Title Insurance: Paving the Way for Smooth Real Estate Transactions in Silicon Valley
In This Episode:
Across Silicon Valley, a staggering 61% of homeowners don’t fully grasp the significance of title insurance. It’s more than just a document; it’s your shield against unforeseen title-related issues. Surprisingly, 63% of homebuyers and sellers believe that escrow is complicated to understand. Patience is a virtue, but sometimes it leads to misconceptions. About 35% of homebuyers and sellers assume that escrow will take longer than it actually does.
Title Insurance & Escrow Misconceptions of Silicon Valley:
- Misunderstood Value: 61% of homeowners need help understanding what title insurance is and what it does.
- Escrow Complexity: 63% of homebuyers and sellers believe that escrow is complicated to understand.
- Misguided Assumptions: 35% of homebuyers and sellers believe that escrow will take longer than it does.
"Escrow is not just a process; it's a journey through the real estate landscape."
About the Guests:
Lori Fredericks – Senior Escrow Officer/Branch Manager Fidelity National Title Cupertino
With 34 years of experience in the escrow industry, her career began in San Mateo County at Founders Title in Burlingame. In 1989, she transitioned to Fidelity National Title in San Bruno, eventually moving to the Cupertino office in August 1991. Passionate about her work, she finds immense reward in assisting people with significant transactions in their lives. A parent to two grown sons, one residing in Idaho and the other in Arizona, she recently purchased a home in Kelseyville, CA, seeking a more relaxed pace in the later years of life. In their leisure time, they enjoy swimming and cooking and look forward to gardening, often unwinding with a glass of wine.
Annie Tyler – Sales Executive Fidelity National Title Cupertino
Successful professionals inspire her, and she strives to develop long-term partnerships in real estate and other industries. With a background in the legal field, she has always been passionate about marketing and business development.
"Navigating the title insurance world is like decoding a map to your property's past."
Show Notes:
- Introduction to Experts: Introduction to Laurie, an experienced escrow officer, and Annie Tyler, a sales executive, both from Fidelity National Title.
- Laurie’s Career Journey: Laurie shares her extensive career starting in 1987, highlighting her expertise in various aspects of escrow, including residential, commercial, and 1031 exchanges.
- Annie’s Career Path: Annie talks about her journey in real estate, including a brief stint at a law firm and her passion for working with realtors and industry professionals.
- Role of a Title Company: A detailed explanation of the function of a title company in real estate transactions, emphasizing the importance of a neutral third party in property purchases.
- Understanding Escrow Process: Laurie breaks down the escrow process step by step, from the initial agreement to the final stages of a property transaction.
- Common Escrow Challenges: Discuss issues that can arise during the escrow process, such as title discrepancies and forgotten liens.
- The Concept of Cloud on Title: Explanation of what a ‘cloud’ on a title means, including examples like IRS liens and undisclosed deaths and its impact on property transactions.
- Importance of Title Insurance: Insights into why title insurance is crucial for property buyers, covering potential disputes and claims.
- Types of Title Insurance: Discuss different types of insurance available depending on the property type, such as residential, investment, or agricultural.
- Real-World Title Insurance Claims: Sharing real-life scenarios where title insurance claims were significant, highlighting the importance of thorough title checks.
- Preventing Wire Fraud: Tips and strategies to avoid wire fraud in real estate transactions, emphasizing secure communication and verification methods.
- Choosing Fidelity National: Reasons why buyers and sellers should consider Fidelity National for their title insurance needs, focusing on their expertise, reliability, and personalized service.
"In the world of escrow, the smallest details can have the biggest impact."
Episode Transcription
Can you share a brief background about your personal experience?
Yeah, so my background on my career. I started in escrow in 1987 at Founders Title in Berlin Game as an escrow assistant. Then, I was fortunate enough in 1989 to join the Fidelity National Title family. And I was an escrow officer there. In 1990, I moved to Santa Clara County, and my career has been mainly in Santa Clara County. I’m currently the manager of Fidelity National Title Cupertino office. I have an excellent background in residential commercial esports. 1031 exchanges, reverse exchanges, refinances, and construction loans. So, a wide variety of escrows I’ve handled throughout my career.
