Author: Jacob Pugh

Probate Information for the Real Estate Agent

A common cause for the sale of real estate is when an individual passes away. As a listing agent preparing to list and market the real estate, it is important to answer a few questions regarding the status of the real estate.  You do not want to sign a contract with a buyer, only to find out that the seller does not have the ability to sell the real estate.  Similarly, when representing buyers, it is important to determine whether the seller has the ability to sell the real estate or if there will be a delay in transferring title.  The purpose of this post is in no way meant to be a guide for decedent’s estates.  Instead, the purpose is to identify a few of the common pitfalls and items that routinely delay closings.

When a person passes away owning real estate in Kansas, that real estate will pass to the people identified by the decedent (a person that has died) in some written document. If no such document exists, the real estate will pass to the “heirs” of the decedent as directed by Kansas law.  The three methods of passing real estate by written document are:

  1. Transfer on Death Deed or Joint Tenancy Deed
  2. Trust
  3. Will

A Transfer on death deed or joint tenancy deed will automatically transfer the ownership of real estate to the person or persons identified in the deed. The filing of a death certificate at the register of deeds is all that is required to finalize the transfer.  As a real estate agent, take a look at the deed or ask your title company to take a look to verify that the seller has the authority to transfer title.

The second method is through a trust. Typically, but not always, the trustee of the trust will have the authority to sell and transfer real estate.  However, there are innumerable varieties of trusts with varying powers being granted the trustee.  Therefore, it is wise to verify that the trust document grants authority to sell real estate to the trustee.  Additionally, it is important to make sure that there are not special requirements in the trust document that must take place before a sale is allowed.  For example “I grant the trustee the right to sell real estate….so long as my son does not want to purchase the real estate at the appraised value.”  This example illustrates a potential issue that could delay a sale.

Lastly, if the decedent had a will or passed away without a will, a probate proceeding will be needed prior to a sale. Simply put, probate is the court process of transferring assets of a decedent to those entitled to the assets.  The most important thing to remember with a probate proceeding is that it is not a quick process.  It usually takes at least sixty days from the first court document filed until authority is granted by a judge for the sale of real estate. Based upon the buyer, this may be an unacceptable amount of time to wait.  If you are unsure of where the probate process is, simply contact the attorney representing the estate and ask.

Decedents estates can be overwhelming and often times complicated. At Tallgrass Title, our attorneys have years of experience transferring real estate following death.  We are happy to answer questions pertaining to your transaction.  It’s our job!

Flint Hills Area Builders Fall Parade of Homes

At Tallgrass Title, we believe in the strength and growth of our area. Several major additions, both private and public, have been added to the job market regionally.  Additionally, the quality of life in the Flint Hills region continues to improve.  This, in turn, has made the Flint Hills region a wonderful place to live and raise a family.  These factors have caused rapid growth in the region.  A major contributor in assisting with that growth is the Flint Hills Area Builders Association (FABA).  Tallgrass Title is a proud member and supporter of FABA.  We feel that FABA best represents the builder and associated supporting businesses and their needs in the region.

This weekend is the Flint Hills Area Builders Fall Parade of Homes. Tallgrass Title is a proud Grand Marshall sponsor of the Parade of Homes and has been so for several years.  We feel that this is a wonderful opportunity for potential buyers to see the quality homes built by FABA members.  It is also a chance for consumers to view the latest designs and products used in the area.  We encourage any interested folks to take advantage of the tour this weekend and join the parade!  The tour is free and guide books are located at each of the Grand Marshall sponsors, online or at each of the homes on the tour.  We hope to see you on the parade!

A Beginner’s Introduction to Real Estate Auctions

Oftentimes, real estate will be offered for sale by using the auction process. An auction is the process by which the public has an opportunity to offer (“bid”) money for property and the property is then sold to the highest bidder. However, the auction process can be confusing to understand or a bit intimidating. This post is by no means an exhaustive explanation or definitive guide to real estate auctions. Instead, I hope to provide some basic information and point out some potential sticking points that could cause issues in the auction process.

In this area of the state, auctions are most often used to sell agricultural real estate, estate property, distressed property, investment real estate or the liquidation of assets belonging to a business or individual for one reason or another.

