Jan 18, 2019

Background Checks on You & Your Home


When buying or selling a home, get ready to reveal some private details through background checks. We’re going to pry, inspect, confirm, clarify, authenticate, and document a lot about you, your finances, and the property. Some of the surprises we unearth would shock your mother, but maybe not your banker.

Just how deep do the folks involved in your transaction probe? Well, there isn’t any kind of testing that involves getting ink on your fingers or peeing in a cup. Nor do we care about your driving record, your education level, your health, or your résumé.

But we will start with requiring your Social Security number and date of birth. We’ll also need to know your past and present marital status, and where you plan to reside after the sale.

As a seller, we’ll run a search of both your name and the property. When something unexpected pops up, like an Abstract of Judgement, a tax debt, or a couple of child support liens, we’ll tell you. This would be the time to ensure your spouse is aware of it as well.

I’m never sure if the “Oh, that” response means “I forgot about that” or “I didn’t think that would come up.” Sometimes, the response is “That isn’t me.” If it’s a common name, it may be true. But we will need to do more research. If the Social Security number or date of birth match those on a lien, I don’t want to call anyone a liar. But that smoke we smell is your pants on fire.

For the title company to close the transaction and issue title insurance, all debts and liens that affect the property must be cured. In other words, they must be paid off at or before closing. We’d rather see the closing date moved back or a sale terminated than to close a transaction without clear title.

The title company also runs the names of anyone purchasing or selling a property through the Patriot Act Name Search. This is a search of names published by the Office of Foreign Assets Control of the U.S. Department of Treasury. It consists of the “Specially Designated Nationals and Blocked Persons,” the “Foreign Sanctions Evaders,” and the comprehensive “Consolidated List.”

All title companies must comply with economic sanctions programs against countries and groups of individuals, such as terrorists and narcotics traffickers. If you’re on the no-fly list, you could also be on the no-buy list.

Your run-of-the-mill criminal usually isn’t prohibited from buying or selling a home. Even if you don’t qualify to buy a gun, you can still buy a house. But you might need to pay with cash.

For homebuyers, most of the vetting process is done by their mortgage company, who looks at income, credit scores, existing debt, etc.

Lenders may often run a background check on a potential borrower before issuing a mortgage on a property. A lender or home insurance company may deny a loan or insurance because of a criminal record if they desire. Especially if it involves a financial criminal act like theft or fraud. However, most only need enough financial documentation to show financial ability to repay the loan. They don’t want to risk giving money to someone who might not pay it back.
[where: 75230]

Jan 5, 2019

How much time does a closing take?

