Category: Real Estate

Building on Rural Real Estate

Many Kansans in our area have a desire to construct a home on real estate lying outside of a city and outside of a “platted” subdivision. The country can lend peace and tranquility to the setting and offer some of the Flint Hill’s most gorgeous views. Additionally, living in a rural area can offer the freedom to pursue rural hobbies like raising animals, having a large garden and having s’mores by a bonfire.  However, there are a few things to take into consideration when moving forward with this dream.

Location of the real estate

Where is the real estate? Finding the right mix between rural and city dwelling is a common issue future homeowners must weigh.  Although rural life may be the goal, it is necessary to determine how far you want to live from modern services. Is the real estate located on pavement or gravel?  Does the county have any plans to pave the gravel?  How well maintained is the road?  Is it passable in all weather?

Another question regarding location is applicable zoning. If you are not purchasing an entire tract of real estate are you allowed to divide off a portion to be purchased?  (Keep an eye out for next week’s blog where we will discuss issues regarding dividing real estate from a larger tract.) Are you allowed to construct a single family dwelling?  Do you have the requisite acreage for a septic system or lagoon?  Will the ground support a foundation, septic system, driveway, etc.?  These questions will need to be addressed prior to beginning the construction process.

Access to Land

Believe it or not, lack of access can be an easily overlooked issue. Simply put: how does one access the purchased tract?  It is important to look into the zoning requirements for a driveway or travel easement.  Oftentimes an easement will be needed to cross neighboring property to access your building site.  Also, does zoning allow two addresses to use the same driveway?  Will the county allow you to create an access point to your real estate where you want it?  It is important to address access concerns, because, if there is a lack of access, and no one is ready to give an easement, what is the point in purchasing the tract?

Access to Utilities

An often overlooked issue is the access to modern utilities like water and electricity. In town it is easier to bring city water and electricity to new build cites and for the new sewer lines to tap into the city sewer system.  However, in the country, it can be more difficult. Here are a few common questions to answer:

  1. Is electricity available at the site? Is it a rural electric cooperative or an electric company? How much will it cost to run the electricity to the divided property?
  2. Is water available? Is there a rural water district? How far is the closest line? Is there adequate capacity for a new structure? If rural water is unavailable is a well an option?
  3. How will sewer waste be handled? Is a septic tank or lagoon an option?

As you can see, the simple rural life could prove to be confusing during the acquisition and build process. Luckily, we commonly deal with these issues and are eager to assist in answering these questions.  It’s our job!

Understanding the Title Commitment – Part 2

Towards the end of the Title Insurance Commitment, you will find a list of “Exceptions from Coverage”. This list appears in Schedule B – Section II. The Standard Exceptions are general and appear on every commitment. However, many of the Additional Exceptions are specific to your tract of real estate. Here are some common types of documents that show as Additional Exceptions:

  1. Plat

A plat is a picture of a subdivision. It is basically a drawing that shows the shape of the lots, and where the roads are. Many also show utility lines and easements originally planned by the developers.

  1. Restrictive Covenants

Restrictive Covenants list any restrictions on lots located in a subdivision. The purpose of these is to ensure that the owner of each lot can enjoy his real estate without causing annoyance to his neighbors. Many of these documents also contain rules concerning the upkeep and appearance of the subdivision. For example, these may include specific guidelines on what materials or color(s) are used for your house. They may also contain rules about fences, additional structures, or vehicle parking. These documents may include information about setting up a Homeowner’s Association (or HOA).

  1. Oil & Gas Leases

In certain parts of Kansas there is active exploration and production of oil, natural gas, and other natural resources. In the past, there were many oil and gas leases given, but a good number of them did not result in any actual activity. Additionally, many of them were for a certain number of years and the terms have already expired. Most of the leases we see on property searches today can be dropped off from the policy by a simple affidavit signed during closing. For more information on oil and gas leases, click here to view a blog we posted earlier this year.

  1. Ordinances

An ordinance is a public declaration made by the city. These may have some effect on your real estate, depending on what type of ordinance it is. For example, the document may provide for the installation of water lines or sidewalks.

