What is a Title Commitment?

Title Commitment

A title commitment is given to Buyers prior to closing to inform the Buyer regarding title to the property.  The Buyer is allowed to review the commitment and talk to an attorney or the Title company or their agent if they have any questions on any of the information on the commitment.  The Buyer usually only has several days to let the Seller know if anything on the commitment is unacceptable to the Buyer. 

Protection against hazards of title is available with a unique insurance called title insurance.  Other insurance policies are purchased for possible futures issues; however, title insurance is purchased with a one-time payment to safeguard against loss arising from hazards or defects.   Title insurance is all about risk elimination before insuring. 

There are two types of insurance: 

1. Owners' policy lasts as long as the insured or the heirs have an interest in the property. 
2. The Lenders' policy decreases and eventually disappears as the loan is paid off.  Most Lenders require this insurance policy just as they require the fire insurance.

Title insurance starts with the search of public records for matters that could affect the title.  Any issues that are found that do not allow for a clear transfer of title must be corrected or a clear transfer cannot occur.  Here are some examples that present concerns:  Incorrect names, outstanding mortgages, judgements, tax liens, easements, incorrect notary acknowledgements.  However, even the most careful search to eliminate risk cannot find hidden hazards of title.   

Some hidden hazards that could occur are things like:

• A forged deed.
• Transfer documents that were executed under an expired or false power of attorney.  
• Heirs that have claims to a property.
• Mistakes in the public records, to name a few. 

Understanding the Title Commitment

The Title Commitment is divided into several sections:

• Schedule A

• Schedule B, which includes the Requirements, the Exceptions, and the Exclusions.  The title commitment should be accompanied by the documents referred to in Schedule B. Schedule B may be the most important part of the Title Commitment

Schedule A:

     1.  Commitment Date

     2.  Policies to Be Issued, Amount, and Proposed Insured

     3.  Interest in the Land and Owner

     4.  Description of the Properties being insured

 

Schedule B:

The Requirements section lists what things must be done before escrow can close and title insurance will be issued.  If a requirement can not be met, close of escrow may be prevented or delayed.  Talk to the escrow officer about fulfilling any unusual requirements as soon as possible to avoid a delay in close of escrow.

Examples of Requirements:

1. Payment of taxes
2. Recording a release
3. Reconveyance of the deed currently encumbering the property
4. Recording the new deed
5. Recording the documents securing the new loan.
6. Other requirements may include approval by the trustee in bankruptcy
7. Recording a disclaimer deed from a spouse
8. Recording a court order evidencing the authority for one person to act on another's behalf
9. Copy of a trust, Corporation, or LLC paperwork
10. Releases of various other types of liens. 
11. Proof of Identity 

The Exceptions section discloses the exceptions that the title company will not cover against.  It also generally includes certain standard exceptions such as mineral and water rights. The title insurance policy will not insure against loss, nor will the title insurer pay costs, attorney fees, or expenses, resulting from title problems listed in Schedule B.  Buyers are often unaware that they need to read the exceptions to coverage.  If an exception is unacceptable to the buyer, the buyer and the agent may be able to convince the title company to remove it, insure over it (with an endorsement), or eliminate the exception by obtaining a release, affidavit, waiver, quitclaim deed or other document. However, if the unacceptable exception is not discovered and objected to within a short period of time from date of receipt, there may not be time to address the unacceptable exception and the buyer may be forced to close escrow subject to the exception. Talk to the escrow officer or an attorney if there are questions or concerns regarding the exceptions on the Title Commitment for disclosure items and for restrictions on the use of the property. 

Examples of Exceptions:

1. Any facts, rights, interests, or claims that are not shown in the Public Records but that could be ascertained by an inspection of the Land or by making inquiry of the persons in possessions of the land.
2. Any encroachments, easements, measurements, variations in area or content, party walls or other facts which a correct survey of the premises would show.
3. Road ways, streams or easements, if any, not shown by the public records, riparian rights and the title to any filled in lands.
4. Unpatented mining claims, water rights, and claims or title to water.
5. Possible additional tax assessment by reason of new construction or improvements pursuant to the provisions of the Acts of Assembly relating thereto, not yet due and payable.
6. Further exceptions will be noted on the title commitment.

The Exclusions section discloses the exclusions that the title company will not cover. 

