Jun 16, 2018

When you can't get to your real estate closing

Contracts are signed, inspections completed, movers are scheduled, and the big day is almost here. It’s full speed ahead to closing day. That’s the big day when paperwork is signed, money changes hands and the keys are handed over.

But what happens when one of the individuals can’t make it to the title company office on closing day to sign those all-important papers? It can become a big speed bump in the process. The contract stipulates a closing date and if one of the parties to the contract fails to close on time, it can become a legal issue. If handled correctly, there are solutions that can keep the deal heading in the right direction.

First, communicate the situation to the title company. Often, if they know well in advance, they can make arrangements that will keep everyone happy. Maybe the elderly seller is in a nursing home and needs to sign at that facility. Or perhaps a spouse is going to be out of town on business and wants their significant other to sign for them both.

Regardless of the situation, letting the escrow officer know early is best. When the title company has to scramble at the last minute to arrange alternate provisions, it can add to the expenses. That extra cost is passed on to the party in need of the special arrangements. Why not let them know ahead and save the extra headache?

When a home seller can’t appear on closing day, often paperwork can be signed a day in advance of the closing date. Then the proceeds from the sale can be wired to the seller when the transaction is complete.

The seller may also be able to assign a Power of Attorney (POA) document so that someone can sign closing papers in their absence. The proper POA must be drawn up beforehand and approved by the title company and lender. There are different kinds of POAs and it is important to understand exactly what the title company requires in advance. Appearing on closing day with a POA and no advance notice can bring the process to a screeching halt.

The most popular solution is often a remote closing. The title company arranges for the buyer or seller to sign documents at a location convenient to the signer. Then original documents are sent back to the title company for processing. There are pros and cons to going this route.

“Remote closings are a godsend because they help keep the closing on track without having to amend the contract with a new closing date,” says Realtor Paul Sander with Ebby Halliday. “Clients love them because they feel the closing process is catered to their schedule. Realtors love them because they help ensure the closing will actually take place.”

The remote closing solution seems to make lots of folks happy. But while remote closings are appealing to many, they have a few drawbacks. Often a title company will hire a mobile notary to take care of the signing. The mobile notary is not an escrow officer and can’t explain the closing documents. They simply tell the party where to sign and initial. Some people need more clarification of the big batch of documents that represent such a large purchase.

Even if the parties can arrange a remote signing, advanced signing, or POA, the lender must approve it as well. Obviously, when closing documents are signed remotely, they must be returned to the title company for processing. This adds to the time and expense of finalizing the transaction.

If the homeowner or buyer is out of the country when the closing is scheduled, that presents a more complicated set of issues. International POA or remote closings require a lot of time and coordination. Often the parties are better off delaying closing until the signer is back in the country.

When you can’t show up to your closing, contact your title company immediately to steer clear of problems. Like a truck powering down the highway, it may take time to shift gears and maneuver to a successful finish.

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]

Jun 9, 2018

Skeletons in the Closet come out when selling a home

Judgment Day in the title business is when the title search comes in and the skeletons in the closet come out. These types of skeletons often come in the form of an Abstract of Judgment. Most law abiding folks aren’t familiar with an abstract of judgment or how it affects real estate. But we see it in the title business regularly.

In Texas, an Abstract of Judgement (AJ) is basically a lien that is filed on a property for an unpaid debt. First a judgment for debt is rendered and then the creditor may file an Abstract of Judgment on the debtor’s property. It is designed to prevent the transfer of that property until the judgment has been paid.

In Texas, your homestead is protected from seizure by most creditors (except taxing authorities). So an AJ doesn’t hinder the peaceful enjoyment of your home – until you try to sell it. Apparently, this makes it easy for homeowners to ‘forget’ about the debt.

But an Abstract of Judgment can exist on a property for a long time with no action. The initial AJ is valid for 10 years and can be renewed by the creditor for another 10 years. An AJ from a governing body is good for 20 years. When the homeowners (or their heirs) eventually try to sell the property, the judgment is there.

