Easements can be created through continuous use, necessity, prescription, or an agreement between the parties. Written Easements should be recorded in the deed records.
HUD1 or HUD: HUD is an acronym for the Department of Housing and Urban Development. In real estate, a “HUD1” usually refers to HUD1 closing statement form used for cash purchases. The standard HUD1 form was used for all real estate closings up until 2010. The GFE HUD1 (Good Faith Estimate) form was used from 2010 until 2015. The HUD1 form was replaced by the Closing Disclosure (CD) in 2015. The original HUD1 is still used for cash purchases and the GFE HUD1 form is used for reverse mortgages.
Judgment Lien: A judgment lien is recorded in the lien index and is the result of a lawsuit. Judgment liens attach to any real estate owned by the defendant in the county in which the lien is recorded. Judgment liens are indexed by name and often need to be verified to see if the person on the lien is the same person involved in a real estate closing. Both tax liens and judgment liens are also called “Writs of Fiera Facias”.
Limited Warranty Deed and Warranty Deed: Sellers sign a deed at closing to transfer title to the buyers. The closing attorney will draft the deed. A limited warranty deed includes a promise from the sellers that the sellers have a legal right to convey title. This promise is the warranty of title. A general warranty deed warrants the title from any “claims of all persons whomsoever”. A limited warranty deed warrants title against any claims made by or through the sellers. (A Quitclaim deed makes no such promises). In Georgia, it is customary to use the limited warranty deed for most purchases.
Power of Attorney (“POA”): This is a legal conveyance of authority to allow one person (agent) to sign on behalf of another person (principal). In most cases, a specific power of attorney is required for real estate transactions to make it clear that the principal approved the terms of the real estate transaction. If a party is not legally competent or able to sign a specific POA, then it is possible to use a completed general power of attorney that was signed when the principal was legally competent.
Quitclaim Deed: A deed transferring any interest, if any, from the grantor to the grantee. This is not used for purchases because it makes no warranties of title to the buyer.
Security Deed: Georgia uses the Security Deed to attach the loan to the real estate. This is commonly called the mortgage. States use either a mortgage, security deed, or deed of trust. The main difference is in the foreclosure procedure. A Security Deed can be foreclosed without a court proceeding.
Title Insurance: Owners Title Insurance protects the owners’ interest in the property. Lenders Title Insurance protects the lender’s interest in the property as secured by the Security Deed. While an owner’s policy is optional, almost every lender will require a lender title policy. The policies are valid as long as the buyers own the property. The default owner’s policy is the enhanced title policy, which increases the insured amount the first five years and offers additional protections.
Wires and ACH’s: Funds for a real estate closing must be wired if the amount is over $5,000.00. An ACH (“Automatic Clearing House”) transfer is not acceptable for closings because the sender can have the funds returned. It is very important to verify any wire instructions before sending funds.
NOTE: Georgia is an “Attorney State” where a Georgia attorney must handle the closing.