The basic premise for an auction is the same: An auctioneer will begin by stating the rules for the auction. He or she will also indicate the terms that a successful bidder will be agreeing to in a contract to be signed following the end of the auction. Typically, the auctioneer will indicate whether the auction is an “absolute” auction or whether there is a “reserve.” However, the auctioneer will rarely indicate what the reserve amount is. If no statement is made about whether the auction is with or without reserve, consider there to be a reserve. Lastly, most auctions are tape recorded or video recorded in order to verify what was said and who bid the highest amount.

Following the statement of rules and terms, the auctioneer will call for bids. This is the portion of the auction that you are probably familiar with from television or the internet. The auctioneer is not in fact offering the real estate for a set amount but instead inviting people to offer a bid. The auctioneer is usually stating something along the lines of “I have been offered $1.00, who will offer me $2.00?” The rest of the words are typically just filler words that do not mean anything. Some auctioneers will chant the call quicker and others slower. Additionally, the filler words will change between various auctioneers. However, the most important part of the calling of the bids is understanding how much the current bid is. If you get confused, just ask the auctioneer, he will tell you.

At the close of the bids, the auctioneer will usually count down “going once, going twice, sold” or some other statement that the bid will close soon. Following the close of bids, a written contract will be signed by the seller and buyer with the actual closing happening sometime in the future.

A couple of quick pointers to remember:

  1. Make sure you have money to support your bid or have your financing approved prior to the auction. Auctions are not contingent on financing. By signing the contract, you are promising to pay the amount bid.
  2. Auctions typically require you to make all inspections prior to the date of the auction. The real estate is almost always sold “As-Is.” This means that you are buying the property in its present condition.

Auctions can be intimidating for the untrained buyer or seller. Therefore, if you are concerned, employ a real estate agent or attorney that understands the process to assist you. Also, attend an auction and plan on not bidding. They are generally open to the public and can be interesting to observe. Lastly, here at Tallgrass Title, we routinely assist sellers and buyers on both sides of auctions. We are here to answer questions or direct you to somebody that can assist you. It’s our job!

Fraud & Hacking Update

With wire fraud and email hacking on the rise, we must all become more diligent in protecting our clients’ information. Here at Tallgrass Title, we take multiple steps to ensure that our clients’ information is protected.  One aspect of protecting our clients’ information is educating prospective buyers, sellers and real estate professionals about the dangers of wire fraud and email hacking.  With this purpose in mind we have created two informational fliers to educate all parties in a transaction. They are for use by real estate agents, banks and other real estate professionals.

We recommend that you provide these fliers to every new client that you represent.  You will also notice that this information will accompany every deed packet sent out by Tallgrass Title to Sellers in a transaction.  Protecting against wire fraud and email hacking requires all parties to a transaction to stay diligent throughout the process.  Should you have questions regarding potential wire fraud, email hacking or anything else that “just doesn’t feel right,” please feel free to contact our office and discuss the issue with our trained closing agents.  It is better to be safe than sorry!

 

Escrowing Insurance Premiums and Taxes

When folks purchase residential real estate and require financing, most likely an “escrow account” will be established during the loan process for the payment of insurance and taxes. This is different than “putting a contract into escrow.”  “Putting a contract into escrow” means that the contract signed by the buyer and seller has been delivered to a title company to begin working towards a transaction.  An “escrow account” established for the payment of insurance and taxes basically means that you will make a monthly mortgage payment to your bank and a portion of that payment will be set aside to pay your homeowners insurance and real estate taxes automatically.  This is done for a couple of reasons.  First and foremost, lending regulations require a bank to establish an escrow account with most residential real estate loans.  Secondly, because the home is the bank’s security for the repayment of the loan, it wants to make sure that its security is protected.  Therefore, the bank wants to make sure the home is insured against loss and they also do not want the home taken away for the failure to pay the real estate taxes.

