March 4 in Blog by admin No Comments
Why does my refinance need Title Insurance?
When you refinance, you still keep your Owner’s Policy from your purchase, but Lenders will require a new title search and Loan Policy to protect their lien holder position in the property.
Even if your home was recently purchased, there are still issues that could arise with the title due to mechanics liens, unpaid judgments, or tax liens. Perhaps easements have recently been created. All of these items may affect the use of the property, or otherwise “encumber” the title.
Whether you are purchasing a new or existing home, or refinancing, title insurance provides an underwriting service to mortgage lenders to ensure the borrower has clear ownership rights to the property, free and clear of any other claims to ownership. Strong underwriting protects consumers, and title insurance fulfills a key part of this due diligence.
Title Security Agency of Arizona is here to assist you and your lender whenever title insurance is needed.
February 25 in Blog by admin No Comments
What information is found in the Title Commitment?
Upon opening escrow and the completion of the title search, you will receive a Commitment for Title Insurance, and copies of those matters as disclosed in Schedule B Section 2-Exceptions
(NOTE: If you do not receive these documents with the Commitment for Title Insurance, request them from your Escrow Officer).
The Commitment for Title Insurance has three schedules: Schedule A and Schedule B Section 1-Requirements and Schedule B Section 2-Exceptions. Below is a brief description of some of the matters reflected in the referenced schedules.
- Effective Date of Commitment. (The date through which the records of the County Recorder have been searched.)
- Proposed Owners Policy to be issued, the amount of coverage (sales price) and the proposed insured (Buyer).
- Proposed Loan Policy (if applicable) to be issued, the amount of coverage (loan amount) and the proposed insured (Lender).
- Type of Interest to be insured in subject property (In most cases this will be Fee).
- Legal Description of the property to be insured.
Schedule B Section 1-Requirements
- Payment of delinquent real and personal property taxes, if any.
- Payment of Homeowners Association transfer fees and charges.
- Payoff and recordation of a release of any loans, judgments and/or liens affecting title to the subject property.
- Recordation of a release of any previously paid liens that have not yet been released of record.
- Recordation of corrective documents as may be determined through the examination of the title.
- Request for authority documents of a legal entity that may be involved in the transaction (i.e corporate resolution, LLC operating agreement, trust agreement).
- Recordation of document(s) transferring title to buyer. (Deed)
- Recordation of lenders security document. (Deed of Trust)
Schedule B Section 2-Exceptions
The matters reflected in this section affect the title to the real property. You will take title “Subject To” these matters of record (i.e. easements, right of ways, covenants, conditions and restrictions, homeowners association, taxing districts, well agreements, road maintenance agreements).
You should review these documents with your real estate agent and/or legal advisor.
February 24 in Blog by admin No Comments
THE PLAT MAP
Viewing the Subdivision Plat Map for the subject purchase property is essential due diligence for every buyer and their agent. Information found on a plat map cover sheet and final plat can include:
· Lot Dimensions
· Private and public utility easements
· “No access” easements
· Designated water provider
· Private and public streets
· Recorder’s sequence #’s for additional research documents like CC&Rs and permits
Many of the Title Commitment “Schedule B” items (the items the buyer is taking “Subject to”) may be found in the Dedication, the General Notes, and the Keynotes/Legend) sections of the subdivision Plat Map.
The plat map is included with the Title Commitment, and copies can also be obtained from our Property Research Department.
February 5 in Blog by admin No Comments
All Contracts ratified on or after 11/17/2013 will be subject to the “Buyer Select” closing agent program. The Buyer will now get to choose their own Title Company. HUD will no longer pay for the escrow fee, which now will be a Buyer expense. This is stated from BLB Resources “Buyer Select Closing Agent Addendum”. Item #5 of the HUD 9548/ Sales Contract form, has HUD either providing seller credits for financing and closing costs, or in some cases they do not pay anything, except recordation of the Deed.
As part of the contract process, HUD will have your Escrow Officer sign a “HUD-Closing Instructions and Certification” and sign and initial their “Attention Escrow” documents. These forms require a State License number and HUD ID # (or Title ID #). Contact your Title Security Agency Escrow Officer and they can provide you with both. A complete list of our Escrow Officers can be found here.
