Jan 9, 2022

Expect Delays in 2022 Real Estate Closings

If you are buying, selling, or refinancing a property in the next few weeks or months, expect delays. In case you haven’t heard, there is a labor and staffing shortage in the U.S. The ripple effect is has hit the real estate industry in several ways. 

Who and what has caused delays?
There are many links in the chain of people involved in a transaction from start to finish. There are an equal number of reasons for delays. Closing delays are not usually intentional. While some delays can be avoided with enough advance planning, it is difficult right now to anticipate every potential setback.  We are in a unique real estate market and additional obstacles seem to pop up every week.

Just like restaurants, retail stores, fulfillment centers, etc., there are labor and supply problems in our industry. There is no shortage of real estate agents or title companies ready and willing to keep the wheels of the real estate industry turning. However, the increased demand for homes and loans in 2021 paired with capacity issues in many real estate-related businesses is a formula for snafus.

While most real estate closing are settled on time, the current backlog lies with:

Lenders: Almost a third of closing delays are due to financing issues, according to the 2021 National Association of Realtors report. Lenders are dealing with record volumes and staffing shortages.

Appraisers: The second most common reason for closing delays this year is appraisal issues. Demand for appraisals has been at all-time highs and there is a shortage of appraisers. Increased valuations have made this job more difficult. 

Surveyors: Another industry seeing high demand and a shortage of licensed professionals.

Inspectors: Ditto. Everyone is working to keep up with demand.

Underwriters: The huge number of transactions have lending and insurance underwriters overwhelmed.

Repairmen, movers, etc.: Again, labor and supply problems are plaguing multiple industries.

What can you do?
If you are buying, get pre-approved by a lender before signing a contract. Stick with that lender.
Make your contract dates realistic. You may need to plan for 45 or 60 days to close instead of the traditional 30 days we often see in Texas.

Book inspections and repair people as soon as possible. It is the responsibility of both buyers and sellers to obtain qualified professionals for these tasks.

Confirm that the appraisal is ordered at least three to four weeks prior to the closing date. Once completed, the appraisal must be reviewed by the lender and their underwriter.

Ensure that the existing survey is approved or a new one is ordered at least three weeks prior to closing. The title company, lender and underwriter must review and approve any survey for use.

Make sure the lender has everything they need quickly. Lenders often require additional documents throughout the loan process. The quicker they receive them, the quicker they are reviewed and approved.

Communicate often and promptly. Surprise delays or last minute rescheduling is frustrating for all parties.

Work with professionals who respond quickly and can help deal with problems.

Be prepared, patient, and kind with everyone trying to do their job during difficult times.
[where: 75230]

Dec 6, 2021

Digging into your Home's Mineral Rights

When purchasing a Texas property, the mineral rights may or may not come with it. Uncovering and then cashing in on mineral rights are not as easy as Jeb Clampett shootin’ up some crude.

Do Mineral Rights Always Transfer?

Whether any mineral rights transfer with a property depends on what rights the current seller owns. Let’s dig a little deeper. In the beginning of time (or for the sake of this article, let’s say 300 years ago), a piece of land included all rights to the property along with the right to do what you wanted with it.

But in time, some property rights may have been given away, taken away, or sold. A property owner can transfer all or part of their property rights by deed, lease, easement, mortgage, or will. Someone who owned your piece of land 100 years ago could have done any of those with the mineral rights. You may own a huge piece of land and have no right to the minerals that lie beneath it.

TREC Residential Contract, Paragraph 2D

Using the standard TREC residential contract, the mineral rights owned by the seller transfer with the property per paragraph 2D. But only the mineral rights owned by the seller will transfer to the buyer. An owner can’t sell you rights that they don’t have. If the seller wants to retain any of the mineral rights, an addendum must be included.

The mineral rights addendum specifically states: “A full examination of the title to the Property completed by an attorney with expertise in this area is the only proper means for determining title to the Mineral Estate with certainty …”

Even though the surface rights may convey to the buyer, the subsurface mineral rights like gas, oil and other mineral rights that may not necessarily transfer. Surface rights that transfer can include natural resources such as plants, water and other resources. Details on ownership of those need expert legal advice as well.

