Thursday, February 10, 2011

Listing and Seller Contract Checklist

So, you're taking a listing or preparing your sellers for signing a contract. Although you could be months away from settlement, here are some items you can address right away to help ensure a smooth transaction.

o Pull and examine the seller's deed. Make sure the name matches what you're putting on your listing agreement. Has there been death or divorce since the sellers took title?

o Is the property leasehold or fee simple?

o If leasehold, ground rent amount, ground rent owner and contact information, when was ground rent last paid?

o Does the owner have an Owner’s Title Insurance Policy? Ask this question and get a copy of the policy, or at least a copy of their settlement statement from when they bought the property. This can help later with any title issues or to give the buyers a break on title insurance costs.

o How many loans is the seller paying, and what type of loans are they (FHA, VA, conventional, HELOC, etc.)?

o Obtain at least the last 4 digits of the seller(s) social security numbers. This is often required to order a payoff.

o If the sellers have an FHA loan, try to avoid closing the last two days of the month. If the loan isn't paid off by the last day of the month, the seller will owe an additional month's interest.

o Will all parties attend settlement? If not, will a power of attorney be used? Will we be sending docs to the seller? Note that we always prefer the sellers to be in attendance at settlement.

o Is the seller a resident in the state where the property sits? In Maryland, there is a nonresident witholding tax.

o Instruct seller not to pack documentation. There may be some important documents in their possession which help us clear some issues.

Being proactive and obtaining as much information in advance can help avoid some of these common closing delays. As always, feel free to reach out to one of our professional settlement officers, or email us at info[at]MASettlement[dot]com!

Wednesday, February 9, 2011

Fraud in Title: An Example

Ever wonder what fraud looks like in a title search?

This is *not* a release

The document above looks like a release of a deed of trust. The recorder indexed it like a release of a deed of trust. The title searcher regarded it as a release of deed of trust, and showed the lien as satisfied.

Fortunately, the title examiner carefully reviewed the document, and noted that the language was neither consistent with a typical release, nor was it executed by the lender or trustee. After questioning the owner, it was discovered that the reconveyance was indeed a fraud.

While the value of title insurance is often measured in claims paid, the above represents a "shadow benefit" that the claims numbers do not reflect: a claim avoided.

Tuesday, February 8, 2011

Facebook for Real Estate? Check out Roost Social Media Toolkit

Looking for new ways to connect with folks in your community? You've probably heard of this thing called Facebook. They even made a movie about it.

But did you know there is a firm in the real estate space that offers not only free webinars but also a free "social media toolkit" for your use?

If you're interested in using Facebook for your real estate business, check out all that Roost has to offer. Starting today and running through the month of February, Roost is offering 20 FREE webinars, conducted by those who really know real estate. For a list of webinar offerings, click here. You'll notice they're very targeted in terms of topic and audience, so regardless of your breadth or depth of Facebook knowledge, you'll likely find something that interests you. And did I mention they're FREE?

Note: We are not affiliated with Roost, nor do we get paid for promoting them. We just like what they do.

Monday, February 7, 2011

Common title issues that delay settlement

As we all know, settlements do not always happen on time. The delay can be for a variety of reasons and with varying degrees of severity. In this post, we'll explore common title issues that may delay settlement - matters that are revealed by a title search or survey that must be addressed before title insurance can be issued. In no particular order:

Unreleased liens: Whether against the prior or current owner, it's not uncommon for the record to reveal a deed of trust which was actually paid off but show as unreleased at the courthouse. Before we can settle, we need to know that all liens we're not paying off are released of record.

Lack of clarity of ownership: Here is a simple formula: [Sellers on Contract = Record Owners = Grantor on new deed]. This means we can't have individuals signing the contract when the property is in a trust. Nor can only one spouse sign a deed when both are currently in title.

Improper legal description: Some deeds have wrong lot or unit descriptions, or just do not reflect the property being conveyed. Sellers can only convey what they have and what the contract states will convey.

Missing heirs / estate issues: Every state's probate laws are a little different, but generally speaking upon death a person's property passes to her heirs per a duly executed will, or in the absence of one through operation of law (intestacy). If an heir cannot be found or does not consent to the sale, there can be problems.

Unrecorded documents: Put plainly, there may be documents missing of record which complete a chain of title (such as a deed) which can delay settlement.

Survey issues: As we discussed here, there are different types of surveys performed in conjunction with many resale transactions. Sometimes, the survey reveals issues, the most common of which are buildings which sit outside of boundary lines or setbacks.

Easements: Typical utility easements are often acceptable for a new buyer and her lender, but sometimes an easement can interfere with the use of a property (think of a powerline easement crossing where the buyers want to add a garage).

Improper execution of documents: Documents need to be property signed, dated and acknowledged before recording. Sometimes they're not. If a title search reveals these errors, we need to address them before settling.

These things happen. How can you mitigate the risk of this affecting your settlement date? Make sure your title company is ordering the title search as soon as you give them the contract!

Photo by Ambro

Friday, February 4, 2011

Federal Estate Taxes: The "Secret Lien"

Here is another guest post from Maryland attorney Elisa Kerr, a member of our Title Review team...


By law enacted by President Obama on December 17, 2010, Congress extended and amended some of the tax laws that would have expired December 31, 2010, through December 31, 2012. When you have a property listed or under contract that involves an estate or assets in probate, you should understand that the possibility exists that the property is subject to federal “estate” taxes.

The federal estate tax is a “secret lien” in favor of the IRS, on all real and personal property of the decedent, and it is not necessary for the IRS to take any specific action or to record any document to give notice of or to enforce that lien. The lien will attach to real property as of the date of the decedent’s death, and will normally last for ten years from that date. However, federal estate taxes are generally not due and will not become a lien on real property if the value of the decedent’s gross estate does not exceed a specified amount. That amount may vary from year to year.

