Author: Monica Fawver

Wet-Ink or Electronic Signatures on Closing Documents

Here at Tallgrass Title we are focused on helping to make each transaction happen as smoothly as possible. One of the tools we encourage people to use is electronic signatures. Programs such as Dotloop®, DocuSign®, and many others provide a secure platform for buyers, sellers, and realtors to affix their signatures to documents quickly and efficiently.

At the beginning of a transaction, contracts, addendums, and disclosures can be signed electronically. This cuts down on the time and shoe leather it takes to obtain documents to get the process started. Most programs also have a way to send a copy of the signed documents to the title company, so you don’t have to save a copy somewhere else on your computer to pass on later.

Soon after the commitment is sent out, our closing agents generate the Buyer Preliminary Documents and the Seller Deed Packet. We send them out as soon as possible and encourage early signatures as it helps the closing process go more smoothly. Our Buyer Prelim Doc packet can be signed electronically in its entirety.  This packet includes a warning sheet about wire fraud; it is very important that it is read by the buyers at the earliest opportunity. Scammers and fraudsters try to steal earnest money deposits, not just closing funds! The fraud sheet also shows that we have partnered with a secure company called CertifID® to send and receive wire instructions. This program verifies the senders/receivers’ identities, verifies the wire instructions, and insures each wire sent using the verified instructions.

The Seller Deed Packet also includes a warning about wire fraud in case they would like to have us wire their proceeds to them at closing. This document and all other documents that do not need a notary’s signature may also be signed electronically. As a reminder: the Information Release form and the 1099 tax sheet require the seller’s social security number so please send the completed documents back to us securely. The Deed and any Affidavits will need to be signed in the presence of a notary. Your clients can either meet with a notary of their choice or they can visit our office where one of our notaries would be happy to assist. During this time of social-distancing, we do ask that you call us to let us know when they are coming.

The final documents that are needed for closing are the settlement statements and the loan paperwork if the buyers are receiving financing. For our purposes, the sellers can sign their statements electronically and don’t need to come to a closing appointment in person unless they choose to do so. As of this time, the buyers do need to sign their loan packet in person, either at their bank or in our office. Some lenders have begun to have buyers sign a portion of the documents electronically to reduce the amount of time needed to complete the closing. However, the buyers do need to sign the mortgage and a few other documents before a notary.

Please reach out to us to discuss which methods best fit your transaction. Our agents are happy to help walk you through the tasks that can be completed electronically in order to help your transaction go smoothly.

Combating Current Trends in Wire Fraud

By now most of you are probably familiar with the idea of scammers trying to steal buyers’ purchase funds. Since that amount is usually several thousands of dollars it makes sense that thieves would be interested in it. It ends up being a decent-sized reward for very little effort and risk.

Recently, we were made aware of a different twist in the wire fraud trend. Lately, title companies have started seeing scammers go after earnest money deposits. Even though the amount is relatively small, multiple thefts can add up to a nice paycheck.

How do they do it? A scammer hacks into a realtor’s or a closing agent’s email and waits. Pretty soon he (or she) starts seeing messages about a sale transaction. He emails the buyer posing as the realtor or title agent with wire instructions for their earnest deposit. The contract is signed and the buyer follows the scammer’s instructions not knowing he has been scammed. Eventually someone notices that the earnest money never was deposited, but it is usually too late to stop the funds from going to the wrong place. Unfortunately, the amount is so small that it might be virtually untraceable as well.

Here are a couple of ways to help reduce the risk of it happening to your clients:

Educate your clients! As soon as a potential client contacts you, begin arming them with the tools they can use to protect themselves. Sure, you don’t want to freak anybody out, but go ahead and warn them about the potential risk and what you will do to help keep them safe. Have them read and sign wire fraud information sheets as they sign their initial offer. Explain to them that you will NEVER, EVER email them about wire information. Go ahead and give your clients the confirmed contact information of the title company they will be using so they can confirm any wire information being sent to them.

Make sure your email is secure. Do not use a free email service. No matter how annoying it is to do it, change your password often! Send all documents relating to a transaction securely. If you think about it, a contract has names, money amounts, closing date, and contact info for some of the parties. It’s a goldmine of information for any scammer who may have managed to hack into your email. So send those documents through secure portals to keep everybody safe.

