Clearing title: what has to come off the record before you can close

What the preliminary commitment shows

The title company searches the public record for your property and issues a preliminary commitment, sometimes called the prelim. It names the current owner of record, describes the land legally, and lists two kinds of items. Schedule A states what the company is prepared to insure. Schedule B lists the exceptions: items that either stay on title after closing or must be removed before the company will insure the buyer.

Items that typically stay are recorded easements, plat restrictions, covenants for a homeowners association, and the current year's property taxes, which are prorated between you and the buyer at closing. Items that must be removed are the ones that secure a debt or a claim against you: your mortgage or deed of trust, a home equity line, any judgment or tax lien, and anything recorded in error.

Your agent reviews the prelim when it arrives and Jennifer, RexMont's transaction administrator, checks it against what you disclosed at listing. If something unfamiliar appears, you hear about it early so there is time to resolve it.

Items a seller commonly has to clear

Most sellers clear one or two items and never think about the rest. These appear most often on Eastside and Seattle files.

• Your mortgage or deed of trust. Escrow requests a payoff statement from your lender and pays it from your proceeds at closing; the lender then records a reconveyance releasing the lien.
• A home equity line of credit. Paying it to zero is not enough; the line must be closed and the lien released. Escrow sends a payoff-and-close request, and you may need to sign the lender's closure letter.
• An old deed of trust paid off years ago but never reconveyed. Title can usually obtain the release from the prior lender or its successor, but it takes time, so it is raised as soon as the prelim is read.
• Judgments, tax liens, or child support liens against you or someone with a similar name. Same-name items are cleared with a Statement of Identity; real ones are paid at closing.
• Unpaid utility charges. Water, sewer, and garbage can lien the property in Seattle, Bellevue, and many Washington cities. Escrow requests final balances from the providers on Form 22K and pays them from proceeds.
• Vesting issues: a deceased co-owner, a trust, a divorce, or a name that does not match your identification. Each has a documented fix.

The buyer's title objections under Form 22T

If your contract includes Form 22T, the buyer has a set number of days, written on the addendum and counted from mutual acceptance or from receipt of the commitment as the form specifies, to review the prelim and give written notice of any objections. The objections are usually about items in Schedule B that the buyer does not want to take title subject to: an easement that runs through the building envelope, a covenant that limits use, or a lien the buyer wants confirmed as paid.

Once the buyer objects, the seller has a response period, also written on the form, to state in writing whether the objection will be cured before closing. If the seller agrees to cure, closing proceeds with that promise attached. If the seller declines or does not respond within the period, the buyer may terminate and recover the earnest money, or may waive the objection and continue. Nothing in Form 22T requires you to remove an item you cannot remove; it gives the buyer a decision point.

Your agent drafts the response with you. Some objections are cured by escrow as a matter of course, such as paying off a lien. Others, like a recorded easement, cannot be cured by you and the response says so.

What escrow needs from you

Escrow is the neutral party that gathers payoffs, prepares the deed, and records the transfer. Early in the file it sends you a short set of documents, and the sooner you return them the smoother closing is.

The payoff authorization gives escrow permission to request a payoff statement from each lender on title. Lenders will not release figures without it. The Statement of Identity, sometimes called a Statement of Information, asks for your full legal name, prior names, date of birth, addresses for the last ten years, and marital history. Title uses it to rule out judgments and liens against people with names like yours; a common name can otherwise hold up closing for days. It is confidential and is not shared with the buyer.

You may also be asked for a copy of your government identification, your forwarding address, a trust certification if the home is held in a trust, and death certificates or court documents if a former owner has died. Escrow will list exactly what applies to you.

Timing, and why the last week matters

Payoff statements are good for a limited number of days and accrue interest daily, so escrow orders them to land in the final week before closing and uses a per-diem figure to true up the exact amount on recording day. Any payment you make on your mortgage in the last two weeks should be mentioned to escrow so the payoff figure is not overstated; if you keep paying on schedule, the lender refunds any overpayment after closing.

Releases for old liens and reconveyances from prior lenders are the slow items. If the prelim shows one, the title company starts on it immediately, and Jennifer checks its status weekly. The buyer's lender will not fund until title is clear, so an open release in the last few days can push closing.

Property taxes are prorated on the settlement statement to the closing date. If a payment is due within the closing window, escrow handles it from your proceeds rather than having you pay the county separately.