For estates of decedents who died in the year stated in the chart below, no estate tax would be due (and thus no “secret lien” would arise) if the gross value of the estate did not exceed the stated exemption:

In order to close or settle on a property that may be subject to federal estate taxes, one of several things must occur:

1. The estate must have filed its federal estate tax return and paid all federal estate taxes due; or

2. The estate must have obtained a Certificate of Discharge of Property Subject to Estate Tax Lien from the IRS. The process of obtaining this Certificate can be lengthy and time-consuming, and must be done by the Estate’s attorney, accountant, or Personal Representative; or

3. In the absence of 1 or 2 above, a title company or attorney or their underwriter may be willing to escrow all the net proceeds from a sale pending their receipt.

We always recommend you seek out the advice of an independent legal or tax professional with any questions specific to your situation, but hopefully this post arms you with the basic information so you know what questions to ask.

Source: the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” (H.R. 4853).


Have a specific question you want to run by us? Shoot us an email at info[at]MASettlement[dot]com!

Thursday, February 3, 2011

The Life of a Settlement File

Earlier this week, we shared with you who does what at a title company. Loyal reader Ken Montville commented that it may also be helpful to provide a timeline of what happens from the day we receive the contract straight through to settlement and document recording. We liked that idea, so here goes...

Order Entry: This happens immediately upon receipt of the contract. The case-specific data (party names, property address, sales price, etc.) is entered into the title software, and letters are emailed out to agents, buyers and sellers introducing ourselves and soliciting some important transaction-related information.

Title Search and Examination: Immediately upon receipt of the contract, a title search is ordered from a title abstractor. Within 5-10 days (on average - that number can change depending on the complexity of the search), a search is performed and reviewed by one of our title examiners. Issues are communicated, and where possible cured. A title commitment is sent to the lender. If major issues are found, they are communicated to all parties (buyers, sellers, real estate agents and the lender).

Taxes and Payoffs: Tax, water, and sewer departments are called and current figures are added to a preliminary HUD-1 Settlement Statement (HUD-1) . Payoff figures for any seller mortgages or liens are requested, received, and entered on HUD-1. Taxes can typically be ordered right away, but for payoffs we want to wait until the closing is scheduled. Why? Because payoffs expire - they're only good through a certain date.

HUD-1 Completion: This occurs as early as a week before settlement, but more likely the day before. Once the lender’s figures are received, they are entered on the HUD-1, which is finalized and sent to the lender for approval. Once approved, it’s on to settlement.

Settlement: The big event! An attorney or licensed settlement agent conducts the closing, facilitating the execution of all documents.

Recording and Post-closing: Several documents (typically the deed and mortgage/deed of trust) go to the county for recording. The remainder of the documents are bundled and sent to the lender. Finally, the file is disbursed and all funds that have come in are disbursed out in accordance with the HUD-1.

The entire process from contract to closing typically happens in 30-45 days. Naturally, any number of factors can affect that timeframe. We've closed some cash transactions in 2 business days, and we still have some REO files that were opened in 2009. The key - as always - is to get complete what is in our control in a timely fashion, and communicate with the parties early and often!

Flickr photo by net_efekt, as modified by me.

Wednesday, February 2, 2011

Online research for the Maryland real estate professional

The following is a guest post from our Title Searcher / Educational Coordinator Michelle Fine.


There was a time in the not too distant past when obtaining any information regarding a property required going to the Land Records Department at the Circuit Courthouse and doing research. This often entailed looking through books and pulling oversized plats out of cabinets.

Today in Maryland (and several other states), we have a much more modern option. Most documents regarding real estate properties are now available online, and in just a few moments and with a few clicks, you can do what formerly took hours.

Your first stop when trying to glean information about a property is State Department of Assessments and Taxation (SDAT): On this site, you can look up your property by address, or Tax ID #. It’s simple to use, and requires no use of a password or user name. Here you can locate:

1. the property;
2. who owns it;
3. whether it's owner occupied;
4. the seller's mailing address;
5. the dimensions of both the land and the dwelling ;
6. whether it appears on a plat (and if so, a plat reference);
7. approximate age of the dwelling;
8. assessed value and how that assessment is being phased in; and
9. a history of recent transactions.

Your second stop is Maryland Land Records. This site does require a user name and password to access, but you can easily request one and usually receive confirmation within an hour. With the Liber and Folio that you have gleaned from SDAT you can look up the current title Deed, and with the seller's names, you can research Deeds of Trust, Mortgages, and other liens that have occurred while they have been in title. This is an invaluable tool both for listing and selling agents to make sure that they are aware of precisely who is in title, the description of the property including whether it is Leasehold or Fee Simple and whether it is on a plat or has a metes and bounds description, and an idea of what is owed on the property, including any Condominium or HOA liens.

Your third stop (assuming that the deed reflects that the property is located on a subdivision plat) is the Maryland Plat site. The site requires a usernameand password, but contact us if you need one and we can help you out. Here you can locate your particular lot and see its shape and relation to the community as a whole. The plat customarily provides any building restriction lines, and some easements that impact the property.

There are also a few other sites that we as title professionals use to fully research a property and the parties.

Maryland Judiciary website: Search for docket entries in most state Circuit and District Courts for liens and judgments filed against the parties.

Maryland State Department Database – Corporations and other entities: This is used to check to make sure that an entity selling or buying a property exists to do business in the State of Maryland, and that they are in good standing.

Pacer access to MD Bankruptcy Courts: (this site does require a fee for use): This site is used to check for bankruptcies against the parties involved in the transaction.


Too much information? Send us an email at info[at]MASettlement[dot]com and we'll do the research for you!