During the loan process, you will be informed of how much the monthly insurance and taxes escrow will be. Also, because your transaction will most likely not happen on the 31st of December, some proration of taxes will be required.  Proration means that the seller will be responsible for the taxes while he/she owns the home and you will pay the taxes when you own the home.  However, taxes are only payable at the end of the year.  Therefore, the seller gives a portion of the taxes to the buyer and the buyer pays all the taxes at the end of the year.

Also, the bank will collect additional funds to be placed into the escrow funds at the time of closing your loan. Those beginning funds will be added with the monthly payments to pay the insurance and taxes when they come due.  The bank handling the escrow account will receive the yearly bill for insurance and taxes and pay them when each comes due.  You will still receive a statement from the County Treasurer and your insurance provider, but this is simply for your information.  Additionally, you are always welcome to choose or change your homeowner’s coverage and insurance company.

Upon selling your house, you may have funds left in the escrow account that will not be needed to pay any future insurance or taxes. These funds will be returned to you following the sale of your real estate.  It is important to work with the escrow service to make sure they are mailed to your new address.  Questions about escrow accounts, homeowner’s insurance coverage and real estate taxes during the loan process are quite common and can seem complicated.  If you have questions, speak with your banker or our closing agents here at Tallgrass Title.  We are happy to explain the process.  It’s our job!

Inspections in a Residential Home Purchase

Imagine you are considering purchasing a new home. You may not be the most construction-oriented person or know exactly what to look for when purchasing a home.  Additionally, your financing may require that you have a home inspected prior to being qualified for funding.  Lastly, you may just feel more comfortable having experts look at your potential purchase and point out potential problems before they become, well, your problems.  After all, for most Americans the family home is the single largest investment they will make during their lives.  The purpose of this post is to describe the inspection process and the common and important issues that often arise.

Prior to purchasing real estate, most buyers (the smart ones at least) will take a look at the real estate. Either they have the knowledge to identify defects in the improvements to the real estate or they hire a person to assist them.  Another option is to inspect the real estate after a contract has been signed by the Seller and Buyer.  It is important to note that if this is the intent of the parties, the contract must specifically give the Buyer the option to inspect the property and to request repairs of unacceptable conditions if they are found.

Prior to entering into the contract or after entering into the contract (whichever the case may be) and during the “inspection period”, inspections are made. At this point, a home inspector is hired and gains access to the home in order to perform the task.  The inspector will look at a multitude of items to gather information regarding the condition of the home.  This information will be compiled in a report that is provided to the buyer.  The report will identify items of various concern and make recommendations for repair, when needed.  Major items to be inspected consist of the foundation, walls, roof, mechanical systems, plumbing, electrical and the layout of the site.

Additionally, if a loan is being procured, a termite inspection will most likely be required. This is typically performed by a different company than the home inspection.  A pest control technician will inspect the house for termite damage and active colonies and make recommendation for treatment, if needed.

Another inspection common to this region is radon testing.   Radon gas is an odorless and harmful gas that seeps into homes and can cause health problems from prolonged exposure.  For more information regarding radon issues when buying and selling your home, please refer to this link: https://www.epa.gov/sites/production/files/2015-05/documents/hmbuygud.pdf

After the inspections are made, a buyer should review the reports and determine whether there are issues of concern to the buyer. For example, if the roof requires replacement, is this in the buyer’s budget?  Is it an unacceptable condition to the seller that will require replacement before moving into the home?  Will the seller either replace the roof or pay a portion of the repair?  Will your bank still finance the transaction if the roof is not replaced?  Again, your real estate agent can assist you in navigating these concerns.

There are many licensed home inspectors, pest control technicians and radon testing and mitigating outfits in the Tallgrass Title service region. If you are unsure which inspector to hire, it is recommended to work with your realtor or banker to identify an inspector to assist you in your transaction.  In any event, buyers should always educate themselves about the home they are purchasing and protect what may be their largest investment.

Water, Water and Water (Part I – Drinking Water)

Leonardo Da Vinci is quoted as famously saying “Water is the driving force in nature.” The modern world of real estate is no exception.  Real estate use will most always require that there is some access to water.  Whether the property be a residential home or a cow pasture, the need for water is present.  Part I of this post will focus where you obtain your tap and drinking water.