How about you, Annie?
I’m Annie Tyler, a sales executive at Fidelity National Title, a job I truly love because I work with realtors such as yourself and folks related to the industry. I just love that. I was with Fidelity Title for four and a half years, did a little detour to a law firm for a while, and I loved it so much that I came back recently. So, I’m a reasonably seasoned title rep. I’m out there in the field all the time, and I do represent the Cupertino branch.
So, what is a title company? What do you guys do?
Well, we can both speak to that. So, when you purchase a property, you want to avoid meeting the buyer and seller, meet on the lawn, and exchange a few million dollars of cash. You’ve got to have, you got to have an intermediary there to handle, you know, a neutral third-party escrow. And then, of course, title insurance ensures that if you’re the buyer, you’re meeting with the seller, and they are all who they say they are. You know a bit of the property’s background, and ensure you have a clear title.
So, Laurie, explain the escrow process step by step.
Okay, the escrow process starts when a listing agent has a signed listing agreement or a purchase contract. That’s when we can begin the escrow process. At that time, our title department will generate a preliminary title report. And that will show the owner of the record, any liens on the property, and property taxes. Once we get the buyer’s deposit and purchase contract, we will ask the buyer to submit their initial deposit. And we will do that through a secure email to them and work with them to get that initial deposit in. And at that time, the buyer will work with their lender if there’s a lender. Then, we will wait until the lender receives the buyer’s information. We will sign the buyer and seller once we get the loan documents. Then we wait for funds from the lender and the buyer, and we can close the escrow. That’s basically how the process of the escrow will work.
And what issues do you generally run during that escrow process?
What issues do we run into during the escrow process? Well, there could be some title issues, of course. Let’s say the owner is different from what the realtor thinks. The owner’s name is different from that of the actual seller. That could be an issue. Some other issues could be the misspelling of a person’s name on the title, which was previously recorded. That’s something we’ll have to fix. Deeds of trust are liens that are not supposed to be there. The seller must be made aware of a certain deed of trust on the property. What we look for in every single escrow is different. So, when we look at that title report, we will review it and assess what needs to be taken care of. Well, one common thing I’ve seen happen, and Lori, you can correct me if I’m wrong, is folks tend to take out something like a HELOC and need to remember they have it, a home equity loan line of credit. So that was… something I’ve seen sometimes come up that they did it back in the day, maybe they used it, perhaps they didn’t, but they forgot that perhaps they have to clean that up before they can sell, for example. That is one thing we would do for them is make sure that we get a zero balance demand and a reconveyance to get that deed of trust off their property.
And what is a cloud on a title?
That could be a trustee’s deed. It could be, like I said, an old deed of trust, a quiet title; maybe some lawsuits are going on, an affidavit of death that perhaps was not recorded, that was supposed to be registered. That could be a cloud. Those are just some of the things: IRS liens, franchise tax board liens, maybe the seller needs to know they even have an IRS lien against them. So that could pose a problem right away. They may need more money or the proceeds from the property sale to pay for that. We see a few things that could cloud the title.
So why should buyers care about the cloud on the title?
Oh, well, may not be able to close escrow. You’ve got a quiet title on there. Lawsuits are going on. You know, it may not close for a year or two. Same, you know, with the trustee sale. You see, you don’t know what’s happening. So the realtors must review that prelim and, you know, let their sellers or the buyer understand what’s happening. Often, our escrow officers check that with the agent and give them a heads up on these concerns or red flags to help the agent navigate that and help their client resolve those if possible. When the preliminary title report comes out right in the beginning, we review it. If there are any red flags, we will alert the listing agent—that way. We can resolve all those issues before if we can. Interesting. One thing that I would like to change in the conversation is that instead of saying listing agent or realtor, let’s just use the words buyers and sellers. OK. Because that’s more interesting for people. People don’t care about reality. People don’t care about us real estate agents. Yeah. OK. If you sell it to a listing agent, you educate the seller. Yeah, so instead of using that word, we tell it to the buyers and reach out to the sellers.