Examples of Exclusions:

1. Any law, ordinance or governmental regulation relating to the use of the property
2. Any governmental police power, unless recorded
3. Rights of eminent domain, unless recorded
4. Defects, liens, encumbrances, adverse claims or other matters agreed to by the buyer
5. Claims arising from bankruptcy or other creditors' rights laws

Specific Title Commitment Issues

Easements: An easement gives persons other than the owner access to or a right of way over the homeowner's property. Common easements include utility easements and roadway or access easements. Easements may be an issue if the buyer is planning on building a pool or adding improvements to the home. 

CC&R's and other Deed Restrictions: A declaration of covenants, conditions and restrictions ("CC&Rs") for a homeowner's association is recorded against the property. The CC&R's empower the homeowner's association, if there is one, to control certain aspects of the home. If there is no homeowner's association, the CC&R's can be enforced by the other homeowners. A homebuyer should always carefully read the CC&R's (and any other association documents) because the buyer will be obligated to comply with all the rules and restrictions.

Access: Failure of the public record to disclose a right of access to the land will be noted in the Title Commitment. Although landlocked property can be sold  the lack of access must be disclosed to the buyer.

Military Airports:  Buyers in areas in the vicinity of a military airport will find this information on a title commitment.  

Judgments: A recorded judgment is a lien on all real property of the judgment debtor. A judgment lien against the seller usually must be paid prior to close of escrow.

Bankruptcy: If the seller has filed bankruptcy, the bankruptcy trustee will have to approve of the sale prior to close of escrow or a court order may be necessary. The seller's bankruptcy attorney should be able to assist in obtaining the approval, but be sure to allow enough time for the process.

Liens: There are numerous types of liens that may need to be paid and released before escrow can close. These liens may include state and federal tax liens. State tax liens are extinguished if the state takes no action for six years. By filing a Notice of Federal Tax Lien, the government establishes its interest in the property and any property acquired after the lien is filed. Mechanics liens and liens arising from environmental laws may also become an issue.

EndorsementsIn addition to the coverage available under the title insurance policy, a buyer can obtain additional coverage through endorsements. These endorsements may be available for little or no cost.

The Title Insurance Policy
The title insurance policy will be issued as of close of escrow. Title insurance does not insure that a title defect will not occur; it insures that if a defect that occurred prior to the policy date becomes apparent, the buyer will be indemnified if the defect cannot be cured. A standard policy generally insures against the title to the property being vested other than stated in the policy; any defect in or lien or encumbrance on the title; unmarketability of title; and lack of a right of legal (not necessarily physical) access.  The policy generally contains the same sections as the Title Commitment.

I always suggest that you talk to the title company that is issuing the title policy and/or an attorney if you have any questions. 

Is a Home Warranty Worth It?

 

If you buy a new computer, stereo, flat screen TV, cell phone or almost any other electronic device, the cashier at your retailer of choice will likely ask you if you'd like to protect your purchase with an extended warranty. While doing so can be a wise decision-perhaps your home is full of rambunctious Rottweilers who frequently destroy your belongings—that added protection comes at a price. Home warranties do as well.

A renewable service contract, the typical home warranty covers at least a portion of the costs of repair or replacement of covered items within a home. This can range from standard appliances such as dishwashers, furnaces and air conditioners to major systems such as plumbing and electric. Depending on the level of coverage selected, you may pay as much as $600 annually. That's usually in addition to fees for service calls on any filed claims.

Is a home warranty worth the costs? The answer depends—at least in part—on whether you intend to buy a new build or an older property.

 

New Build – Many new builds come with builder warranties that cover structural defects. Because the appliances and systems are new as well, they should be free of problems. In the case of a dishwasher with drainage issues or a refrigerator that's more hot than cold, you can likely get a replacement from the manufacturer. Unless you're a true Nervous Nelly, it makes sense to skip the home warranty and put your money into emergency savings instead.

Older Home – While rich in character and history, older homes are more likely to have defects. Before purchasing one, ask about the exact age of the appliances included in the sale and service paperwork for all the major systems. A home inspection is essential to determine if costly repairs or replacements are likely. If they are, the benefits of a home warranty may more than outweigh the cost of the annual premium.

Two of the companies that I've had good experiences with are Old Republic Home Protection & American Home Shield. Check out their sites and see if a home warranty might be right for your next purchase. For more articles like this check out my monthly newsletter.

Why Location Matters—and What Qualifies as Good

What three things matter most when buying a residence? 