Help keep funds secure. Encourage your clients to use the secure programs offered by title companies, including CertifID for wire instructions and Earnnest for digital funds transfers.

The bottom line is we must respect every transfer of funds and work to protect those funds. If we don’t try to do anything about wire fraud, or think that it only happens to someone else, we are letting criminals have their way. A small action on our part could spike a scammers gun.

Deed Packet Pro Tips

So, what comes next after the signed contract has been delivered to the title company and the title commitment is complete? The Deed Packet!

The number one thing to remember is: EARLY SIGNATURES MEAN SMOOTHER CLOSINGS!

The sooner the completed deed packet is sent back to the title company, the easier it is to complete the pre-closing tasks. For example, the information release allows us to obtain the mortgage payoff quote. The deed and other documents to be recorded must be reviewed to ensure they will meet the county recording requirements.

The second thing to remember is: Let the title company know asap if the seller doesn’t live close by.

If the seller lives some distance away, they may need extra time to ship the completed documents back to us in time for closing.

Here is a breakdown of the most common documents in the Deed Packet:

The Deed. (No kidding, right?)

However, this is the most important document of the bunch. Please ensure that each party signs it in the presence of a notary. As we mentioned in a previous blog, it is also paramount to keep the same original formatting to ensure it is accepted for recording. And, it really makes our job easier if all of the documents are printed single-sided, not double-sided!

The Affidavit as to Debts, Liens and Indemnity.

This is a complicated title for a document that actually has a rather simple purpose. The purpose is for the seller to confirm that there are no other liens that can attach to the real estate. Each party will have to sign in the presence of a notary. However, the important thing to keep in mind are the checkboxes that usually appear on pages 2 and 3. Each of the statements that accompany the checkboxes should be read carefully before being marked off.

The Authorization for Release of Information.

All mortgage holders require that 3rd parties receive authorization from the mortgagors to receive any information from them. Without this document, we can’t prove how much money will be needed to get the mortgage released. It is also important for the seller to fill out the name of the lender, and the account number if they have it. This is because there are certain types of mortgages that don’t have to report to the county when they are sold. It could potentially delay closing if the title company doesn’t know who is actually holding the mortgage.

The 1099 Tax Information Sheet.

Yes, the title company must report most sales to the IRS. Besides the signature lines that are clearly visible at the bottom of the page, there is other information that is needed. Near the top of the page, please guide the seller to fill in their social security or tax ID number(s), their new/forwarding address, and their phone number. We have to mail out a copy of the actual 1099 form to each seller for the next tax year, so a valid mailing address is really, very helpful.

Here at Tallgrass Title, we also include Fraud Warnings to put people on their guard. This is very important to us, since fraud is becoming more common.

These are the documents that are included in most Deed Packets. There may be other documents specific to the transaction, but they usually don’t appear as often. Please feel free to reach out to us if you have any questions about any of the documents you see in the Deed Packet. We are always happy to help and will even send out a notary to meet with your sellers who are in the area!

Tips for Recording and Filing Documents

We realize that many of you will probably not have to take a document to the county Register of Deeds Office. However, it is still helpful to know a little bit about the requirements. It makes filling out and completing the deed packet and other documents necessary for closing much easier.

Tip 1:

This first thing to keep in mind is: Only documents with original signatures can be recorded. As of 2019, the Register of Deeds will not accept documents that have been signed electronically. What that means, is that each deed, mortgage, and affidavit must be signed in person in front of a notary. The original documents must be sent back to the title company for closing. (Remember, if you can’t drop it off to us, we will come to you!)

Tip 2:

Don’t change the formatting of a deed or other notarized document. Let’s face it, technology is complicated. Your computer or printer might try to change the margins, font, font size, or spacing. Why is that a big deal?

