Pre-Closing Guide

Real Estate Closing FAQs

In the Capital Region, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” throughout the FAQs.

How do I prepare for closing?

Upon receipt of the ratified contract, our office will begin the process of conducting a title search and coordinating settlement with your lender.

If you have not already scheduled a date and time for your settlement convenient to all attendees, please call 202-362-1500 or e-mail us to do so, or you may have your real estate agent coordinate closing with us.


Please call our office one day prior to closing and we will provide you with the dollar amount you will need to bring to settlement. In the event we do not have figures from your lender and cannot provide you with an exact amount, you may refer to the Good Faith Estimate provided by your lender and use a personal check for any remaining balance due.

Please make checks payable to Federal Title & Escrow Company.

What documents will I be expected to sign at closing?

You will be required to sign numerous documents at the time of closing. In the majority of closings, the lender prepares and delivers the documents to the closing agent the day before or day of closing. Thus, most borrowers do not have the opportunity to review the documents prior to closing.

Moreover, most borrowers do not take the time to read the documents at closing because of time constraints. While the majority of the documents are simply disclosures and other non-binding notices to borrowers, a handful of the documents are vitally important and legally binding.


What services does the closing agent provide?

It is customary for the closing agent to receive a “title order” from a real estate agent, loan officer, purchaser or a refinancing owner in preparation of a closing. The closing agent will then order a title search, a location survey (if required), payoff statements, and real estate tax information in preparation of closing. Within a few weeks prior to closing, the closing agent will schedule a closing date with the lender and the parties involved, as well as, clear title and issue title insurance commitments to the respective parties.

The day before closing or on the day of closing, the lender will provide final loan instructions to the closing agent along with the lender documentation. Upon receipt of these items, the closing agent will prepare the final Closing Disclosure form and conduct closing with the parties.

Generally, the actual closing involves an explanation of the documentation by the closing agent and the acquiring of signatures, which takes approximately one hour. In some cases, there may be subsequent adjustments to the Closing Disclosure form or other documentation that will require a longer closing time. At the time of closing or shortly thereafter, the lender will remit funds to the closing agent’s escrow account for disbursement.

Who decides the closing agent or attorney for my closing?

It is your choice as a refinancing owner or a purchaser of the property to select the closing agent.

What factors should I consider in choosing a closing agent?

While the functions performed and services provided by the closing agent include those matters previously described, the most important role played by the closing agent is the issuance of the title insurance policy. Without the closing agent’s ability to issue a title insurance policy, your transaction could not proceed to closing.

Ultimately, the most vital function of the closing agent is issuing a title insurance policy, and since title insurance policies are all substantively equal, the closing agent is simply providing a commodity necessary to complete the transaction. Unlike our competitors, you will receive your owner’s title insurance policy at closing for no additional charge.

What fees should I expect to pay the closing agent?

You should expect to pay variable and non-variable fees, including variable and non-variable title charges:

Variable fees and costs – Both the types and amounts of fees and costs will vary widely among closing agents and attorneys. Items to look for include:

  • Settlement/closing fee
  • Ttitle search/abstract fee
  • Title insurance premium
  • Title insurance binder fee
  • Location survey fee
  • Courier/overnight fee
  • Notary fee
  • Document preparation fee, etc.

Non-variable costs – These costs include the District of Columbia transfer and recordation taxes, along with the costs charged by the District of Columbia for recording of the deed, deed of trust (mortgage) and other documents that require recordation.

Unless otherwise negotiated in the sales contract, the standard purchase transaction will require that the purchaser pay the recordation tax and that the seller pay the transfer tax.

DC Recordation is calculated using the purchase price.

  • Transactions $399,999 and under are taxed at the rate of 1.1% of the purchase price.(Example: $300,000 x 1.1% = $3,300, so the buyer and seller each pay $3,300 for a total of $6,600 paid to DC.)
  • Transactions $400,000 and above are taxed at the rate of 1.45% of the purchase price.(Example: $500,000 x 1.45% = $7,250. So the buyer and seller would each pay $7,250 for a total of $14,500 paid to DC.)
Are the variable fees and costs negotiable among closing agents?