In residential real estate, there are three main sources of drinking water in this region of the country: Municipally supplied water utility, Rural Water District or owner owned and maintained well.

Municipally supplied water is just that. The City supplies water to its residents and charges a fee for the service.  This is how a majority of homes are supplied with drinking water.  However, where does the City obtain the water supplied?  Typically, a City will own and maintain wells or obtain water from a reservoir or river and treat and supply the water.   The water is then provided to residents through a City owned water system.  Often, the water obtained from wells is pure enough that the City will not be required to treat the water.  Reservoirs or rivers almost always require some form of treatment to the water before providing it to residents.  Furthermore, to ensure the safety of the water supplied, the State of Kansas and the Federal government require periodic testing of public drinking water.

Rural Water Districts are “member-owned” cooperatives that are most often established to provide water to areas not served by a City. The “members” are basically the individuals that purchase water from the water district.  The members maintain a board that oversees the water system and its sources of water.  Water districts are also required to periodically test its water to maintain that it is pure and uncontaminated.  In order to purchase water from a water district, one must first become a “member.”  This usually involves a small transfer fee from the previous owner of the real estate.   If you are establishing a new residence or other new water service, the fee requirement can be substantial.  It is important to investigate this issue when planning a home building project.

The final, most common source of water is the private well. The owner has a water well that pumps water and provides it to the residence or farm.  In Kansas, water windmills were once a part of most farm yards.  Today, the work is done by electric pumps and pressure tanks in order to provide constant, consistent water to the owner.  Owning your water source may sound liberating, but a private well comes with its own headaches.  The owner of the well is wholly responsible for checking the quality of the water.  Additionally, wells can go dry; especially in drought years.  Lastly, the equipment required to pump and pressurize and possibly treat the water requires maintenance.  It is important in a real estate transaction to investigate these issues prior to closing.

When purchasing or selling real estate, it is important to understand how water is obtained at the real estate. This will prevent unwanted surprises down the road.

What is the Difference Between a “Warranty Deed, Quit Claim Deed, Corporate Deed, etc.?”

In your contract for the sale or purchase of real estate, you may have seen language that says that the real estate shall be passed by a “good and valid general warranty deed.” What is a warranty deed?  Along those same lines: what is a quit claim deed? Corporate warranty deed? Executor’s deed? Sheriff’s deed?  Which deed do you need for your real estate transaction?

To start, a deed is the document that transfers ownership of real estate from one person or entity to another. Often when folks think of a deed, they get a mental image of a large, cartoonish scroll of paper with ornate writing and metallic stamps.  In reality, a deed is simply piece of printer paper that contains language of conveyance.  This begs the question: well, what prevents anybody from simply making a deed to real estate regardless of whether they own it?  Title insurance! But that is for another post (Understanding your Title Commitment and Policy).

General Warranty Deed

A “general” warranty deed in Kansas is just that; a standard, plain, warranty deed. The “warranty” portion of the deed is stating that the grantor (seller) of the real estate is “warranting” or “defending” the fact that the grantor actually owns the real estate. They are also guaranteeing that they are passing title to the real estate.  A warranty deed is guaranteeing that no other person owns the interest in the real estate being transferred.  It works like a warranty on a new car that guarantees the car will perform as promised for a period of time. Additional language regarding the extent of the warranty being given is included in the deed.

Deeds from Businesses or Estates

When the words “corporate”, “executor” or “conservator” appear in the title of a warranty deed, it is basically to identify the entity or authority of the grantor (seller) to transfer the real estate in the transaction. Additional language about the entity or individual transferring title is accompanied in the deed.  However, at the end of the day, the title being conveyed by one of these deeds is the same as a general warranty deed.

Sheriff’s Deed

A “sheriff’s deed” is a deed that results from the county sheriff passing title to real estate. This is typical through a foreclosure sale or tax sale.  This type of deed can be quite complicated and must contain certain language regarding how the sheriff came into authority to transfer such real estate.  It is advised to consult with a real estate professional when dealing with a sheriff’s deed in Kansas.

Quit Claim Deeds

Lastly, a “quit claim deed” makes no warranty to the grantee (buyer) of the real estate about the ownership held by the grantor (seller) or the ownership to be conveyed upon the grantee. It simply means that any ownership that the grantor may have is being given to the grantee.