It is the duty of the Register of Deeds to keep the real estate records legible and clear. In order to do this, there are strict guidelines to help make that happen. One of the rules is the size of the font. If the wording is too small, the documents can’t be scanned correctly into the archives. There are also rules in place about document margins. There needs to be plenty of space at the top for the filing information, as well as enough space on the sides so no information will be cut off. If your printer likes to cut off the top or bottom of a legal-sized document, you run the risk of losing important information. For example, part of a legal description or a signature line could be left out.

Also, it is very important to print the documents single-sided, not double-sided.

Tip 3:

When will the recorded original deed be given back to the buyers after closing? This is a question we get asked on a regular basis. The answer? Usually within 30-60 days following a closing, we send out the recorded original documents with the Title Insurance Policy. Unfortunately, we cannot just pull out a magic number that fits all cases. This is because we have to wait until the commitment requirements have been met. For example, some banks take a bit more time than others to file mortgage releases. Rest assured though, that we will work to send out the policy and documents just as soon as we possibly can.

Here at Tallgrass Title it is our goal to help you successfully complete your real estate transaction as smoothly as possible. Reach out to us to let us know how we can help you make it happen!

Real Estate Taxes – 1st Half Due

In the state of Kansas, real estate taxes are paid in arrears. This means that the taxes for 2018 are not payable until the end of 2018. The county issues the tax statements in the beginning of November each year. The 1st half is due on December 20th and the 2nd half the following May.

How does this affect real estate sales?

As soon as the new tax statement is available at the county treasurer’s office in November, we obtain a copy of it. For all closings that happen between early November through the end of May, our closing agents ensure that the taxes are paid in full during closing. The only exception to this rule is when the Lender will pay the taxes directly out of the escrow account. For example, if a closing happens in February, the seller will pay the 2nd half taxes during closing, even though technically they are not due until May.

Why we do it this way:

In most counties, the new owners will not receive a 2nd half tax statement. So, it would be very easy to forget to pay the 2nd half in May. The treasurer’s office would think that the previous owners are responsible and send notices to them. However, the previous owners have already given a credit to the new owners to pay the bill (through the tax proration), so they actually aren’t responsible. As you can see, this can cause a lot of unnecessary stress on all the parties.

Things to tell buyers to reduce the stress:

  1. If there is an escrow account with the Lender, the taxes usually will be paid from it.
  2. The tax proration is a credit to the buyer for taxes that will come due in the future.
  3. We cannot be sure exactly how much the new taxes will be until the county tells us in November. But they usually are close to the amount due last year unless there was a building project.
  4. Realtors or buyers can always call our closing agents to ask questions. It doesn’t matter how many months ago the closing happened. We are happy to help you find the answers!

Judgments That Appear on the Commitment – and what to do about them

Our job as a title insurance provider is to insure the parties are passing clear title to the real estate. We perform an in-depth search of the real estate to prove that. We also perform a judgment search on both sellers and buyers. We check for court cases filed against each party and any liens that have been filed against the real estate. If we find any open matters that need to be resolved, we add requirements to the commitment. Once the required documents are provided to us, we can clear the lien from the real estate.

Child Support

If a divorce has been filed by one (or more) of the parties, there may be a court order for child support or spousal maintenance. The title insurance commitment will list a requirement for proof that the payments are current.

Tax Liens

In some cases, the real estate taxes may be delinquent. When this happens, the delinquent taxes must be paid off during closing. The seller can certainly pay the taxes before closing, but we are usually asked to pay them off out of the seller’s proceeds. We obtain a payoff statement from the county treasurer’s office and add the total payoff amount to the settlement statement. If the seller chooses to pay the back taxes early, we will update the commitment as soon as we receive proof of payment.

Mechanics Liens

Contractors who do certain types of repairs or improvements have a period of time to file a lien. For example, if a homeowner doesn’t pay a bill for their driveway being paved, the buyers could be stuck with paying it. The unpaid contractor has up to a few months to file a lien at the county. This is why we have each seller sign the Affidavit of Debts and Liens. By doing so, they are swearing that there are no other outstanding debts that could attach to the real estate.

Civil Matters

If there has been a civil case filed against one of the parties, we have one of our attorneys review the documents to be sure it will not attach to the real estate. We may require additional documents or a payoff in order to release the suit.