According to the New York Times, the answer has been "Location, location, location" since at least 1926, when the well–known expression was first used in a classified advertisement in the Chicago Tribune. Today's real estate agents still tend to agree. Buy a property in a good location and it's likely to be a solid long-term investment. But what qualifies a location as "good," you ask?

Start with the characteristics below.

Safety – The safer the better, so look for property in a neighborhood with a low crime rate. Consider locations where residents feel free to engage their neighbors and walk around outside even after dark.

Schools – Look for property in a good school district, even if you have no school-age children of your own. The quality of the neighboring schools will affect your home value and resale price in the future. See WFISD Website.

Entertainment – Properties nearest the popular places in town are always worth more. For example, if you live in a coastal area, a future buyer might pay more for your home if it's near the beach. If you live within a city, proximity to the best commercial district will add value.

Views – Homes near the water (lake, ocean or otherwise) or with spectacular panoramic views are always popular with home buyers. Add to the future value of your property by buying in such a location.

Transportation – The best location is one with easy access to public transportation such as the train or bus stop. If you're buying in a town where more people commute by car, easy access to the freeway may be valued more highly.

For more articles like this check out my monthly Newsletter:  http://mydigitalnewsletter.com/tanyaruff/

Keys to Successful Home Buying Negotiation

Sir David Frost, English Journalist and comedian, once wrote, "Diplomacy is the art of letting someone else have your way," and a measure of diplomacy is certainly an essential ingredient in any negotiation in which you wish to secure the most favorable outcome. Consider these additional keys to successful home buying negotiation. 

Know the Market- At any given time, your local real estate market may favor buyers or sellers. If you're planning to purchase a home, a buyers' market will afford you greater negotiation power because the seller will have fewer offers from which to choose. In a sellers' market-where offers tend to be plentiful- agreeing to a quick closing may still provide you with the upper hand. 

Don't Disregard Concessions- Most buyers are obsessed with price when purchasing a home. While haggling a lower figure may may be possible, there are easier ways to effectively reduce your costs. Known as concessions, they may include seller's contributions towards your closing costs, home improvements and repairs. 

Get Pre-Approved for a Mortgage- There are countless tales of real estate deals falling through because a loan failed to close. Smart sellers want to avoid such a situation, and buyers with pre-approval documents from lenders are more attractive as a result. 

Make Friends With an Expert- you can buy a home without a buyer's real estate agent;. But you're unlikely to secure the most favorable outcome should you choose to do so. Think about it: in a transaction where one side has expert assistance and the other does not, who will have the negotiating advantage? 

Keep Your Cool- Don't let your emotions get in the way. You're much more likely to get the home on your terms if you practice diplomacy, are open to compromise, and treat the seller and their real estate agent with nothing but respect.

For more articles like this check out my monthly Newsletter: http://mydigitalnewsletter.com/tanyaruff/

Refinancing an Underwater Mortgage

Refinancing an Underwater Mortgage

 

For most of us, our home is the biggest investment we’ll ever make—and we pour our hearts, souls and hard-earned cash into making it the best one possible as well. Of course, the value of our property fluctuates with the real estate market. When it’s good, our investment grows. When it’s bad, we can end up underwater—like 28.2 percent of U.S. homeowners were in third quarter 2012.

According to the real estate website Zillow, these mortgages added up to more than $1 trillion in negative equity. And while one might think that the 14 million borrowers affected were shut out of all money-saving refinance opportunities, the assumption would not hold true. In fact, it is sometimes possible to refinance an underwater mortgage.

 

Ask Who Guarantees Your Mortgage Your home loan may be owned, or guaranteed, by Fannie Mae, Freddie Mac, The Federal Housing Administration, Department of Veterans Affairs, your lender or a private investor. Before you can evaluate your refinance options, you need to figure this out. What’s the best way to do so? Just contact your mortgage servicer and ask.

 

Put Cash In Regardless of who owns your mortgage, a cash-in refinance is always an option. Should you choose to pursue a lower interest rate in this way, you will be required to contribute cash at closing in addition to the usual settlement fees. The exact amount depends on your lender and the underwriter’s loan to value requirement.

 

Have a HARP If your mortgage is owned by Fannie Mae or Freddie Mac, you may be eligible for the Home Affordable Refinance Program. You’ll need cash for closings costs unless you elect to roll them into your new loan, but you won’t have to fork over the thousands generally required in a cash-in refinance. You must be employed and current on your mortgage payments to qualify.