Yes. Because title insurance is not regulated in the District of Columbia, these fees and costs will widely vary among closing agents.


Title Insurance FAQs

In the Capital Region, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” throughout the FAQs.

Why do I need title insurance?

Title insurance is a one-time charge assessed at settlement. It protects a homebuyer in the event that the property title, which proves ownership, is flawed. Problems with the title can include outstanding mortgages or liens, easements, inaccurate notary acknowledgments and deeds, wills or trusts that contain wrong names or improper vestings.

Title companies offer two kinds of policies: an “enhanced” title policy and the “standard” title policy. The difference between the two is based on pre-purchase problems, such as a deck addition that was erected without a proper building permit, and post-purchase problems. While the standard policy would not cover such a problem, the new ALTA enhanced policy does. While it is more comprehensive than the old one, it also costs about 20 percent more.

It has become common for title companies to automatically assume homeowners want the more comprehensive and more expensive coverage, but buyers do have a choice. In fact, title insurance is not required by law. However, most lenders will not provide a mortgage without it. The cost, generally a few hundred dollars, varies based on the value of the property.


What are some scenarios a title policy would guard against?

Your title insurance policy will protect you against a variety of defects. This is a short list of common examples:

  • False impersonation of the true owner of the property by the seller or other persons previously in title
  • Forged deeds, releases and other documents
  • Deeds by persons of unsound mind
  • Deeds by minors
  • Invalid documents completed by an expired attorney
  • Invalid deeds delivered after the death of the grantor
  • Deeds by supposedly single persons but actually married
  • Fraud
  • Claims for unpaid estate inheritance and gift taxes against prior owners of your home
  • Unrecorded easements – giving one party the right to enter another party’s property
  • Undisclosed descendants of former owners of your home or the land on which it is situated


What is the difference between an owner's and lender's policy?

A lender’s policy protects the mortgage holder (the institution that owns your mortgage). If there is a fault in title that results in a loss, the mortgage holder will be paid back.

An owner’s policy protects you, the homebuyer, against a loss that may occur from a fault in your ownership or interest you have in the property. A title policy will protect the equity in your new home.

Compare coverage and pricing for different title policies; a “enhanced” title policy and the “standard” title policy.

Owner's Policy FAQs

Many homebuyers don't realize the importance of an owner’s title insurance policy when buying their new home.

Only owner’s title insurance fully protects the buyer should a problem arise with the title that was not discovered during the title search. Owner’s title insurance also pays for any legal fees involved in defending a claim to a title.

Read: Title Claims in Real Life (As seen by our settlement attorneys)
Like any insurance policy, it is a small price to pay to insure one of the most important investments your homebuyer will ever make.

Why should I purchase an owner's title insurance policy?

When you buy a home, you want to be certain that the title to the land is clear. However, even the most diligent search of the public records could fail to disclose a number of title defects. So a title insurance policy protects you for the duration of your home ownership.

Legally you do not need to purchase an owner’s policy, though it is strongly recommended. Find out how much an owner’s policy will cost with a quick quote.

What problems could arise during a title search?

Several scenarios could create a title cloud, including but not limited to:

  • A forged will or deed;
  • A title transfer by someone underage;
  • A married person conveying real estate without his or her spouse;
  • Fraudulent impersonations;
  • Secret marriages;
  • Undisclosed heirs;
  • Invalid divorces; and
  • False affidavits.


Why do I also have to purchase a lender's title insurance policy?

Lenders must also protect themselves against title related defects. A lender wants to insure that the loan they are issuing is protected by title insurance, since they too must insure that their investment is covered. And in some cases, when a lender sells loans to secondary investors, the new lender requires that the loan has title insurance.

Why can't I use the seller's owner's title insurance policy?

The seller may have a judgment against them or another issue that could cause a discrepancy in the title. Plus, the policy needs to be in the new purchase amount of the house, so it is properly insured. However, if the new homebuyer can secure a copy of the seller’s current owner’s title policy, and the policy is less than 10 years old, the homebuyer may be entitled to a reissue rate for their new owner’s title policy.

