At a “purchase settlement,” typically the sellers, purchasers, and their real estate professionals will attend the closing, which will be conducted by one of our competent and experienced attorneys or settlement officers. At a refinance settlement usually only the borrowers and our attorney or settlement officer are present.
Because we rely on third parties such as lenders to provide us with instructions, information, and figures for your settlement, we often cannot furnish to you the exact amount you need to bring to closing until the day before, or, sometimes, even the day of settlement. However, you should be able to rely on your lender’s or your realtor’s good faith estimate for the approximate amount of money you need to bring with you. If you happen to bring too much money to settlement, we refund back to you any excess amount upon completion of the closing. Obtaining your insurance early will assist the lender in determining escrows which can speed up the ability to provide an accurate settlement figure.
An abstract is a history of the property title as revealed by the public records. Abstracts may contain errors and do not disclose “hidden
hazards” that can threaten your property title if you do not have a title insurance policy.
If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It’s not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.
The Patriot Act requires that we collect a photocopy of your valid government issued picture I.D. such as a Driver’s License, Passport, Military I.D. Additionally, if you are bringing money to the settlement these funds will need to be “certified funds.” Certified funds can come in the form of a cashier’s check, teller’s check, Money order, or certified personal check. Cash is only acceptable in small amounts.
Please call our office in advance if you intend to bring cash to the settlement. Your lender will require that the purchaser bring proof of Homeowner’s insurance.
Your lender may also require a current Wood Desrtoyiing Insect or Termite. You may also be required to bring additional documents which our office will inform you of in advance.
While the time of a settlement can vary greatly, typically a refinance will take about 30 minutes and a purchase will take about 45 minutes.
In certain circumstances, a “power-of-attorney” can be prepared for you. A “power-of-attorney” is a legal instrument which allows another to sign legal documents on your behalf. Please give us a call to discuss this if you will not be able to attend.
A lender’s policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender’s interest from certain matters which may exist, but may not be known at the time of the sale. This policy only protects the lender’s interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner’s policy.
An owner’s policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
- Undisclosed heirs
- Forged deeds, mortgages, wills, releases and other documents
- False impersonation of the true land owner
- Deeds by minors
- Documents executed by a revoked or expired Power of Attorney
- False affidavits of death or heirship
- Probate matters
- Deeds and wills by persons of unsound mind
- Conveyances by undisclosed divorced spouses
- Rights of divorced parties
- Deeds by persons falsely representing their marital status
- Adverse possession
- Defective acknowledgments due to improper or expired notarization
- Forfeitures of real property due to criminal acts
- Mistakes and omissions resulting in improper abstracting
- Errors in tax records
Title insurance provides valuable protection for property buyers. Like all forms of insurance, however, it does not cover every conceivable problem and it is important to understand its limitations. Title insurance is based on examination of the county real estate records, and generally will not cover problems arising from facts outside of the recorded chain of title. One common problem not covered by title insurance is boundary line issues, which would be revealed by a survey of the property (for example, it turns out that your fence is actually two feet onto your neighbor’s property). Unrecorded mechanics’ liens and unpaid public utility bills are other examples. The title insurance policy will describe many of the situations it does not cover; these same limitations will generally be found in an attorney’s title examination. A qualified real property attorney can assist in helping a buyer understand the limits of a title policy and can take care of issues not covered by the policy.
A lien is any legal claim on real property that acts as a security for the payment of a debt or other obligation. If the debt is not repaid as promised, the lender or the lien holder can foreclose its claim on the property and force a public sale to pay the debt. The most common form of a lien on property is a mortgage. While all mortgages are liens, not all liens are mortgages. Other types of liens are commonly encountered and part of the work of the real property attorney is to check for outstanding liens at the time a real estate transaction closes. These include such things as judgment liens resulting from a court judgment against the owners, mechanic’s liens resulting from recent improvements to the property, liens for unpaid taxes, and liens for unpaid municipal utilities such as water and sewer. Often, if a seller is divorced, the divorce decree will provide the ex-spouse with a lien on the couple’s property to be paid at the time of sale.
Mechanic’s and materialmen’s liens exist in most states to provide special collection rights to persons and businesses that make improvements to real property. They are of particular concern to the purchaser of real property, as the seller may have had significant work done on the property in anticipation of sale. If the seller has not yet paid for that work, mechanic’s liens can result. The definition of mechanics and materialmen usually includes anyone who provides services such as carpentry, plumbing, painting, and the like, as well as anyone who supplies building materials and supplies for the project. On any given project, the general contractor, the subcontractors, and the lumberyard and other suppliers will have mechanic’s lien rights. Some states also grant these rights to professionals such as architects, engineers, and surveyors.