So, how do title searches work, and why are they so crucial?
Title insurance, well, a buyer needs title insurance. They, if there’s a claim or anything, a deed of trust in the chain of title that could be forged, a power of attorney that the termination date is out of date, excuse me. Title insurance can pay attorney fees and costs if there’s a claim. It can be reimbursed for their covered losses. If there’s a divorce or a marital dispute, the claim will do any validity of divorce protects against the divorced wife or husband. These are just a few examples, but every owner, purchaser, and beneficiary should be insured by title insurance. So, Sharad, we could think of it as any other type of insurance you purchase for your home or car. If the darn thing doesn’t work or there’s a problem with it, with an insurance policy, you have recourse. There can be exceptions, and we would note those, but generally, it’s similar to insurance, and any buyer or seller would be familiar with the general concept. It helps ensure that things go smoothly most of the time. Still, if it doesn’t, and there’s a problem down the road, then you have a reliable insurance company with, you know, many, many billions of dollars and reserves to help cover your damages.
So, what are the different types of title insurance buyers can purchase?
Well, that depends. That depends on whether it’s an investment property, whether it’s vacant land, agricultural, or residential. For the most part, buyers will want title insurance, and they will live in the property. They want the ALTA homeowner’s title insurance. Investment property, most of it will be a CLTA, owner’s policy. Vacant land is a CLTA. Of course, we do have, you know, a particular tile insurance for construction, you know, commercial property. It depends entirely on the property.
So, share a story where a buyer or a seller recently claimed title insurance.
Well, I’m not sure if they’ve claimed title insurance, but I can tell you some problems that have come up, such as title issues that either I or other escrow officers have encountered. The big one is old deeds of trust. We don’t see that too much anymore, as much as we did when the refinance was back in the… early 2000s; everybody was refinancing quickly. But for a seller, we will often see this old deed of trust, and they have no clue. They need to remember they need to have information on it. And we are required to get a reconveyance. So either we track down this lender and try to get the reconveyance out of them, or that seller will have to bond it. They will have to go to a surety company, which will then issue a reconveyance, but there is a cost. So that’s one of those things where we look at the prelim and tell the seller, again, you have a deed of trust here; we will have to take care of this. And we need a reconveyance to close escrow. So, for your audience, Sharad, of buyers and sellers, to put it in their language. If there’s a deed of trust, it may mean they borrowed or leveraged that property for some financial gain. And that reconveyance is when that and Lori, you can correct me if I’m wrong, is when that is released. In other words, you loan me one hundred thousand dollars; for example, you recorded a deed of trust that says, the $100,000, we’re clear. A reconveyance is a document that releases that. So then the seller, for example, if you could move forward and sell that property. Otherwise, if you still need to pay me the $100,000. I have a deed of trust. I can lay claim. And… I’m considering a similar situation where a deed of trust was not paid off through the escrow. And it was in a partnership. One of the partners signed a reconveyance when the loan was not paid off, and the other partner came to sue. So, that was a claim that Fidelity had. I understand that she committed the fraud and has dropped the case. So that’s the stuff we have to deal with regarding the claim department. I also had an interesting case where an attorney recorded a deed, a grant deed, from the trustees of a trust to the heirs directly. They forgot to record the affidavit of death of the person of the trustee. So, right there, there’s a cloud on your title. So now you have to go back and record that affidavit. The heirs probably already got paid. That would be a cloud on the title. In other words, one of the steps in the process got dropped. It was missed and got settled. And that needs to be clarified. And so there you go. That’s another type of issue against which you want to be insured.
And what is wire fraud, and how can buyers avoid it?