January 24 in Blog by admin No Comments
Please make sure lines 258-264 of the Purchase Contract are filled out as specifically as possible.
Example: Suppose the contract is silent on Line 262, and Line 263 just has a dollar amount of $600.00 to be paid by the seller. Does this mean the buyer’s agent can tack on as many extras as it would take to reach $600.00?
The words “at a cost not to exceed” mean that the seller has agreed to pay for the stated coverage only. If there is no optional coverage on the contract, then the seller has agreed to pay for a standard warranty policy and nothing more.
Do note – your Escrow Officer cannot order the home warranty for the transaction.
January 2 in Blog by Title Security No Comments
Are your buyers new to Arizona? Best to let them know early in the process, that Arizona is an Escrow state.
In some states, possession of the property is turned over after funds are transferred. In an escrow state, the additional step of recordation is required, before legal transfer has been completed. If your buyers are from an abstract state like, say New York State, they may wonder why they cannot get their keys at the signing table, and may be disappointed and upset.
November 18 in Blog by admin No Comments
Remember that Seller’s loan is not paid off the same day as their signing. As a rule of thumb your Escrow Officer will collect 5 extra days of interest, to account for the time between signing and the payoff, which occurs after the buyer’s lender funds. After the buyer’s lender funds, we can record. It is after recordation that we can send the seller’s payoff. If extra interest has been collected that is not needed for the payoff, it will be refunded by the seller’s lender thru the refund of their impound account.
Seller signs on Monday November 4th and interest is collected thru Friday the 8th. Buyer’s loan funds on afternoon of Thursday 7th and the transaction records on Thursday at 4pm, which is past the wire cutoff time of 2pm. Seller’s payoff wire would go Friday Nov 8th.
For FHA loans the interest is collected for each month up front and is not calculated in days.
Keep that in mind, if the calendar month advances between seller’s signing and recordation.
September 17 in Blog by admin No Comments
The Consumer Financial Protection Bureau (CFPB) continues to put policies in place that follow their ongoing efforts for consumer protection. In response to these efforts, ALTA (American Land Title Association) has implemented some Best Practices for all title and escrow companies. One of these Best Practices is around how title and escrow companies handle Non Public Information (NPI).
NPI includes any information we hold in our systems and/or files that is non-public – specifically in our industry, that would be a social security number or personal tax ID numbers. ALTA now recommended that all companies that handle NPI information in files take every precaution to protect this information against security risks.
In response Title Security Agency has implemented a procedure and now all emails that contain NPI information will be encrypted. We are utilizing an encryption program by McAfee to secure these emails.
If we send you an email that may contain NPI, you will receive an email in your regular inbox. The subject line will state “secure web mail: outbound email encryption”. And it will show the email address of the Title Security employee who sent you the email. You will then be asked to click on a link to “access your secure web mail account”. Click on that link, and it will step you through how to set up your McAfee account. Once you have completed this set up process, you will be able to access the email by entering a password you have set up and can also respond to the email, if necessary.
I know that this may take a bit of time to get used to, but it is a system that is being put into place for an important reason – to protect you and your client’s personal information. With the increased cyber-fraud and identity theft in today’s world, we need to take every precaution to protect our consumers.
Please contact us with any questions you have about our new email encryption.
August 7 in Blog by admin No Comments
When is a 1099-S issued in the sale of Real Property?
For sales or 1031 exchanges of certain real estate, the Escrow Officer is legally required to report the proceeds to the IRS using form 1099-S.
Some sales of principal residences are exempt from 1099-S reporting; in these cases an “IRS Form 1099-S Certification Exemption Form” is signed by the seller under penalty of perjury. Not all principal residences are exempt.
Some sellers exempt from 1099-S reporting are Corporations, Governmental Units and builders.
June 25 in Blog by admin No Comments
As a buyer or seller, you want to be certain all conditions of your sale have been met before property and money changes hands. The technical definition of an escrow is, “A transaction where one party engages in the sale, transfer or lease of real or personal property with another person who delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder.” The third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.
Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon successful completion of the escrow.
The escrow holder must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, terms of sale and any financing obtained by buyer, and requests for various services to be paid out of the escrow funds.