The laws governing mechanic’s liens vary greatly from state to state. Commonly, however, the contractor has the right to serve the owner of the property with a lien claim or notice of lien and to record it as part of the county land title records when payment is not made for materials or services provided for the improvement of real property. If the lien is not paid, the contractor can commence a court proceeding to foreclose the lien and to sell the land in payment of the obligation. In some states, the contractor is required to file a notice of lien or to provide the owner with notices relative to the possibility of a lien, prior to commencing work on the property or supplying materials. Usually the time for filing a mechanic’s lien is short; commonly the lien must be filed within sixty to 120 days of the last day of work on the property.
Mechanic’s liens are of special concern, because in certain circumstances, they can result in an owner being forced to pay twice for the same work. Commonly, this occurs when the owner pays the general contractor in full for the work in advance. If the general contractor then fails to pay his subcontractors, the subcontractors may still have the right to file a lien and force the sale of the property if they are not paid. The fact that the owner has already paid the general contractor for the work may not be a defense. This problem can be prevented by obtaining mechanic’s lien waivers from all materials suppliers and subcontractors prior to full payment.
By far the most common method of financing the purchase of real property is through a traditional promissory note secured by a mortgage. Some states, however, provide for an alternative financing method, most commonly used in transactions between private parties, called a contract for deed or land installment contract. At the risk of over simplifying, such a contract looks like a purchase agreement contract but effectively acts as a mortgage.
In a traditional mortgage finance transaction, title to the property transfers to the buyer on sale. The buyer borrows the money to pay the seller in full, and then gives a mortgage back to the lender. With a contract for deed, however, title stays with the seller. The contract will provide for a purchase price and monthly payments, and provide that if the buyer completes making the specified payments, the owner will then provide the buyer with a deed to the property. Contracts for deed are often used for short-term financing (of a few years or less), and may contain a balloon payment clause. The contract is then said to balloon on a specified date at which time the entire outstanding and unpaid balance of the purchase price will be due and payable. The hope is that the buyer will be able to use the contract period to find and qualify for financing.
In those states that allow them, terminating contracts for deed or land installment contracts is frequently easier and faster than foreclosing a mortgage. If the buyer fails to make the required payments (including any balloon payment when due), the seller can cancel the contract, usually by serving notice on the buyer. If the buyer fails to cure the default within the time provided by statute, he or she can lose the property and any money paid to date.
Adverse possession is a right to use or own property that is the result of continued use and occupancy over a period of time, generally ten to twenty years depending on the state. If a non-owner of property occupies and uses the property without the permission of the actual owner for long enough, the law will find that the actual owner has lost his or her rights in the property and ownership has transferred. Since the doctrine of adverse possession results in taking property without payment, the principle is applied very carefully by the courts and only if certain specified conditions are met. Thus, for example, the adverse use must be obvious to the real owner. And the use must be hostile, meaning that it is without the permission of the real owner. Use of another’s property with the permission of the owner will never create a right of adverse possession.
Adverse possession issues arise most often where an adjacent property owner encroaches on a neighbor, although they may also arise in other situations. For example, assume your neighbor erects a fence three feet onto your property, preventing you from using that space, and starts using the land as a garden. Obviously, as owner you would have the right to remove the fence and the garden. Or, you could sign an agreement with the neighbor allowing him to use the land with your permission for a specified period of time. But, if as owner you took no action, and the adverse use continued for the specified number of years, the neighbor could come to actually own that portion of the property. For this reason it is important when purchasing property to check for encroachments and adverse uses, and conduct a survey if there is any question as to where the property lines actually are.
The theory behind state and local zoning ordinances is that uses within a particular area should be uniform. While this system generally works well, obviously there will on occasion be the need for exceptions to the general rule. Depending on the needs of the individuals involved, and the impact on the neighborhood as a whole, it may be possible to change the zoning on a particular property by obtaining a variance. A variance is permission to depart from the requirements of a zoning ordinance in one or more particulars. Generally, a variance request is granted or denied through administrative action. Variances can be divided into area variances and use variances.
An area variance may be requested where the use is permissible, but does not quite fit the property. For example, if an owner wanted to add a deck to his or her home that would violate the minimum setback requirements of the zoning regulation, or wanted to build a two-story garage, which exceeded the height requirement, an area variance would be required. By contrast, the use variance relates to a use of the property that is otherwise impermissible in the given zone. If, for example, a landowner wanted to build a grocery store in a locality zoned exclusively for residential purposes, a use variance would be required. Generally, a use variance will be harder to obtain than an area variance. The land owner requesting the variance must show undue hardship that is not self-imposed, and must demonstrate that the variance would not harm the public welfare, have not an excessive impact on the general zoning plan, or would not adversely impact surrounding property values. The requirement that any hardship not be self-imposed is of particular significance. The purpose of this requirement is to prevent an owner from building a nonconforming structure and then seeking a variance for it on the grounds that it would be a hardship to tear it down.