When does an owner's title insurance policy expire?

An owner’s title insurance policy stays active as long as you (or your heirs) own the said property.

How many claims are made with title insurers?

Title insurers paid approximately $460 million in claims in 2001, according to American Land Title Association (ALTA). This figure was up over $100 million from $350 million in 2000. Compensation was paid to insured homeowners either for losses they experienced under policies issued to them or to defend their titles from the claims of others.

Generally speaking, homeowners assume there are rarely problems with titles, however according to an ALTA survey of 420 abstractors and agent operations, title problems arise in one out of every four real estate transactions. In 2001 this would mean that 1.6 million of the 6.5 million residential real estate transactions had a problem with the title.


What types of title insurance policies do you offer?

Federal Title offer two kinds of owner’s title insurance policies, a standard package and an enhanced package. The homebuyer can decide which package meets their needs, up until they are signing the papers at the closing table. Click here for a comparison between the two title policies we offer. Order settlement services online today, or if you are shopping around, get a free quote online.


Lender's Policy FAQs

Planning to finance your home purchase or refinance your current home loan? Your lender will require a lender’s title insurance policy in order to close.

Why do I need a new lender's title insurance policy for a refinanced loan?

To the lender, a refinance loan is no different than any other home loan. So your lender wants to insure that the new loan is protected by title insurance, just like the original lender required on your previous loan. When you bought your house, you bought a policy for both yourself (an owner’s policy) and the lender (a lender’s policy), but when you refinance, you are only buying a new title for the lender (a lender’s policy).

Why does a lender require title insurance for loans?

Typically, once a lender buys your loan, they immediately sell it to secondary market investors. In order to protect its security interest in the loan, these secondary investors require that the loan has lender’s title insurance. Lenders are protecting their investment against title related defects.

When I bought my home, wasn't I required to buy a lender's policy?

Yes, you bought a lender’s policy when you bought your house. However, unlike the owner’s title policy which doesn’t expire until you (or your heirs) sell the house, the lender’s policy expires when the loan is paid off. When you refinance, the original loan is paid off and a new loan is issued, therefore requiring a new lender’s title policy.

When does a lender's title insurance policy expire?

A lender’s title policy expires when the loan is paid off.

What may have happened since I bought my house that would warrant a new lender's title policy?

Since the original loan was issued, you may have taken out a second mortgage, had mechanic’s liens, child support liens or legal judgments recorded against you, which are all issues that could result in a financial loss to the lender. Even if it has only been six months, there are still title defects that could arise. So the only way for the lender to protect their investment, is to require a new lender title policy with each new loan.

About how many claims are made with title insurers?

Title insurers paid approximately $460 million in claims in 2001, according to American Land Title Association (ALTA). This figure was up over $100 million from $350 million in 2000. Compensation was paid to insured homeowners either for losses they experienced under policies issued to them or to defend their titles from the claims of others.

Generally speaking, homeowners assume there are rarely problems with titles; however, title problems arise in one out of every four real estate transactions, according to an ALTA survey of 420 abstractors and agent operations. In 2001 this would mean that 1.6 million of the 6.5 million residential real estate transactions had a problem with the title.


Want more title insurance?

Condo FAQs

Reviewing and understanding a condominium’s declaration and bylaws is extremely important. These documents stipulate nearly every aspect of condominium living — from the election of the board of directors of the condominium association, to whether you may lease your unit, to owning pets.

What laws and rules govern a condominium?

The condominium declaration creates the individual units from the entire parcel of property. The plat attached to the declaration specifies the boundaries of the unit. Typically, units constitute the air space dimensions of an apartment, the space between the unfinished surfaces of the walls and of the ceiling and floor.

The portions of the property that are not individual units, e.g., the exterior of the building and the grounds of the property, are common elements owned by all of the unit owners as tenants in common according to their percentage interests as defined in the condominium declaration.

What expenses do my condo fees cover?