Real estate transactions and title insurance can be complicated and confusing. Tallgrass Title professionals are always available and willing to discuss your questions regarding deeds or any other aspect of your real estate transaction. It’s our job!

Kansas Farm Lease Basics

A common issue that comes up with the sale of agricultural real estate in Kansas is whether the real estate is currently leased to a farmer or rancher and when that tenancy ends. Simply put, if you purchase real estate that is currently leased to another person, you take the property subject to that lease.  This could mean that even though you purchased the real estate and received a deed, you may not have possession of that real estate until many months in the future!  If you know this fact in advance, it may be addressed in the contract to protect the interests of the buyers.

The information in this post is meant to educate the buyer of rural real estate so that there are no unexpected surprises following closing. In Kansas, absent a written agreement to the contrary, leases are governed by the Kansas Landlord Tenant Act.  This is basically a series of statutes (laws) that dictate the arrangement between land owners and tenants.  Again, written agreements may change this arrangement so long as they do not violate the Landlord Tenant Act.

Basically, all farm tenancies are year-to-year beginning and ending on March 1 of each year. If the owner of the real estate does not properly terminate the lease, it will automatically renew for another year.  One section that causes continuous issues, is the termination of farm tenancy statute.  If the owner of the real estate wishes to terminate a farm tenancy, written notice must be given to the tenant at least 30 days prior to March 1 and set the termination date for March 1.  Now, there are typically 28 days in February, which sets the typical termination date at January 29.  In a leap year, the termination date would be January 30.  As there are 31 days in January, this is counterintuitive as the termination dates do not fall on the last day of the month.  However, if there are already fall planted crops (typically wheat) on the real estate at the time of termination, the termination does not take place until the harvest of the crops or August 1, whichever is sooner.

Often, agricultural real estate is sold in February-April.  A contract for sale could foreseeably close after the tenancy termination deadline has expired and the Buyer would be subject to the existing lease.   An easy solution before entering into a contract during this time of year would be to request that the contract would be contingent upon adequate proof of termination of the tenancy.  Lastly, if there is a written contract, they often run on the calendar year and not the March 1-March 1 statutory term.  In order to avoid issues with written agreements, one needs to simply ask to review the contract, and any termination notice, prior to entering into an agreement to purchase.

Kansas agricultural leases can be a complicated subject.  Should you have any questions regarding your rural real estate transaction, feel free to call and ask to discuss the issue.

Digital Order Submission, Courier Service and Drop Box, oh my!

At Tallgrass Title, our goal is to make your transaction or refinance as smooth and convenient as possible.   We understand that the daily life of a home buyer or seller can be quite busy.  Real estate agents can often be juggling multiple transactions while assisting several clients.  Likewise, bankers and lawyers can find it hard to physically bring documents to one of our offices.  The purpose of this post is to illustrate several order submission and document delivery options that Tallgrass Title has put in place to ease the process.

To assist in the process, we have several options to submit orders or deliver documents to our office. With technology rapidly developing, the simplest way to submit an order for title insurance is through our Paperless Closer system.  Simply upload an order for title insurance or upload a contract directly to our system.  An earnest money check can then be delivered to our office during office hours or deposited in our new 24-hour drop box at our Wamego, Kansas location.  Additionally, our website has an additional portal for submitting an order if you have not yet set up a Paperless Closer login with our office.

Tallgrass Title also offers a free courier service in our primary service area of Riley, Pottawatomie and Wabaunsee Counties. For example, our couriers will travel to Manhattan, Kansas to pick up documents needed for your real estate transaction.  Additionally, we will deliver proceeds checks or commission checks wherever needed.  Our courteous couriers are all licensed and bonded notaries as well.  So, if a deed packet needs to be executed in front of a notary and returned to our office, simply call for our courier service.  We strive daily to make the title insurance and real estate closing process as simple as possible.  We want to know if there is a way that we can make the real estate closing process easier and more streamlined for you.  Should you have any ideas or suggestions that will help the process, please feel free to let us know.  Remember, we work for you!