Buying or selling a house takes time. How much time you spend closing depends on several of factors. There is a reason we call it the closing process. Many moving parts must come together before title transfers ownership. In Texas, it’s typically 21 to 45 days.
How long does it take to sign all the documents and actually transfer ownership of the property? That part of the process usually happens in a single day. The closing day is when the deed to a property is exchanged for money. The buyer deposits the money due with the title agent and signs the loan and purchase documents. The seller signs the deed and closing statements and receives money due to them. In Texas, the buyer and seller usually sign closing papers separately. Unlike some other states, not everyone sits down at the closing table at the same time.
Signing the closing documents can take anywhere from five minutes to several hours, depending on the situation. The more complicated the transaction, the more paperwork there is to endorse and the longer it can take.
If both buyer and seller have reviewed their documents in advance, closing should go quickly for each of them. If they decide to read over every page for the first time at the closing table, it could take hours.
Both parties will must sign all required documents with a notary, even those that seem inconsequential. Some of the closing papers are agreements, others are disclosures or acknowledgements. Every paper serves a purpose and if your signature is needed, you must sign. Without your signature on every needed document, your closing may be delayed or cancelled.
If you don’t understand a document, ask for clarification. Many smart people do not understand how to read a closing statement and balance the various debits and credits. The more details you want explained, the longer the signing process will take.
Truthfully, most people skim over the documents they’re signing. Even lawyers rarely take the time to actually read them all because not all of them contain important information. Many of the documents are disclaimers to avoid lawsuits.
For the typical seller, our time at the closing table is usually 5-20 minutes. Generally, there are only a few documents to sign. The seller can expect to sign the deed, closing statement, and a few other documents. The seller should be ready to hand over the keys, garage door openers, etc. to the property.
A buyer can expect to take much longer. If paying cash, there is minimal paperwork and the closing can be completed in less than 15 minutes. However, most buyers finance the purchase of their home, and most of the home-buying documents they sign at closing are required by the bank.
As a buyer getting a mortgage, anticipate signing more paperwork than almost anything else in your life. These will include the promissory note, deed of trust, and the closing statement. There will also be a stack of loan documents to sign. Since this is an important last step of a home purchase, buyers should ask questions about any documents that concern them.  All documents signed at closing will become legally enforceable and oblige the signatory to certain obligations.
Once the closing documents are signed, there are a few more behind-the-scenes activities that must happen to finalize the sale.
After buyer and seller have signed all closing documents, the funding and recording steps take place. Incoming checks and wires are processed. Notarized documents are scanned and emailed to the lender for funding approval. Once reviewed and approved, the lender wires funds to the escrow agent who is given approval to fund the transaction.
The escrow agent then disburses the required funds to the seller and pays off any lienholders. The deed and mortgage documents are then recorded with the county courthouse.
It is not officially the buyer’s home until the title company funds the transaction and records the documents. The contract terms will determine when the buyer gets possession of the property. Possession typically takes place at closing and funding. But some contracts include a leaseback for the seller.
The buyer doesn’t get the property until closing AND funding. The funds must be collected from the buyer and their mortgage company before possession is given to the buyer. This usually takes between 5 minutes and 2 hours after all documents are signed, depending on the title agent and the lender. If the lender has a glitch or if it is late in the day and past wiring deadlines, the transaction may not fund until the following day.
This final step to a home sale can go smoothly and quickly if you know what to expect and plan for it. Reviewing closing documents in advance will prepare for a hassle-free closing. Schedule your closing for early in the day and communicate with your lender to help achieve a quick closing. 
[where: 75230]

Dec 29, 2018

Weed Insure it if we could

Today’s Title Tip is a weedy issue if you’re considering a different kind of ‘joint’ ownership. It involves getting title insurance for a property being acquired to use for marijuana-related business enterprises.

While medical or recreational use of marijuana is not legal in Texas, there are plenty of folks who think it could be some day. Lots of forward-thinking investors might look at real estate for growing, processing, or selling marijuana if it becomes legal here. Or they could be looking to buy similar property in a state where it is legal.

There are 22 states that allow legalized medical use and nine more than allow both recreational and medical use. This growing industry is attracting real estate-minded buyers. But your plans could quickly go up in smoke.

Title insurance agencies and underwriters are turning away from the idea of issuing title insurance or closing these properties. And without title insurance, lenders are disinclined to finance and investors are hesitant to put money in a pot farm or cannabis dispensary. This restriction comprises all properties “including but not limited to the cultivation, storage, distribution, transport, manufacture, or sale of marijuana and/or products containing marijuana.”

Why be such a drag on the wacky tobacky business? Blame the Feds. Although some states allow it, marijuana remains illegal under the Federal Controlled Substances Act. And the federal government can seize property related to federally illegal enterprises.

Additionally, the Feds can seize money involved in illegal activity transactions. The current conflicts between state and federal law regarding marijuana make insuring property transactions related to this business precarious. I don’t know of a title company that wants to insure such an investment or risk having their escrow accounts seized.

And since we don’t like to leave any stone unturned when it comes to title work, this issue pertains to both past and future use. Not only will title agencies not insure a property to purchase as a marijuana -elated business, but they don’t want to insure the purchase of property has been used in the past in connection with the marijuana business, even if you don’t intend to continue using it for that purpose. The long arm of the law can go back too far for comfort.

The latest title insurance bulletin I’ve seen – marked confidential – does not demand that title agents become pot detectives. But we are to be alert to transactions with companies that bear marijuana-related names or for people and entities known for their marijuana or cannabis businesses. We have ways of sniffing those out. 

Marijuana laws are still changing in our country and the title insurance restrictions will change with them. Until then, take this ounce of advice before putting your cash in the grass business. It could end up a bust. 

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]