The expenses that are paid by condominium fees vary from association to association. Some associations collect for utility bills (e.g., water, electric). Typically, the condominium association uses the fees to pay for management activities and any maintenance requirements, including day-to-day obligations for trash removal, exterior painting, plumbing and so forth.

What is a special assessment?

A special assessment can sometimes be charged by a condominium association to pay for a major, usually unforeseen, expenditure, such as the repair of the roof or pipes or repaving of the parking lot.

Do I need to carry my own insurance policy for my condo unit?

It is the responsibility of the condominium association and the board of directors to maintain both liability and casualty insurance coverage on the property for which the association is responsible, i.e., the common elements of the condominium. You may choose to carry an individual insurance policy to cover your condominium unit and personal belongings.

NOTE: In Maryland there has been a recent change in the law. Pursuant to Section 11-114(g)(2), the Maryland Condominium Act-Unit Owner Liability provides that the bylaws of a condominium association may require that a unit owner be responsible for the insurance deductible amount (not to exceed $1,000.00) under a property insurance policy for damage incurred to the condominium from a cause originating in the owner’s unit. The Act further provides that all other deductible amounts are common expenses.


Can a condo association prohibit renters?

An association may restrict or prohibit the renting of units by properly amending its declaration and/or bylaws. Generally, property values increase and the ability to obtain mortgage financing becomes easier when an association has imposed leasing restrictions.

District FAQs

In the District of Columbia, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” throughout the FAQs.

What is the DC Tax Abatement program?

The DC Tax Abatement Program was designed by the District of Columbia to help lower income residents purchase property.

Visit our DC Tax Abatement program guide for the most up-to-date information on qualifying incomes, purchase price restrictions and other documentation you’ll need to provide in your DC Tax Abatement program application packet.

READ MORE: DC Tax Abatement program overview

What is the DC Homestead Exemption?

The Homestead Deduction subtracts $69,100.00 from the assessed value of your residential property before your real estate taxes are calculated. To be eligible, you must:

  • Own the property
  • Occupy the property as your principal residence (domicile)
  • Complete and submit this form
What is the Senior Citizen Tax Relief program?

This is a reduced real estate tax specifically for senior citizens. Real estate taxes are reduced by approximately 50%. To be eligible, you must:

  • Be 65 years of age or older;
  • You must own and live in your property;
  • You and other senior citizens who occupy the property must own 50% or more of the property; and
  • Total adjusted gross income of everyone living in the home must be less than $100,000.00 for the prior calendar year.

Maryland FAQs

In Maryland, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” throughout the FAQs.

Is there an advantage to being a Maryland first-time homebuyer?

Yes, there is an advantage. If you are a first-time homebuyer in the State of Maryland, then you are exempt from paying your portion of the State Transfer Tax (.25% of the Sales Price). Remember that ALL buyers must be first-time homebuyers in order to qualify for this exemption (e.g., if husband owned Maryland home prior to marriage, and now both husband and wife are purchasing a Maryland property, then the exemption would NOT apply). Federal Title & Escrow Company provides all paperwork for this exemption.

For more details, ask your Realtor or contact us.

Virginia FAQs

In Virginia, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” throughout the FAQs.

Coming soon!

What happens after closing?

Federal Title & Escrow Company

For nearly 25 years, our independently owned title company has leveraged technology to streamline the closing process, providing top-notch service at a competitive price for buyers, sellers, agents and lenders across the District of Columbia, Maryland and Virginia.

  • We are proud pioneers of creating a better closing experience for buyers, sellers, agent and lenders.
  • Our instant REAL Credit™ for ordering settlement services online has saved our neighbors upward of $18 million to date.
  • Our paperless, custom-built closing workflow software allows us to proactively keep customers in the know and avoid settlement surprises.
  • Our free mobile app Close It!™ helps homebuyers and their agents better understand the complete cost to be paid at closing.
    • Often imitated but never replicated – we set the bar other title companies aspire to reach.

Have questions? We'd love to hear from you! Contact Us

Closing Costs Explained...

Closing costs include taxes, lender fees and title fees that a homebuyer pays at settlement. Watch this video to prepare for the process.

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