Is it better to ask for a CERTIFIED check or a WIRE at your closings?
Immediate access to money is key for all clients, especially if they're relocating outside the area.
A WIRE clears quickly.
So does a CERTIFIED check -- unless it gets lost, misplaced, destroyed or stolen.
Therein lies the potential problem.
You see, banks are extremely reluctant to re-issue a CERTIFIED check and will do so only if your Title Company signs an affidavit and agrees to take responsibility in case the 'lost' check is ever presented for payment. Most title companies, will not do so -- because of the inherent risk.
In our experience, WIRES are the way to go.
Please contact us in advance and we can help you advise your clients which type of payment would be the best choice, whatever their individual circumstances.
When is the very WORST time of the month to schedule your closings?
Timing, they say, is everything. So is our experience at literally thousands of closings.
To save you and your clients time, money, hassle and delays, we strongly recommend scheduling your closings EARLY IN THE MONTH, if at all possible.
You see, the entire closing process, which involves many separate parties, simply tends to bog down at the end of the month. Town offices can take longer to verify information. Homeowners insurance agents can take longer to put documents together. Moving companies and van/trailer rentals are in shorter supply. Appointments for utilities and cable service may also be delayed.
Even a Title Company may not be always be able to accommodate specific closing times/locations at the end of the month -- simply because of the increased demand and the co-ordination time necessary to get every participant in the closing fully-ready on a quick-time basis. It's always a good idea to make 'The earlier, the faster, the better, the rule to remember for everyone -- at every one of your closings.
When the tax bill arrives, who owes what -- and when? And how is the bill pro-rated between the Buyer and the Seller?
This can be tricky... If a tax bill is due at the time of the closing or within 60 days following the closing, the amount of the bill (or estimated bill) is usually charged in full to the Seller.
That tax bill amount is then pro-rated between the Buyer and the Seller. This means the Buyer is charged an amount on the Settlement Statement -- and the Seller is credited with that same amount. The amount charged to the Buyer and credited to the Seller represents the Buyer's share of this bill. The actual amount of the pro-ration depends on the tax period covered by the bill. The Buyer will owe the Seller from the day of closing through the end of the current tax period.
NO CURRENT TAX BILL DUE?
When no current tax bill is due at closing or within 60 days of closing, the reverse is true.
At closing, the Seller can be charged for his or her portion of an ANTICIPATED future tax bill. At closing, the Buyer receives a credit for the same amount. Then, when the tax bill DOES arrive, the Buyer is reponsible for paying the bill in full -- because the Seller will have already paid the Buyer for his or her share of the bill.
A WORD OF CAUTION
Cities and towns can take several months to update ownership records. Therefore, it's very likely that the first tax bill issued after the closing will be issued in the Seller's name. The Seller should immediately forward any tax bill received to the Buyer for proper payment. If the Buyer knows that a tax bill should be coming due -- and he or she has not yet received it -- contact the appropriate city or town office for a duplicate copy (just in case the original bill was mailed to the Seller in error or not forwarded on to the Buyer).
Need more info? Give us a call.
What must Sellers of condos and properties with home owner associations disclose (and Buyers know) before -- rather than after -- the closing?
Sellers of condos and properties like homes in subdivisions that require membership in a homeowners' association should provide Buyers with a copy of the association's formal legal documents, usually filed with the State. These include: the DECLARATION, BY-LAWS, and RULES & REGULATIONS of the association. The Seller should also provide the Buyer with a copy of the most recent ANNUAL BUDGET. Buyers must know of any monthly or annual dues, assessments, scheduled expenses or contingency funds for unexpected expenses, like snow removal costs above and beyond budgeted amounts. All of this information can also be obtained through the Realtor for the Seller.
Need more info? Give us a call.
The Right of Recission for Refinancing. How does it affect your closing schedule?
The Right of Recission is a non-waivable federal regulation that allows a borrower (and a borrower's spouse, even if the spouse is not a borrower on the note) to cancel a refinance decision anytime within 3 business days of the closing, excluding Saturdays and Sundays.
The right of recission applies to every refinancing transaction involving the borrower's PRINCIPAL residence. It does NOT apply to any other lending transaction, such as the purchase or refinance of an investment property or second home.
WHEN IS THE MONEY AVAILABLE?
What this means to a borrower who is refinancing a home for any reason is that the money from their refinancing note is NOT available until 4th business day after the closing. For closings on Thursdays, funds would not, for example, be available until the following Tuesday.
This also means that the payoff for the mortgage that is being replaced by the refinance will also NOT be sent until the 4th business day after the closing.
Bottom line? The earlier in the week you schedule your closing, the faster, the better your closing will be.
Need more info? Give us a call.
Where should your clients keep their copy of the signed HUD Settlement Statement. And how long should it be kept?
A signed copy of the HUD Settlement Statement should be kept in a safe place -- preferably, the same place the client keeps all other important paperwork. The Seller should retain the HUD statement copy for AT LEAST 7 years for IRS/tax purposes. The Buyer, however, should hold on to the HUD statement copy for as long as he or she owns the property. There are many occasions when trying to resolve title matters/discharge problems, when a subsequent Title Company will want to know information about the purchase. Was a mortgage paid off? Who was the Title Company that handled the closing? Was Owner's Title Insurance purchased? Because of the time-sensitive nature of real estate closings, the faster the old HUD statement is produced, the faster the Title Company can begin to work on addressing problems.
