Apr 14, 2018

When it comes to title insurance policies, there are no hand-me-downs. No recycling. There are no “slightly used” policies available. It doesn’t matter if a property has been owned a year, a month or a week. When a property is sold from one person to the next, a brand-new title insurance policy is issued. Every time.

One might think it’s an unnecessary task and expense when a home may be changing hands after only a year or so of ownership. Why get a new a new title insurance policy when a title search was done so recently? Because a homeowner or builder could do many things to encumber the title in a short time. There are an amazing number of possibilities. Some are unsavory, most are unlikely, but all are still possible. A lien or judgment could be filed against the property owner in the short amount of time they have owned it. Nothing brings out the debt collectors like the purchase of a property. Delinquent child support debts can invite a lien against a property faster than you can say abstract of judgment. An unpaid ex-spouse can get to the courthouse with their judgment quicker than you may think.

How would you like to discover that the newly remodeled home you just bought has an unpaid construction lien and the contractor is now looking for you to pay it? And it could have been discovered with a new title search? We won’t even mention the more unusual encumbrances that can happen during a short ownership. From potential encroachments to marital status changes, you don’t want surprises after the purchase of your property. And you certainly don’t want uninsured surprises.

Prior to purchasing a property, a new and updated title search is needed to reveal any of these kinds of issues and ensure the new owner has clear title. The new owner’s title policy lasts as long as you or your heirs own the land. A bright note is that if you refinance your property within seven years of purchase, you receive a discount on the new title insurance policy. The discount varies, based on the number of years since you originally purchased the property. If it is in the first year since purchasing the property, you get a 40% discount on the title policy premium. It drops down to 15% if you are in the seven-year window. After seven years, the title insurance premium is full price.

Regardless of how long someone has owned a property, when you are buying it, you should want and obtain a new and complete title search and the title insurance to back it up.
[where: 75230]

Apr 12, 2018

Why You Can't Buy a House on the Weekend

Realtors work weekends. It’s just part of the business. The real estate industry operates seven days a week, with agents showing homes and submitting contracts any day of the week. To be successful, there isn’t an easy way around it. So why aren’t title companies open on weekends as well?

After all, the title industry revolves around real estate agent and the business they bring the title companies. The short answer is that we like to have our weekends off. And federal holidays too. But that flippant response probably wouldn’t sit well with the hardworking agents who bring us business – and whose business keeps us alive.

Truthfully, there are several really valid explanations for why title companies are closed on weekends. To begin with, financial institutions, like mortgage companies, are closed on weekends. Therefore, they can’t fund a transaction. More importantly, they aren’t available to answer financing questions. Often buyers have last minute queries about their home loan. Their lender – not their Realtor or the title company – needs to be the one to answer them. They may want clarification on how their insurance or taxes are being escrowed. Or perhaps they have an issue with their appraisal costs or loans fees.

Last minute questions are common and are handled easiest during weekday business hours. Other important institutions are also closed on Saturdays, Sundays and holidays. Taxing authorities and court house recording departments are typically closed on weekends. Other real estate related businesses, like home warranty companies and insurance firms, may have claims representatives available on weekends, but their sales and new policy departments are likely not available to take requests.

Occasionally an escrow officer is willing to sign paperwork with a buyer or seller on a weekend and then arrange for funding and recording of paperwork on the next business day. However, some title companies consider it a risk they aren’t willing to take. When it comes to the real estate closing, there are too many moving parts and participants who may need to be contacted on closing day.

Most contracts call for possession of the property to convey to the buyer at closing and funding. Funding is the important word here. It means that until the full funds for the purchase have been received and confirmed by the title company, the buyer does not take possession of the property. No keys and no moving in until the business deal is really done. And that kind of business is only really done during weekday business hours.
[where: 75230]

Mar 12, 2018

Marital Status in Real Estate

Your friendly title company representative wants to know if you’re married. How flattering, right? Not exactly. Asking about your marital status isn’t a come-on or a pick-up line. At least not when it comes to a real estate sale.
When someone in a real estate transaction – either the buyer or seller – has been married, is getting married, is separated, is divorced, or is in any past or present state of marriage, it can affect the sale of a property. Well, sure, it can affect your mental state, too. But it also affects the sale process in other ways.
When married and selling a property, both spouses are typically required to sign closing documents. This applies even if the property is in the name of only one married seller or was owned by only one spouse before marriage.
Texas laws focus on protecting the homestead rights in a marriage. Basically, our governing forefathers wanted to ensure that one spouse didn’t sell the family homestead without the knowledge of the other spouse. And if the property isn’t the couple’s homestead, the spouse would need to sign a non-homestead affidavit before the sale. They want to safeguard a spouse’s rights to their home. Seems fair in my non-legal opinion.
Also, because Texas is a community property state, our laws presume that real estate is community property during a marriage. The title company wants to make sure the spouse doesn’t have other rights to the real estate. When the seller is married, there typically isn’t a big issue with getting a spouse to sign paperwork. They just come to the closing together.
But often sellers don’t realize how important it is. Failure to disclose that you’re married can cause delays in the closing process. Additional documents may need to be drawn and some paperwork may need to be changed or updated.
Realtor Rob Schrickel with Ebby Halliday recently attended a closing where his seller casually mention that the wife was packing. While he knew the seller had a partner, he didn’t know that they had gotten married. Schrickel recalled the awkward moment when the escrow officer paused and asked, “What? You’re married?”.

When that happens, the screeching noise you may hear is the sound of the brakes bringing your closing to an abrupt halt. These kinds of surprises regarding marital status inevitably cause delays and could lead to litigation. “Fortunately, we were able to reach the wife and she was able to come in and sign some documents pretty quickly,” says Schrickel. “It turned out okay and we ended up closing on the sale.”

But it isn’t always that easy. Especially in those sticky situations where an estranged spouse or ex-spouse needs to sign documents in order to complete the sale. Property ownership isn’t always tied up in a neat bow even when people legally divorce. Release of liens aren’t always recorded and deeds aren’t always updated properly. 
The title company handling the sale will want to review the divorce decree or settlement agreement that has been issued by the court. They aren’t being nosy and don’t care about who go what except where it comes to the property. If they don’t have proper documentation that awards the property to one party, then an ex-spouse might be asked to sign paperwork in order to sell. If the divorce is still pending, both parties must sign the closing documents. That’s never any fun.
When buying a home, marital status isn’t as complicated, but it can still matter. Just one spouse can purchase a property. However, if you’re getting a mortgage, your lender may require your non-borrowing spouse to also sign some documents.
If you’re purchasing a property while going through a divorce that isn’t yet finalized, talk with an attorney. Run, don’t walk, to a real estate or divorce attorney for advice on how to proceed while protecting your future home — unless you want to deal with your ex when you sell some day.
If your marital status has changed in any way since you first purchased a property, always be prepared to provide documentation of ownership before selling.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
[where: 75230]