Exactly. I assume that this mirrors the “Title Company” described in US transactions. The lawyers have a trust account (similar to escrow). As the buyer, your lawyer is in charge of receiving the money from the mortgage company then ensuring that the correct amounts are doled out to the necessary places to ensure the transaction is complete. Their reputation and career are theoretically on the line. They ensure that all existing mortgages and liens are paid, and outstanding interest, no outstanding property taxes (taxes owing or remaining for that year are pro-rated) and then the remainder passed to the seller and/or his lawyer. The Canadian banking system is fairly monolithic and reliable, so 99% of the time, this money is moved by account-to-account transfer between banks (and sometimes credit unions or trust companies). The lawyer is also responsible to see that payment removes things like liens when paid.
Obviously this system is in place for the specific reason the OP mentions, to prevent anyone in the chain from absconding with the money or getting stiffed, or even overlooked. The lawyer has also done the necessary legal title search to ensure that nobody’s prior claim is actually overlooked. 4 years legal training and a professional membership, license to practice that can be revoked and legal penalties; usually this is enough to deter theft.
Most lawyer theft seems to be by shaving of parts of less specific large sums of money residing longer term in the trust fund or managed by them; i.e. estates, trust investments, etc. When a fixed amount goes in and pretty much immediately out again, and everyone is waiting for it, it’s pretty hard to shave much off it. Take all the money and run is not a great strategy unless it’s several million dollars, and even so, only a viable option for someone already “doing life on the installment plan”, 1 to 5 years at a stretch.
Ok, with respect, NONE of those three stories has ANYTHING to do with what you’re asserting in your worries as an individual buyer/seller and escrow. Those are all three cases of banks (who should know better) getting ripped off by the escrow agent. And there’s no indication that those examples are in any way related to the fact that an assetless title company was involved.
So, no, your cites are worthless for supporting the main point you tried to make. Try again.
Does the seller always have to reveal the terms of the mortgage to the buyer? If I wanted to sell a house but have nobody else know how much I owed on it, am I out of luck?
I worked for a title company in Oregon for close to a decade. Every single transaction we did was insured and bonded. The idea that we could steal the money and leave the consumer hanging is utter nonsense; it is all explicitly protected, heavily audited and regulated, and well-capitalized.
I could just pay out the mortgage holder, get the title, then transfer the title to the new owner on receipt of payment. It doesn’t have to happen all at once. My governement gives me a couple of weeks to transfer title without having to pay land tax on both transactions.
If you don’t have the money, or if your government is going to tax you twice, that won’t work.
But you don’t have to tell the new owner /exactly/ what you owe who: you can pay down part of the loan first, or take out bridging finance.
Seems a convoluted way to hide what is meaningless information … if the house is worth $400k to me, it doesn’t matter how much the seller still owes … escrow does the search so the house will come into my possession free of encumberments …
I was under the impression that the outstanding mortgage, like any outstanding liens, is registered with the Lands Branch / Titles Office; it would pretty much have to be, so buyers could be sure that they knew the full encumbrances on the title (as I mentioned, the buyer’s lawyer is responsible for ensuring all title problems are paid off). The only way out would seem to be to get enough money to pay off the mortgage before the buyer’s lawyer or agent did a title search.
I haven’t dealt with it personally, but I think in the U.S., ‘bridge loans’ are commonly available, so the closings don’t all have to happen simultaneously.
As well, it’s not completely uncommon to, for instance, a buyer to close on a house before the actual move-out date, and rent the house to the occupants for the period between the closing and move-out. Or, in my case vice versa: I had a confirmed closing date (and had scheduled the move) but the seller wanted to moving the closing to a few weeks later. Since I didn’t want to change my move date and the house was already empty, the seller rented it to me for the time between the original closing (i.e. my move date) and the actual closing.
If the mortgage was filed with the local courthouse, it’s public record and only a court order would hide it.
When property ownership is researched prior to a title transfer, only the outstanding encumbrances are of immediate interest, so a paid-off mortgage won’t stand out on a transaction accounting, but the public record is still there.
However, anyone looking up a mortgage at the courthouse will only find the fact that there is one, and probably the original amount and terms. If you need to find out the exact payout figures to pay it off, you will have to contact the lender and that info is usually considered private.
It matters to you - if you give him 400k for the house - and he owes 500k to various banks - getting the banks to let go of that other 100k is a deal breaker as they still have a lien on the house and are not going to let it go until its satisfied.