Here at Tallgrass Title we understand that each real estate transaction has unique twists. Feel free to call or email if you have any questions about your transactions. As always, we are here to help!

Title Insurance 101 – Refresher Course

Most of you have probably been in the real estate world long enough to know what title insurance is. However, we thought it would be helpful to provide a “refresher” course to help answer your client’s questions.

Let’s face it, most people closing on real estate don’t read through the details of all of their closing documents. However, there are people who look at the settlement statement and want to know what they are paying for. Also, suppose you have clients who are keeping a close eye on finances. If they want to save some money, they might ask if title insurance is necessary. Here are some pointers to help out your clients, or those professionals who are still new to the real estate world.

“Title Insurance protects property rights.”

This is the simplest definition of title insurance. A title insurance policy insures that the property owner actually has full title to the real estate. When a real estate legal description or address is brought to us, we start an extensive search. Our search follows the “chain of title”, the deeds that show how the real estate changed hands over the years. Any mortgages filed against that real estate must have been properly released. Not only do we look at the records for that tract of real estate, but we also look for judgments against the buyers and sellers. We look for any law suits or claims that could potentially attach to the real estate as liens.

Title Insurance brings peace of mind.

The title commitment is our promise to issue a title insurance policy once the requirements have been met. The title insurance policy is issued after closing, once the deed and mortgage have been filed, and the liens properly released. Once the new property owners receive their policy, they can be assured that they truly own their real estate. If a claim is made by someone challenging their ownership, they have the policy to back them up.

Here at Tallgrass Title we work hard to provide the information and assistance everyone needs for a smooth closing. Feel free to contact one of our agents today to help get your real estate questions answered.

What Happens to Your Mortgage When You Sell Your Property?

Many people have at least one mortgage on their real estate. When you intend to sell your real estate, that mortgage must be released so the buyer will receive clear title. You may wonder, how do I get my mortgage paid off for closing? Do I need to contact the mortgage company to get the payoff amount? Will I need to send the payoff money to the mortgage holder after closing?
We are here to tell you that paying off a mortgage at closing really does not have to be as complicated as it sounds. Our closing agents are used to handling this as part of a regular closing.

Mortgages

A mortgage is simply the document that secures repayment of money borrowed by placing a lien on real estate. The mortgage needs to be paid off and released from the real estate; otherwise, the mortgage will remain with the real estate sold. Nobody wants to buy a house with somebody else’s debt attached! The mortgage may either still belong to the original bank that issued the mortgage, or it may have been sold off to a different bank. It may be a surprise, but it usually isn’t more complicated if the mortgage has been sold. The payoff process stays the same.

What is the payoff process?

The process begins with the Seller completing an information release form for us. This form typically accompanies the deed and other documents for the Seller to sign weeks before closing. It only requires a small amount of information from the seller: current mortgage holder name, loan #, signature, and SSN. In most cases, this document may even be signed electronically and sent back to us. Electronic signatures are a big help, because the sooner we get the completed form, the sooner we can get the payoff quote for the settlement statements.
As soon as we receive the filled-out form, we contact the mortgage holder on the Seller’s behalf. The mortgage holder sends us a statement with the total payoff amount and their wire instructions. We add the payoff amount to the closing statements and send the payoff amount immediately after closing.

After the Closing

After the mortgage holder receives payment, the amount is applied to the underlying debt and a “release” is sent to the county for filing. To complete a seamless closing, our agents will typically add a couple extra days-worth of interest in order to make sure enough funds are sent to secure a release of the mortgage. If there are any excess funds, the lender will refund them to the Seller.
If the Seller has set up automatic payments, he or she should contact the mortgage company to cancel the payments following closing. Also, prior to the closing date, the Seller should be aware of when payments are due. If a payment is not made within the grace period, late charges may be applied.
Our closing agents are always happy to answer any questions you may have about the closing process. Give us a call today or visit our website www.tallgrasstitleks.com.

Tallgrass Title Going Paperless

With the continuous technology development going on right now, advisors in the title industry have been encouraging title companies to go paperless. Going paperless is not a new idea for us. We have been talking and planning for this for some time. We have already started uploading certain search and closing documents for new files. When someone sends or gives us a document, we scan it and publish it as soon as possible. However, we intend to officially go paperless in the next couple of weeks.

