Shortly after your case is opened with Capitol Title, you will receive an email from us assigning you a file number and a settlement coordinator. It will also include a checklist of items required from you to complete the closing. You can help us provide the most efficient services by contacting your Capitol Title settlement coordinator upon contract ratification. Capitol Title will use this time to diligently process all of the items listed on the following page to ensure a smooth transaction.
*A drawing which shows the structures and improvements on a lot in relation to the platted boundary lines, building restriction lines and easements. The drawing will also include a certification that the property is not within a special flood hazard zone.
What Is Pre-Settlement Processing?
Before we discuss the particulars of pre-settlement processing, we must discuss forward contracts and swap contracts. A forward contract is a customizable agreement between two parties to purchase or sell a specific asset at a specific time in the future, as in the contract is “forward reaching.” Included in a forward contract is the price of the asset and how payment(s) will be arranged. The price of a forward contract is called the “forward price” and it is calculated based on the risk-free rate and current market value of the asset, not either party’s anticipation of what the asset may cost in the future at the time of sale and purchase.
Some examples of forward contracts include, but are not limited to:
- Closed-Outright Forward
- Fixed-Date Forward
- Window Forward
- Option Forward
A swap contract exists only in financial agreements, essentially. In this contract, two parties agree to exchange financial instruments, debts and liabilities, or cash flow for a specific time. As it most likely apparent, financial and business institutions are the entities that typically engage in this sort of contract. There are two types of swap contracts: currency swaps and iterate rate swaps.
What Is Pre-Settlement Risk?
Anyone who engages in any sort of contract should be aware of pre-settlement risk and factor this risk or risks in the contract. Pre-settlement risk refers to the chance that one party will not hold up her or his end of the bargain, such as defaulting. When this occurs, you are put at a disadvantage that is usually costly and the resolution may take months to resolve the matter. You see, when one party defaults on a contract, the other party (i.e., you) is left in dire straits as she or he attempts to find a replacement for the asset that was defaulted on. Typically, defaulting can occur closer to the end of a contract so that the non-defaulting party is less prepared to secure a replacement. Usually, securing a replacement costs more money, in part because of the short notice and the eagerness and desperation of the non-defaulter. Furthermore, unless the non-defaulter is insured, she or he stands to lose the financial value of everything and then some in the contract.
When securing a replacement, the market value of the asset in the original contract may have increased, or a new contract with another party may include other stipulations that are cumbersome and worrisome. Therefore, it is highly recommended that any party who engages in a forward contract or swap contract calculates pre-settlement risk. Both parties will have a clearer understanding of potential risk costs if they have a conversation about what to do and how they will settle the matter if one party defaults.
What Is Pre-Settlement Funding?
Pre-settlement funding is a process whereby a court advances money to a plaintiff so that she or he can pay for her or his legal fees. As the name suggests, the court grants this money to the plaintiff before her or his case is resolved formally. This approach is more recommendable to plaintiffs than plaintiffs seeking out advances from banks or other institutions, because a plaintiff will not have to pay back the money nor interest fees if she or he loses the case or settlement.