Prepaid interest? Transfer taxes? Tax stamps? Points? What closing costs can a Buyer tax-deduct?
As a general rule, when you purchase a primary residence, the only costs you can deduct are prepaid interest, points, and certain real estate taxes. These items can be deducted for the tax year in which you buy the house IF you itemize your deductions. For more specific tax advice, we recommend checking with your tax advisor.
If a Power of Attorney is appointed to attend a closing and sign the closing documents, can this create problems that might jeopardize the closing?
Yes, it can! Especially if the Title Company is not informed ahead of time. Some Lenders may not allow the Buyer to appoint a Power of Attorney under any circumstances. Most Title Companies will not allow a Seller to appoint a Power of Attorney to sign the deed.
There have been many occasions where a Power of Attorney is rejected because the Buyer/Seller tries to appoint a Power of Attorney using a standard form found on the Internet, generated from a computer program, or purchased from an office supply/stationery store. Such forms may not contain the requisite state law/statutory language, or may not be specific enough to the particular transaction to satisfy Lender requirements (if a Lender is involved). As a result, a Power of Attorney form that may be acceptable for other purposes (Estate Planning, for example) may not be accepted for a real estate closing.
If the Title Company has ample warning that a Power of Attorney may be used, and can review the signed Power of Attorney prior to the closing, the Title Company can usually identify and resolve most problems. In other words, the more notice we are given, the more likely that your closing will proceed smoothly.
Why is NOT having Owner's Title Insurance so risky? If the Buyer already has paid for Lender's Title Insurance as part of the deal, isn't more insurance simply redundant?
Sometimes, what seems logical can wind up leading you and your clients into "The Danger Zone".
1) Lender's Title Insurance protects the Lender not the Buyer -- as the insured policy holder. Without OWNER'S Title Insurance, Buyers are at risk, since they have no rights to make claims under the Lender's Insurance Policy.
2) The Lender's policy insures the balance the Buyer owes on the mortgage. Without an OWNER'S Title Insurance policy, the Buyer's equity in the property is completely unprotected.
3) The Lender's right to make a claim against the policy begins when the Lender suffers a loss -- which normally would not occur until after the mortgage has been foreclosed on.
4) Most importantly, in any situation where severe title issues occur, the Lender's Title Insurance Company could decide to payoff the Lender and buy the mortgage -- leaving the Buyer out in the cold, having lost the property while still being responsible for making payments on the borrowed money.
Owner's Title Insurance is the sole safeguard that protects the property interests of Buyers. Lenders, Realtors and closing agents should recommend it as a matter of course. In fact, Lenders, Realtors and closing agents who make any statements to the effect that Owner's Title Insurance is unnecessary open themselves up to the risk of being sued by a Buyer who elects not to buy the coverage -- but winds up needing it.
Can a Buyer "negotiate" the cost of an Owner's Title Insurance policy?
Sorry, no negotiation. In PA, the insurer has no authority to negotiate rates. Rate tables & schedules, which are filed with PA State insurance department offices, are public information, and are adhered to by all title insurance companies.
Why does anyone need Owner's Title Insurance if a Title Search has already been done?
Owner's Title Insurance and a Title Search are like apples and oranges -- they're two entirely different things. And both are necessities.
A Title Search is only as good as the records kept in any County Registry of Deeds and Probate Court. If a problem does not appear in the records, or appears before the established cut-off date for the search, you, not the Title Company, are at risk and liable to resolve any problem(s).
In stark comparison, Owner's Title Insurance protects you against the unforeseen -- the many HIDDEN RISKS which can affect a property title, EVEN IF a professional, meticulous and accurate Title Search is performed.
For example: looking at records in a Title Search will rarely uncover forged documents, documents signed by a minor or someone under duress. Just as important, there can be mortgages, liens, easements and restrictions on a property -- NOT found due to data entry or indexing errors in the County records. Any one of these problems could prove financially costly -- unless you're protected by Owner's Title Insurance, which safeguards your vital interests (and your peace-of-mind).
Which title works best for your clients: Tenants-in-Common or Tenants with Rights of Survivorship?
When two (or more) people take title to a property, what happens when one of them dies?
If your clients take title to a property as JOINT TENANTS or JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP, the surviving owner(s) inherit -- without the need for probate.
If your clients take title to a property as TENANTS-IN-COMMON -- or if the deed does not state any 'condition of tenancy', the surviving owner(s) must go through the probate process. This may take considerable time, since either a Will (or if no Will exists, state law) determines who gets the deceased person's share of the property.
Avoiding probate can save time and money.
But there may indeed be situations where Tenants-In-Common is the best way to file.
When in doubt, call us -- we'll help you determine which title is best in any given situation.
WHEN YOU HAVE ANY QUESTION AT ANY TIME, CALL US AT (724) 934-3630 FOR FAST HELP