If the transaction is dependent on arranging new financing, it is the buyer’s responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. When all instructions in the escrow have been carried out, the closing can take place. At this time, signatures are obtained by all parties, all outstanding funds are collected and fees such as title insurance premiums, real estate commissions, termite inspection charges, etc, are paid. Title to the property is then transferred under the terms of the escrow instructions and the appropriate title insurance policies are issued.
June 4 in Blog by admin No Comments
Have The Best Closing Experience – Read The Title Commitment When You Receive It!
When a title commitment is received by the parties, it should be reviewed for content and accuracy. A title commitment has three schedules: Schedule A, Schedule BI – Requirements, and Schedule BII – Exceptions.
Here is what you will find in each Schedule and what you should look for:
The first part of the title commitment provides the names of the proposed insured. This should be the buyers in the transaction. If these names do not match the names as your buyer has told you they would like to take title, you should contact your escrow officer to have this information corrected. The escrow officer may not have the latest Amendment to the contract. The escrow officer and the loan officer (if there is a loan) will rely on this information to prepare the necessary documents to close the transaction, if it is wrong then all documents may need to be redone which could potentially cause a delay in the closing.
The Policy Amount should match the purchase price, if wrong maybe the escrow officer does not have the latest Amendment. Again, contact your escrow officer to have the correction made.
The name of the seller should be listed as the party that has “Title to the fee estate or interest in the land as of the Effective Date”. If the name is different, there may be a title issue such as a deceased individual or a spouse that still owns the property, a trust or LLC that has an interest in the property, or some other issue that may require immediate attention. The name listed should be the same party that entered into the contract. If the name is not as the seller had indicated to you, check the requirement page (Schedule BI) and see what requirements have been made. There may be a requirement, for instance the spouse may need to quit claim their interest.
The land referred to in the title commitment should match the land being sold. This will be the legal description of the property not the property address, as title companies insure legal descriptions not property addresses. Review the legal description to see if it looks right, especially when dealing with a Condominium or multiple lots or parcels.
Schedule BI Requirements
This part of the title commitment provides a list of the requirements that must be satisfied in order to close on the transaction. If the seller is a corporation there may by be a requirement that states: Furnish currently certified copy of a Resolution of the Board of Directors of the Corporation authorizing the execution and delivery by the proper officers of all instruments required to consummate this transaction. The requirements will call out any unusual issues that must be dealt with at closing. For instance, if the seller is deceased a call for the Personal Representative to be appointed may be made or probate to be finalized.
The requirements section will call out any loans that show on the property so that the loans are paid and the release of the loan is obtained upon payment through the escrow. Sometimes the title commitment will show two deeds of trust on a property, yet the seller has only a single loan. Let your escrow officer know right away, they will need to obtain a Release of Deed of Trust from the previous lender, or a letter of indemnity from the previous title company that issued the title insurance. Additionally, any judgments, tax liens or taxes will show in the requirement section so that these items are also satisfied during the closing. Occasionally, these liens will show up as a result of a common name. In that case, the client may be asked to supply additional information showing that they are not the same person in the judgment. These are all items which will need to be cleared and it is important to be sure that they are being taken care of. Be sure the escrow agent has all loan payoff information e.g. account numbers etc.
An Owner’s Policy on vacant land may require an ALTA survey, this will be noted in the requirement section.
Schedule BII Exceptions
This section shows all of the title “issues” that are excepted from coverage – in other words, the title company will not insure for these issues. These include items such as covenants, conditions, and restrictions (CC&Rs); easements (utility or access) and/or mineral rights and reservations.
Reviewing is not Advising
When reviewing the title commitment with your buyer or seller, you should not advise them about the legal meaning or effect of any document contained in the title commitment. That would constitute legal advice and is prohibited under Arizona law. When the parties involved in the transaction spot a problem on the title commitment, that should be brought to the attention of the parties involved.
The title commitment is a crucial part of the closing process and provides all parties and their agents with notice of the current state of title. A thorough review of the title commitment immediately after issuance can save everyone time in the end and lends to the successful closing of transactions.
Contact Title Security Agency for all your title and escrow needs. We are committed to making each transaction a smooth one.