Or sellers. Oh, yeah. Wire fraud is crazy these days. Completely crazy. So, the best advice for a buyer is not to accept wire instructions from anybody other than your title company or escrow officer. Do not accept from your… agent or anybody else. As the escrow company, we will send a secure email to them at the beginning of our transaction to set up their initial wire, and those instructions will stay the same. And the best thing for them to do is to call. Call and verify those instructions. They will get them in a PDF form. I’ll often have them call me from the bank to verify the instructions. Sellers, you can email me your wire instructions, but again, I will contact you from the phone number you gave me at the beginning of our transaction and verify those instructions before we close escrow. So now we have things in place. Buyers should feel very secure that transferring their funds is safe. We will never send wire instructions to any other parties in the transaction; they will only be sent to the principals. Okay, and share a recent story about buyer fraud that you remember. Well… I have not had that happen to me. I have heard from other escrow officers that the funds did end up in the fraudster’s hands, and they have yet to recover them. But I’ll tell you, Fidelity has recovered quite millions, millions of dollars as diverted wire fraud. So. That’s why the platform that we have now is very, very secure. But you just have to be the buyers. Like I said, you have to pick up the phone and call. And how is technology changing or alleviating some of these concerns for buyers? Well, that’s our new in-here platform where, as I said, I will send that secure email to them at the beginning of our transaction. They will answer the questions I ask them, and at the end, they will document my wire fraud form. So that is technology, what we’ve done with that. is awesome. So, and not so much for the seller on that side, but we do through our transaction, through all of the escrow process, your buyer or seller will be notified when certain things happen, just like when the initial deposit gets in. They’ll be alerted when a closing statement goes out. At the end of our transaction, a final closing statement will go to the buyer and the seller. The grant deed will go to the buyer. These are all automatic things happening, which is excellent.
And why should a buyer or a seller choose Fidelity National over other title insurance companies?
Well, there are a few good reasons, Sharad. One of them is expert escrow officers like Lori and others on her team and our company who help make things happen. You may know that Fidelity is consistently ranked as a Fortune 500 company. With billions of dollars in reserves to pay claims. But you know, even more than that, those are important things to buyers and sellers, certainly. Another important thing is that I’ve been at Fidelity for some time now, and so has Lori. One of the reasons we work there is that Fidelity empowers us to work a little bit entrepreneurially and handle our clients and Lori’s on her desk. You know, personally, so she gets to know them. She knows how they work. And that enables us to stay in touch and provide excellent service. And you know, that’s what service is, personalized. So, I feel that way about Fidelity. You know, everyone is different. And just like when you go to a restaurant, you know, you have your preferences, and you know we try to accommodate those.
Links mentioned:
Connect with Lori Fredericks and Annie Tyler:
Ready to secure your real estate transaction with confidence? For a free and no obligation 45-minute consultation to discuss title insurance and escrow services, contact Lori Fredricks and Annie Tyler for expert escrow services today!
- Connect on LinkedIn
- Lori Fredericks: https://www.linkedin.com/in/lori-fredericks-8615a582/
- Annie Tyler: https://www.linkedin.com/in/annietyler/
- Email:
- Lori Fredricks: lori.fredericks@fnf.com
- Annie Tyler: annie.tyler@fnf.com
- Phone: (408) 996- 7177
- Website: Fidelity National Title Santa Clara Country
- Connect on LinkedIn
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Sharad Gupta
Sharad Gupta, a dedicated real estate professional and former tech expert, brings a wealth of life and professional experience to his role as a podcast host. Transitioning into real estate after a two-decade-long career in tech, Sharad is deeply committed to providing for his family, yet his true passion lies in community service. Inspired by his special needs son, he consistently raises funds for local organizations. His commitment extends to his pivotal roles as a San Jose Neighborhood Association Member and an active participant in the San Jose Rotary Club. Here, he tirelessly advocates for community betterment, initiating impactful service projects, and championing local issues. His diverse background, coupled with his relentless drive for community service, resonates deeply with his podcast audience, providing them with an inspiring and profound listening experience.
“A clear title is more than a document – it's peace of mind in real estate."