  1. Easements

Easements give other persons the right to use your real estate for a specific purpose. A very common easement is an “ingress/egress easement”. This allows someone to travel across your real estate usually to access real estate they own adjacent to yours. Another very common easement is a utility easement. These agreements allow electric, natural gas, or other specified companies to construct or maintain utility lines. Most easements contain language saying that the easement will “run with the land”. This means that when you sell your property, the new owners will have to honor the easement. As mentioned above, an easement is for a particular purpose. As the owner of the real estate, you do have the right to make sure that the person using the easement isn’t trespassing on or causing damage to another part of your real estate.

As you review your title insurance commitment, please remember that you can ask for copies of the documents that are listed. At Tallgrass Title we are happy to answer any questions to help make your transaction as smooth as possible.

Early Work = Smooth Closings

In the early stages of the closing process your closing agent will put together what we call a Deed Packet for the Seller to sign. The deed packet consists of many of the documents we need to close your real estate transaction. Not all deed packets are the same.

However, all deed packets will consist of at least a Deed, an Affidavit as to Debt, Liens and Indemnity, and a Seller 1099 Information Sheet used for taxes at the end of the year. Additional documents as needed will often appear. If there is a current mortgage, your closing agent will ask for an information release. This is so our office can receive a current payoff on any existing mortgage. There may also be other affidavits to clear exceptions from the final policy. If you are working with a realtor, there will be documents authorizing Tallgrass Title to pay the realtors at closing or to give your realtor permission to sign documents on your behalf. New to our deed packet is a Proceed Instruction Sheet that instructs us how to deliver the proceeds due from your sale.

As a Buyer, you may receive inspection invoices or invoices related to work performed on your new home. It is equally important for our office to receive invoices as soon as they are available. Your closing agent needs these invoices to ensure that all the work done on the real estate is paid in full and there are no outstanding liens attached to your real estate.

Returning the signed deed packet and forwarding invoices as early as possible helps make the closing process go smoothly. Your closing agent will then have time to prepare for the closing and to get ahead of any issues that may arise.

Tallgrass Title is here to help in any way we can to stream-line the closing process for you. We offer courier and notary services to our clients and are available for any questions you may have about the closing process. If for any reason you or your realtor are unable to come to our office to deliver a deed packet we are more than happy to come to you. That’s our job!

Paperless Closer: Top 5 Power User Tips

Here at Tallgrass Title we work hard to make the closing process as hassle-free and convenient as possible from start to finish. One of the tools that we have been providing for years is Paperless Closer. Access this program via the “Client Login” link on our website and provides a secure portal for sharing documents. Not only do we post the commitment, contract, receipts, and closing documents to it, but realtors can use it to send documents to us.

Here are 5 tips to become a Paperless Closer Power User:

1. Use the “New Order” button on the main Lobby page to submit new orders. Fill out the basic order information, like the property owner’s name and the address. As soon as you hit the submit button, an alarm goes off on our end. You can also leave a note on the form to have our courier come pick up the earnest money from your office. As soon as the check arrives at our office we will post the receipt to paperless closer.

2. View tasks assigned to you. On your homepage, you can view any tasks we have assigned to you. The task may be a reminder to submit an invoice for an inspection, so we can pay it during closing. Usually, we use this to remind you of tasks that aren’t a standard part of every closing process. For example, if there is an additional document required like a rural water payment book, we may schedule an activity to remind you and us to make sure it gets done.

3. Use the Status dropdown tool to view closed files. We understand that realtors are audited periodically. If you forgot to get a copy of one of the documents you need, use this tool to complete your set.

4. View the name of the assigned closing agent and his/her contact info. Don’t know who to send invoices or questions to? Find the name of the closing agent and click on the E-mail link to send a direct message.

5. Use the “Closing Disclosure” button on the order page to view the document draft. Want to make sure a particular fee will appear on the Closing Disclosure? Use this button to view the current draft of the document.

Call us at (785) 456-2779 to create your account today! It takes less than 5 minutes to set up a new account and grant access to a file. Should you experience any difficulty at any time in locating your file or viewing documents, just send a quick email to order@tallgrasstitleks.com. We monitor this email address 9 hours a day and our goal is to respond to assistance requests within minutes! Most paperless closer troubleshooting issues are resolved very quickly and easily. Also, we understand that technology can be frustrating. If you would like further instruction on this program, contact our office to set up a training session at your office. It’s our job to make sure you are comfortable using this tool.