What This Means for You:

Our search documents will be uploaded to Paperless Closer. This is the program we use to securely store documents with a portal that you can access. Access the portal through our website using the “Client Login” button at the top of the page. We already upload the contract, receipts, closing statements, and invoices during the closing process, but you will be able to view even more information. You will be able to see the deeds, restrictive covenants, plats, etc. that we researched during the search process. This should make it easier, especially for realtors, to see which documents have already been given to us, as well as help you collect the documents you need to keep for your records.

A tip for cutting down on paper: we only need originals of notarized documents back in our office for closing. In the deed packet, a seller may sign all of the non-notarized documents electronically. Just be sure to send us a copy od the completed documents and we will add them to paperless closer. As a reminder, please do not send documents with personal information through email without making sure it is protected. Scammers and hackers are becoming more and more common, and none of us want to see our clients’ identities stolen!

If you (or an auditor) are going through your files and notice a missing document, look for it on paperless closer. For older files, if you don’t see it, just send us an email or quick call and we can publish it immediately. You won’t have long to wait since it is a very quick and easy process for us to pull something from our electronic archives.

Not familiar with Paperless Closer?

For those who are not as familiar with Paperless Closer, just let us know and we can get you some training. It only takes minutes to create a new account if you don’t have one. And, it is a simple, user-friendly program that won’t take up much of your time.

As always, please call or email if you have any questions or need any assistance with Paperless Closer. We are happy to answer any questions you may have!

How Do Flood Zones Affect My Real Estate?

If the property you own or plan to own is located near a waterway, creek, river bottom or other low-lying area, it may be in a flood zone. These zones are areas that may have a likelihood of flooding. Did you know that your homeowner’s insurance policy probably won’t cover flood damage? What can you do to protect your property? What will a Lender require if you purchase real estate in a flood zone? Flood zones are also not covered by title insurance.  Since there are several flood zones in Riley, Pottawatomie and Wabaunsee Counties, we at Tallgrass Title would like to provide some basic information about them.

  1. Who determines where a flood zone is located?

The agency who oversees flood zones is FEMA (Federal Emergency Management Agency). This agency works with a floodplain administrator and community officials to produce maps showing where the risk areas are. Over time, flood zones may change, and new maps are drawn. According to FEMA, a flood zone is a “Special Flood Hazard Area” and is commonly referred to as a 100-year floodplain. This does not mean you can expect a flood once every 100 years. It means that a Special Flood Hazard Area has a one-percent chance of flooding each year.

  1. Is the real estate in a flood zone?

If you are purchasing real estate near a waterway or other low-lying area, it is a good idea to check whether the property is in a flood zone. Your realtor can usually assist with this question, but you can also check for yourself at the following link: https://msc.fema.gov/portal.

  1. If your real estate is in a flood zone, what will be required?

If you have a lender, they will require flood insurance if the house or structures are in a flood zone. This is a requirement that banks are forced to follow by bank regulations. It is wise to check the coverage of the policy to determine what is actually covered by the insurance. In most conventional residential loans, you will see a “flood zone determination” sheet. Usually, this simply notifies you that the lender checked to see if the real estate is in a flood zone. If the real estate is in a flood zone, there will be some additional paperwork.  If you have questions, speak with your lender or real estate agent.  The following link will answer a great deal of questions: https://www.fema.gov/national-flood-insurance-program

  1. Can my real estate be removed from a flood zone?

In some cases, it is possible to have the structure on your real estate reassessed and removed from the flood zone. There are certain procedures to follow to make that happen. The document that grants the amendment is called a LOMA (Letter of Map Amendment). The application for this document can be downloaded from the FEMA website. Most of the time, a licensed surveyor or other engineer will be required to provide elevations and a site map. FEMA will review the elevation and other data to make the determination. However, this process can take several months to complete.  Also, there are no guarantees as to whether the LOMA will be granted.

As you can see, there are questions that often arise with flood zones in real estate transactions. Our closing agents are trained to understand these concerns and answer questions you may have.