There are numerous documents required when underwriting title insurance. In this article, we are going to discuss the five most important documents a title company needs throughout the title insurance process.
1. Project Budget – Sources & Uses Statement
First and foremost, the title company will need a project budget. This is often referred to as a “sources and uses statement” that essentially lists all the funds (and their sources) that will be used to pay for the project. This document helps all parties understand the full scope of the project at hand and should include the following:
- architectural and engineering fees
- engineering fees
- permits and surveys
- transactional costs, such as attorney’s fees and lender’s fees
- costs related to closing
This budget should also be updated throughout the course of the project as plans and costs change.
2. Draw Request
Next up is the draw request, which may come in a number of forms – the most common of which is the AIA G702/703 forms. These forms include a breakdown of various construction costs.
3. Sworn Construction Statement
The sworn construction statement is a breakdown of costs detailing what is allocated to the general contractor vs. subcontractors. As the title process progresses, it’s important to track lien waivers to ensure that everybody is getting paid the correct amount in order to avoid any issues.
4. Lien Waivers
Each time there’s a draw request, the title company needs to receive copies of all lien waivers for payments previously made. These lien waivers essentially act as proof that all subcontractors have completed their work and been paid appropriately.
5. Change Orders
Any and all change orders also need to be submitted to the title company. These change orders can impact the value of a project, so it’s important that they’re considered.