Why are Certified Funds required in a Real Estate transaction?

What are certified funds?  What are the differences between a “cashier’s check, bank money order, personal money order, cash, check, wired funds or ach?”  I’m buying real estate and my title company wants me to bring “cash or equivalent” or “certified funds.” Why? Why can’t I just write a personal check?  The money is there!  Does somebody stamp my hundred dollar bills as “certified?”  What bank is going to give me $200,000 in hundred dollar bills so that I can buy my house?  Do I need an armed guard?

Relax! The purpose of this blog post is meant to give a simple explanation of why “certified funds” are required in your real estate transaction and how to acquire and present them to the title company.

Certified funds are just that. They are certified to be good, guaranteed, valid, and non-revocable.  Here are the different types of certified funds:

  1. Cashier’s Check
  2. Bank money order
  3. Wire
  4. Cash

Simply put, once a cashier’s check or bank money order is issued by a bank, it cannot be recalled or cancelled by the bank.  The bank that wrote the cashier’s check or bank money order must by law, honor and pay the amount due in the document.  Therefore, it is the same as handing a person the equivalent amount of funds in cash.  Personal checks or personal money orders can be cancelled if it is determined that there is an issue with the check or the underlying funds.  Therefore, personal checks or personal money orders must “clear” the issuing bank before the payment is deemed absolute.  This could take as long as a week or more.

A wire is a method of transferring funds between two banks.  Once the wire has left the issuing bank and has been deposited in the receiving bank, the transaction is complete and final.  The funds cannot be returned without the approval of the recipient bank and underlying customer.

Cash is, well, cash. It is absolute funds, and value has is transferred immediately to the holder.  There is no issuing bank to recall the funds.  It is the absolute transfer of value when given from one person to another.  However, we highly recommend not paying for your house in cash. And so will your bank when you request $200,000 in cash to buy your house!

Certified funds are required because it assures that the funds are good and valid and present at the closing of the transaction.  A closing is set for a certain day and if, for example, a personal check is presented, the title company will have to wait at least a week before giving the seller their proceeds from the sale.  If the seller does not receive his proceeds for a week past the closing date, well, the parties have not really closed on the agreed upon date, right?  In order to ease this issue, your closing agent will require certified funds so that she may disburse proceeds to the seller, commissions to agents, filing fees, etc.  Certified funds give the closing agent the assurance that she is holding good funds and is clear to let money go to the various parties entitled.

When you are ready to complete your real estate closing, you will either pay for the real estate from your own money, borrow funds, or a combination of the two.  If you borrow the funds, most likely your banker will either give you a cashier’s check to deliver to the title company or simply wire the funds on your behalf.  If you are responsible for a portion of the funds, you will need to request a “cashiers check” or a “bank money order.”  Depending on your bank, either term may be used.

Buying or selling real estate is a major investment and can potentially cause you stress.  Our goal at Tallgrass Title is to answer your questions about certified funds or any other aspect of your transaction.  Its our job!

Importance of a Real Estate Agent in a Transaction

How do I negotiate a contract? What does “in escrow” mean? What is an appropriate “counter-offer?”  How much will my proceeds be from the sale of my house?  What the heck is title insurance and who sells it?  Which title insurance/closing company should we use?

An American’s home is his or her largest investment. The majority of us do not regularly purchase and sell real estate.  For this reason, the purchase or the sale of your house can be incredibly stressful.  Real estate agents or Realtors are real estate professionals that navigate through these tough questions daily.  Real estate agents are not just salespeople.  In fact, I would say that the majority of a real estate agent’s experience is in assisting a buyer or seller understand the transaction.  An agent will help you write a contract for purchase of real estate, advise on technical terms, and assist in making offers and counter-offers.  Additionally, an agent may help in coordinating financing for the purchase of real estate.  One must remember that a real estate agent has studied the profession and is licensed and works in the profession.  An average homeowner in the United States will usually own less than five homes in his or her lifetime.  This will most likely result in many years passing between sales and purchases.  It can be difficult to remember the details of a smooth transaction in these gaps.  Additionally, Americans are becoming more mobile across state lines and internationally.  A homeowner may understand how a real estate transaction takes place in Louisiana, but a Kansas transaction will have its own unique issues.
In addition to assisting homeowners in the art of negotiating and closing real estate transactions, real estate agents understand the market.  Understanding what the market will bear is invaluable in a real estate sale or purchase.  Real estate agents work in the field, they assist in sales constantly, and they know what property is worth.  As a Seller, you will be tasked with setting a list price for your home or real estate.  Your agent will know strategy for setting a listing price.  Additionally, as a Buyer, you will at some point make an offer on a house.  An agent will advise whether the price you would like to offer is appropriate or likely to result in a purchase.
Lastly, as title insurance professionals, we work with real estate agents on a daily basis.  They are incredibly valuable in the transaction process.  Real estate agents assist in securing signatures on various documents, coordinating closings and financing for their clients, and directing the disbursement of funds for various costs.   For these reasons, Tallgrass Title is a proud affiliate member of the Manhattan Association of Realtors which covers Riley, Pottawatomie, Wabaunsee, Marshall, Clay and Washington Counties.  Here at Tallgrass Title, we believe in the importance of real estate agents and encourage all buyers and sellers to work with a real estate agent in their transactions.