How Do You Get The Mineral Rights?

If you really want to who owns the mineral rights for a property, hire an abstract company. Or you can try the do-it-yourself method by researching the property records at your county clerk’s office. It is often necessary to trace records back through several transactions to determine where they may have initially been sold and then whether those rights were then sold to someone else.

In Texas, mineral rights are transferred with a Mineral Deed.  Occasionally, mineral rights are not sold but are leased. A leasehold is a different scenario that needs a real estate attorney’s guidance.

Laws concerning mineral rights can be complicated. Just remember that property ownership is completely separate from mineral rights ownership. Sorry folks, but you have no rights to your land’s minerals if you don’t legally own the rights.

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]

Nov 26, 2021

HOA Violations - Who is responsible?

A recent home buyer posed a question about an HOA violation concerning their new home. It seems the fence installed by the previous homeowner a couple of years ago doesn’t conform to the HOA rules. Now the HOA is requiring the new owner to bring the fence into compliance with the HOA regulations. Who is responsible for correcting a violation of an HOA restriction?

What is fair? 

When a property is part of a mandatory homeowners association, a violation of the HOA rules, regulations, or restrictions does not usually hinder a sale. And the seller is not automatically obligated to resolve the violation.

After closing, the new buyer may get a letter from the HOA stating that they are out of compliance and must fix the issue. That kind of surprise shouldn’t happen, but certainly does sometimes.

Know your rights

When there is a mandatory owners association (HOA), the standard TREC contract has a provision for providing HOA documents and for the buyer to object to any issues. The buyer is entitled to receive copies of all documents that govern the maintenance or operation of a property including restrictions, bylaws, rules and regulations, and a resale certificate.

HOA documents are essentially restrictions to the owner’s use of their property. These can include a variety of matters: how many and what kind of pets are allowed, signs or flags being displayed, parking of vehicles, guests allowed, cable or internet services available, front door color, fence design, roof materials, etc. What is fine with one new homeowner may be completely unacceptable to another.

The Resale Certificate discloses the amount and frequency of dues and assessments, any lawsuits they are involved with, and other information. A current resale certificate is required from the HOA to state if they are aware of any current violations to their rules and restrictions.

The HOA disclosure on the resale certificate gives the buyer notice of any violations prior to closing.

As stated in the contract, after receiving the HOA documents and resale certificate, the buyer has three days to terminate the contract if they don’t like what the resale certificate or other documents reveal.

Or the buyer could address any issues with the seller within that three-day period and come to an agreement. The buyer and seller could amend the contract to require the seller to fix a violation.

In the case of our new homeowner, they did not take notice of the violation disclosed by the HOA or the fence restrictions. And they did not object to the HOA documents in the three-day period. The seller claimed to have no previous HOA notice of the violation and therefore had no obligation to disclose an unknown issue.

Know your responsibilities

When it comes to HOA documents, the buyer must be proactive. It is the buyer’s responsibility to review the HOA rules, restrictions, requirements, and resale certificate prior to purchase. The three-day period for objections is important. HOA documents can total more than 100 pages. That’s a lot of reading to do in less than three days.

If the HOA has a website, they are required by law to post their restrictions on their site. If you’re considering the purchase of a property with a mandatory owners association, why not go to their website and review the rules, regulations and restrictions prior to executing a contract?

The buyer has a duty to ask questions and resolve any HOA item they have an issue with. This should happen as soon as they receive HOA documents. The three-day period is their opportunity to request that the seller fix any violations. If they fail to do so, then along with buying the property, they are buying the problem that comes with it.

A buyer of a property with a mandatory HOA is obligated to pay assessments and to follow the restrictive covenants governing the use, maintenance, and occupancy of the property and community. They need to take the time to understand their HOA commitment.

Buyers have the right and responsibility to make an informed decision on their purchase.

The opinions expressed are of the individual author for informational purposes only and not for legal advice. Contact an attorney for any particular issue or problem.

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