One goal of zoning is to separate property uses into distinct zoning districts (residential, commercial, industrial, etc.) and to keep uses within each zone uniform. For example, if a district is zoned for residential use, no businesses will normally be permitted to open there. But, what happens to a business that existed and was operating prior to the time when its location was zoned residential? At this point, the constitutional prohibition against taking property without just compensation comes into play. If a use predates the zoning plan, it will be permitted to remain, because the government lacks the power to simply close a business in a zone that becomes residential, or require a home in an industrial zone to be torn down, unless it is willing to compensate the owner for the loss. Such exceptions are called nonconforming uses. Commonly, the portion of the zoning statue allowing prior nonconforming uses is called a grandfather clause and such a use is said to be grandfathered in. Nonconforming uses, however, are not exempt from all zoning regulation. While they cannot be taken (without compensation), the government is not required to allow them to change or expand. The use is generally limited to what existed when the zoning ordinance was adopted. Also, if the nonconforming use is abandoned or ceases, the grandfather rights are lost, and the nonconforming use cannot be restarted at a later date. Under many laws, if a nonconforming structure is destroyed by fire or other cause, it may not be rebuilt. The hope is that with these restrictions in place, nonconforming uses will decrease and cease over time.
There are indeed companies and investors who specialize in buying foreclosed properties and make money doing so. This is, however, an extremely high-risk form of investment that is definitely not for the inexperienced or faint of heart. Consider the differences between a sheriff’s sale and a standard real estate purchase. In a normal sale transaction, the seller gives the buyer an opportunity to inspect the property, and provides promises and warranties regarding title. These promises are in turn generally backed up by a title insurance policy or an attorney’s title opinion. In a sheriff’s sale, none of these safeguards exist; the rule is caveat emptor, or let the buyer beware. The deed that the sheriff conveys to the purchaser has no covenants, warranties, or representations of any kind, and the purchaser generally has no recourse if there is something wrong with the title to the real estate.
Another major problem with purchasing at a sheriff’s sale is that there is little or no opportunity to inspect the property prior to the sale. In general, the delinquent borrower still lives in the property at the time of the sale, and may be at best uncooperative (and at worst downright hostile) if asked to allow inspection by a prospective purchaser. Moreover, in many states the borrower will be allowed to remain in the property for some period of time after the sale (the redemption period); this is often up to six months and sometimes as much as a year. During this period, the borrower obviously has no incentive to maintain the property, pay taxes, or utility bills, and may actually be antagonistic enough to deliberately damage the property.
These problems explain why the mortgagor/lender is usually the only bidder at a sheriff’s foreclosure sale. With experience and the assistance of competent counsel, a purchaser can indeed successfully obtain good title to property, often at bargain prices, through the foreclosure sale process. But this is an activity best left to those with expertise in the area and a high tolerance for financial risk.
There is no requirement to buy title insurance; but, realistically, most mortgage companies, banks and credit unions will require title insurance to protect ther interest in the property. However, it is recommended that you do purchase title insurance unless you have fully investigated the condition of title and are willing to accept the property with the liens and restrictions shown.
While simple real estate transactions may be handled without a lawyer, you may want your own attorney to clarify any terms that are unclear to you in any documents you are being asked to sign. You may also need sophisticated tax or real estate advice for more complex real estate transactions.
Not really. Title insurance rates in Louisiana are regulated by the state’s insurance commission and will not vary from one title company to another. However, slight variations in a title insurance quote can occur if a lower degree of coverage is offered. Premium amounts are based upon the purchase price and loan amount of the mortgage.
A HUD-1 Settlement Statement is a government-regulated form provided by the title company (closing agent) that itemizes all fees and charges for the buyer and seller and gives full disclosure of all monies involved in a real estate transaction. Some of these fees and charges might include: contract purchase price, agent commissions, lender fees for the loan, insurance, title company charges, abstract of title, property taxes, surveys, and recordation fees. The settlement statement outlines your debits and credits and provides each party with a “bottom line” figure. For a more detailed description of the HUD-1 Settlement Statement see this link.
A properly filed Homestead Exemption reduces the amount of money homeowners must pay for their annual property taxes. The homestead exemption of each Parish varies, but filing for one can save hundreds of dollars. Property owners are allowed only one homestead exemption – for their primary residence. Homestead Exemptions on investment property are not allowed. To file for the homestead exemption, bring a copy of the recorded Act of Sale where you acquired your home to your Tax Assessor’s Office. Filing for the exemption is done in person the first time. Either you or your spouse can do it – it is not necessary for both of you to be there. Each year thereafter, a postcard is mailed to your home for renewal.
If purchasing, you should contact Trieu Title as soon as you have a signed contract. By contacting us as early as possible, you allow us adequate time to obtain a title abstract on the property being purchased and clear any outstanding “clouds” on title prior to your contracted settlement date. Additionally, we can better coordinate the settlement with all parties involved including the sellers, purchasers, real estate professionals, and lenders. If refinancing, you should contact us after you submit your loan application. Do not wait for final loan approval, as the time between your loan approval and settlement is often only a few days. By scheduling with us early, you allow us time to obtain the title abstract and clear any issues with your title, obtain payoffs from your current lender, and coordinate closing with your new lender.