Unlike a Texas homestead property, non-exempt real estate is not as protected. If you own non-exempt property, like a rental house, the Abstract of Judgment can allow the creditor to force the sale of the property at auction to pay the judgement. Section 52.001 of the Texas Property Code explains the AJ process.

The abstract of judgment is discovered when doing a title search. Title companies specifically search in detail for these types of encumbrances. The AJ typically contains all of the relevant information, such as the amount of the judgment, court costs, attorney’s fees and any post judgment interest that was awarded. It is a cloud on the title that won’t be overlooked or reduced by the title company.

The title company will require a release of the AJ before closing the transaction and issuing title insurance. Either the seller pays the judgment or often it can be deducted from the seller’s proceeds at closing. Regardless of how it is done, the judgment must be resolved.

Never underestimate the power of an Abstract of Judgment. Unlike the ghouls in the closet, it can haunt you for a very long time.

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]

Jun 2, 2018

Home Buying - State by State comparison

Well butter my butt and call me a biscuit. Grab a seat fellow Texans. You may need it when you hear about the way they finalize real estate sales in some of our fellow united states. Let’s start with a peculiar Yankee custom that’s a changin’.
A recent revision to New York property transactions stipulates that it is no longer allowable for buyers or sellers to tip to the title closer. Yes, you heard that right. The long-held tradition in the Northeast of buyers tipping the real estate closer with cash, gifts, tickets, etc., has been squashed by the New York Department of Financial Services. Anyone else getting a chuckle out of the mere thought of tipping your closer?
In New York (and a few other states) the buyers, sellers, attorneys and brokers all sit down at the closing table together with the title closer to finalize the transaction. New York buyers generally pay most closing costs, including title insurance premiums and taxes. And the past custom has been that they tip the closer $100-500. Sellers pay the state and city transfer taxes.
New York real estate buyers and sellers are represented by attorneys in addition to their brokers. Closings are also conducted by attorneys in Connecticut, Delaware, Georgia, Kentucky, Maine, Maryland, and Vermont.
Every state has their own rules about who can conduct closings and handle escrow funds. In some places, like Texas, a title company handles both the escrow and the closing. In others, like Indiana or Illinois, an attorney, a title company, or lender may conduct the closing. In Iowa, Michigan, Minnesota, Nebraska, Oklahoma, and Wyoming, closings may be conducted by attorneys and even real estate agents. Kansas also allows lenders and independent escrow firms to conduct closings.
Who pays for what varies all over the country as well. Closing costs are almost always negotiated, but each state has its own customs. If you’re in Alabama, Alaska, or Arizona, it’s likely the closing costs are split between buyer and seller – though not always split 50/50. At the other end of the alphabet, Wisconsinites usually divide the closing costs with sellers paying the biggest chunk.
California is entirely different in the real estate world – but then, aren’t they always? Their closing procedures differ between Southern and Northern California and vary from county to county. The closing might be through an attorney, a lender, or an escrow officer.
The cost to close a real estate sale also varies from state to state. In most states, consumers can shop around and compare closing costs just like they do for a mortgage. Texas and Florida are the only states where title policy premiums are stipulated by the state. All Texas title companies are required to charge the same for a title policy.
While Texas title policy premiums might be higher than some states, our total closing costs are often lower. Because in addition to the title policy, closing costs can include transfer taxes, mortgage tax, documentary taxes, etc. … none of which we have in Texas.
Unlike Texas, the escrow, legal, and closing fees are wide and varied from state to state, and sometimes from county to county within a state. We prefer our rates nice and steady in the Lone Star State. Texas might be part of the wild west, but we don’t take kindly to any wild ideas about tipping escrow officers. And I don’t think you’ll find real estate agents conducting closings any time soon.
You can hang your hat on that.
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]