Jan 24, 2020

The Real Big D's in Real Estate

There is more than one Big D in Dallas-area real estate. These important “Big Ds” represent the circumstances that often demand that someone sell their property. I’m talking about death, divorce, downsizing, disaster, debt, and default. These difficult situations can make transferring the title to a property more complicated.

Folks don’t like to think about most of these situations, but they are a real fact of life that many homeowners must deal with. In the coming weeks, we’ll take a closer look at the challenges in buying or selling a property when it involves one of these.

Death

Death is a sensitive subject — we all must face at some point. Death isn’t an “if something happens to me’ situation but a ‘when something happens’ event. When a person dies with real estate held in their name, it becomes more complex. Inheriting a property upon a death can be complicated and cumbersome for the beneficiaries. Often the heirs are not prepared to maintain the property or pay the mortgage, taxes, and insurance. Selling the property means the heirs must prove they have the authority to sell. All ownership and heirships must be addressed and resolved before a title company will close and ensure the sale of the property. This is not a quick or easy process. And then there’s what happens when a buyer or seller dies during a transaction.

Divorce

When a marriage ends, the couple often sells any property they share. Cooperative from all parties is required and sometimes tough to obtain. In Texas, if the divorce is not finalized then both spouses are required to sign selling documents of their homestead property. If the divorce is final and the deed is still recorded in both names, the title company will need to review the divorce decree and confirm ownership rights.

Downsizing

The average Texas property owner is over 60. A number of these folks are downsizing. Some owners embrace the idea while others are compelled by necessity. Moving to a less expensive property or opting not to purchase a replacement home, can have major tax implications. Title companies are required to report property sales to the IRS. Tax laws change, but as of now, if you have owned and lived in your home for two of the five years before the sale, then up to $250,000 of the profit is tax-free. If you are married and file a joint return, the tax-free amount doubles to $500,000. Title companies require sellers to disclose and swear to this information.

Disaster

Fire, floods, hail, tornadoes and other catastrophes can happen when people are in the process of buying or selling a house. According to the standard Texas contract, if any part of the property under contract becomes damaged or destroyed, the seller must restore it to its previous condition before closing. There is a clause that allows the buyer accept the property in its damaged condition with an assignment of insurance proceeds. However, the lenders and insurance company must be on board as well.

Debt

Financial disasters that rack up debts include job loss, lawsuits, and bankruptcy. Then there are other debts that folks just haven’t dealt with. Often these debts are attached to a property. They are discovered in a title search and must be paid off before the property can be sold or at closing. Title companies deal with liens from mortgage companies, creditors, the IRS, child support agencies and such on a regular basis. The seller’s timely cooperation with the title company is essential to completing the sale. Without it, the property ends up in the next category – default.

Default

In Texas, a property is typically foreclosed on by either a mortgage company or a taxing authority. The bank or other entity takes possession of the property and sells it. Since title insurance protects the buyer against unknown liens and claims, the title company will want to be diligent and may make exceptions to what they will insure in a foreclosure situation.
If you’re buying or selling a property that involves one of the Big Ds, be prepared for the red tape. Your title company will be working to cut through it.

[where: 75230]

Jan 16, 2020

Let It Close - steps to get your property closed

Closing on a house can be frightful. But a new home is so delightful. And since we’re all set to go. Let it close, let it close, let it close.
While getting to the closing table isn’t always lively and fun, we still love to get there. There are a few potentially slippery steps from the time you put a warm signature on your sales contract to the handing over of the house keys.
Unless something pops up to put a freeze on the process, these are the basic steps most buyers and sellers will follow for closing on a residential property:
Contract – Buyers and Sellers complete and sign the contract. The agents execute it and deliver it to the title company.
Option Fee – If there is an option period, buyer delivers specified option fee to the seller within 3 days.
Earnest Money – The amount specified in the contract is deposited with the title company listed on the contract within 3 days.
Inspections – Buyer does their due diligence and conducts all inspections of the property before the option period ends.
Information Exchange – Title company, buyer, seller, and mortgage company exchange information needed for the sale. Lack of contact and information can stall the process.
Title Search – Title company researches property records, tax status, maps, restrictions and more. Any liens, judgements or other issues are investigated and addressed.
Mortgage Company – Buyer secures their lender, provides all needed documents and obtains loan approval.
HOA Resale Certificate – If there is a homeowners association, the resale certificate and rules and restriction documents are ordered, paid for and delivered to all parties.
Appraisal – A professional appraisal of the property is performed if required or desired.
Survey – An existing survey and survey affidavit are supplied by the seller or a new survey is ordered. Once received, the title company reviews the survey and determines if it is acceptable for use.
Title Documents – The title commitment, tax certificate, property restrictions, etc. are delivered to the buyer and their lender for review.
Contingencies Removed – Contingencies to the contract in addition to issues on the title are addressed and removed prior to closing.
Clear to Close – Approval to close the sale is given by both lender and title company.
Schedule Closing – An appointment is set up for all parties to sign closing documents.
Final Walk-Through – buyer takes a final look at the property to confirm condition and acceptance.
Signing – Buyers and sellers sign documents to consummate the closing.
Funding – after all required documents are signed, reviewed and approved, buyer delivered funds and lender sends funds to the title company who then disburses monies to designated parties.
Keys and Possession – after funds are processed, buyer gets keys to property.
Deed Recorded, Records Filed – Title company files the deed(s) in county court records and records the transaction.
Title Insurance Policy Issued – Title company issues title insurance policies to buyer/lender.
There is nothing magical about the closing process and there’s nothing really cold or gloomy. But if it goes as planned, all the way home you’ll be warm.
[where: 75230]

Jan 12, 2020

What is Quiet Title?

Despite the sound of the name, there is nothing secretive or hushed about ‘Quiet Title.’ This is actually a legal action to ‘quiet the title’ under Texas law.

Quiet Title refers to a lawsuit to clarify the ownership of land and the validity of any liens on a piece of property. Legal action to quiet title is basically a suit filed to establish the true ownership of real property.

Typically, the reason for a quiet title lawsuit is to remove a cloud from the title. A cloud is any potential claim to ownership of a property such as a lien, encumbrance, mortgage, legal dispute, tax levy, partial ownership claim, etc. These are usually discovered in a title search of the property conducted by the title company or title plant. 


If the cloud cannot be removed at or before closing, title companies will not ensure the transfer of ownership. The title company wants to make certain the seller has full rights to transfer ownership and that no other person or entity has a claim to the property. If ownership is in dispute, it must be resolved.

A court order can quiet the title and determine who has title to the property. The plaintiff must show any proof necessary to establish their ownership and rights to the property. The court having jurisdiction over property disputes in that county will establish title rights and ownership. 

The most common causes of legal action to quiet a title is to clear up issues associated with a quitclaim deed, tax sale, or other less common ways that title was previously transferred.

In Texas, a ‘quitclaim deed’ isn’t really a deed at all. It is a document that transfers whatever interest someone has in a property to someone else. The person signing this ‘deed’ may have all, some, or none of the interest in the property. They are simply relinquishing all claims to the property. It makes no promises about whether they have title to the property. These are mostly used when a family member is gifting real estate, following a divorce, etc. However, a quitclaim deed can leave the possibility that other people or entities could have a claim to the property.

Quiet Title lawsuits can take a couple of months or longer. The process can be longer or shorter depending on the details of the case. 

As a buyer of real estate, you wouldn’t want to be forced to defend your ownership against some party in the future. If there is a risk of that, a real estate attorney can assist with the task to ‘quiet’ any challenges or claims to the title before you buy the house. 
[where: 75230]