 

Play with the FHA If your mortgage is owned by your lender or a private investor, you may be able to secure a FHA Short Refinance. Your lender must participate in the program and you must be current on your loan payments. As part of the refinance, the amount you owe on your first mortgage will be reduced to no more than 97.75 percent of your property’s current value.

 

For more articles like this check out my monthly Newsletter: http://mydigitalnewsletter.com/tanyaruff/

 

 

Vacation Motivation

A couple of months ago I read an article about productivity and although I don't remember the quote exactly- it went something like this, ""If I were leaving for vacation tomorrow, what would I be able to accomplish today?" This quote has absolutely stuck with me! I keep thinking about those days before I leave on a trip that I work feverishly on my to-do list and get energy, drive and focus from places I never knew existed.

What would happen if you worked today like you were leaving on vacation tomorrow? I have a feeling your to-do list would have a lot of things checked off by the end of the day!

Looking for a Realtor with energy, drive and focus? www.TanyaRuff.com

The Art of Attraction

Ten Ways to Attract Buyers to your Home

You’ve undoubtedly heard from media reports, and perhaps friends and neighbors, how tough it can be to sell a home in today’s “buyer’s market.” Granted, it’s not the easiest time in the history of real estate, but it isn’t the toughest time either. Here are 10 simple ways to attract buyers to your home...

#1: Offer a Home Warranty A home warranty adds value to your home. It gives potential buyers a little extra piece of mind in the form of protection against unforeseen problems including appliance break down, roof leakage or a malfunctioning furnace. Warranties vary in coverage, but in general there are plans that will cover your home while it’s on the market as well as plans that kick in once it sells.

#2: Create a Virtual Flyer Sometimes sellers find that friends, neighbors and associates can be some of the best buyers. Create a free virtual flyer to advertise your home at www.vflyer.com and email it to everyone you know. (You can use this service to advertise other things as well such as parties, events and so on.)

#3: Advertise on the Internet More than 80% of buyers begin their home search on the Internet, so be sure your home is there for them to find. List your property on craigslist.org, backpage.com, zillow.com and trulia.com. After your Realtor enters your home into the MLS it will automatically be on Realtor.com as well. You can also buy your own domain name to match your home’s address. Then create a website or blog for your home (or ask a web-savvy teenager to do it).

#4: Aim for Amazing Curb Appeal While buyers are out driving around and viewing neighborhoods, you want your home to make them literally stop the car and look upon it with awe. Having the best dressed home in the neighborhood will attract buyers and higher offering prices. Do not underestimate the importance of this. It’s the first impression potential buyers have of your home, and poor curb appeal may actually discourage them from wanting to even take the time to view the inside.

#5: Price it Properly If your home is priced too high, buyers may think that you’re not serious about selling, or that you may be difficult to work with and unwilling to negotiate. Also, buyers who are looking within a specific price level may miss your home even though you may actually be willing to accept a much lower price. Your Realtor can help you price your home properly for the quickest sale.

#6: Host an Open House While opinions vary on the success rate of Open House events, it certainly can’t hurt to host one. Even if your neighbors are the main visitors, they may actually know someone who could be interested in your home. The fact they’ve seen it with their own eyes could encourage others to visit.

#7: Take Tons of Pictures Potential buyers love to see pictures of homes, whether on the Internet or on flyers. Your Realtor should post pictures on the MLS. You can post them on the other websites listed above. If you have a video camera, you can even create a virtual tour of your home.

#8: Directional Signs If you live near a corner or busy intersection, place the “home for sale” signs that point towards your home in the best spot possible. If you ask nicely, your neighbors who live on the corner may be willing to let your place one of those signs right in their yard.

#9: Stage Your Home After you’ve made sure your curb appeal is tops, you should not neglect improving the inside via staging. Hire a professional stager or ask your Realtor for assistance. If you’re worried about the cost of hiring a stager, many offer different levels of service which range from a walk through of your home and verbal advice, to a full blown service where they bring in their own furniture and decorations and redesign your entire home.

#10: Update Your Home Buyers love nothing more than brand new carpeting and paint, updated sinks, fixtures, cupboards and so on. You obviously don’t want to update to the extent that you overprice your home for the neighborhood, but you do want to update to within a comfortable level for the market value in your area.

 

If you have more questions about the best way to attract buyers to your home, call me! I have the professional understanding and insight to help you attract the most potential buyers to your home.

 

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