Is the Mobile Home Part of the Real Estate?

A traditional dwelling house built onto a foundation or basement is part of the real estate and will transfer over by deed. However, a manufactured, mobile, or modular home built somewhere else and moved on-site may not automatically be transferred.

So, what are the differences between Manufactured/Mobile Homes and Modular Homes?

A manufactured, or what used to be called a mobile home, has the following specifications:
1. A structure which is built to the HUD code
2. Transportable in sections
3. Dimensions of 8’W x 40’L and 320+ sq. ft. or greater
4. Built on permanent chassis
5. Designed to be a dwelling
6. Can be attached to a permanent foundation
7. Certified by its manufacturer, evidenced by labels on the home
8. Has a title and owner pays personal property taxes

A modular home has somewhat different features:
1. Built in sections in a factory
2. Pieced together at building site
3. Cannot be moved from its foundation
4. Becomes real estate once attached to the foundation

Why Should We Care?

If you are getting financing, the bank will need to know whether or not the home is attached, since it affects what type of mortgage they can offer you. If the home is part of the real estate, a mortgage will secure it. However, if the home is personal property, such as a trailer, the mortgage is on the real estate. There would be a perfected security interest on the trailer, in the same manner as on a vehicle.

How do you convert a Manufactured or Mobile Home to Real Property?

You complete an Affidavit to confirm that the home has been permanently attached. This form is also the formal application to eliminate the title. Send the filled-out form to our office along with the original title. All liens and taxes on the home must be paid in full. We will then send the documents to the appropriate offices for approval. The title is considered eliminated when the affidavit form has been recorded in the Register of Deed’s office in the county in which the manufactured or mobile home is affixed.

What if the title can’t be found?

If the owner does not have a title for the manufactured or mobile home, he or she will need to obtain the title before selling the home. An owner of a manufactured or mobile home with a model year of 1979 or older may execute certain documents to establish ownership. If the manufactured or mobile home is a model year 1980 or newer, a quiet title suit will be needed in order to obtain title.

Though the process might sound a bit complicated, it doesn’t have to stress you out. Tallgrass Title has experience with the issues surrounding these prefabricated homes. Give us a call today to get the assistance you need!

IRS Tax Scam Phone Calls

It’s that time again! Tax Season!  With tax season, come the tax scammers.  Starting in late January and early February, these are the calls that go something like this:

This is the IRS. We are contacting you regarding money you owe to the IRS.  If this money is not paid within 24 hours, a warrant for your arrest will be issued.  To avoid any further legal action please call xxx-xxx-xxxx. 

Holy cow! That is panic inducing, but do not fear, it is only a scam! Here are some clues that it is not really the IRS.

*The IRS will NOT:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand tax payment and not allow you to question or appeal the amount you owe.
  • Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
  • Ask for your credit or debit card numbers over the phone.
  • Threaten to bring in local police or other agencies to arrest you without paying.
  • Threaten you with a lawsuit.

The IRS will not call you if you owe them money. They will send you notice after notice regarding what you owe, and they will send it through the United States Postal Service a/k/a regular mail.  They will not email, call, fax, or use any other type of technological service. They will send it through good old-fashioned mail.

Their notices will include not only how much you owe, but where the discrepancy was, and how they calculated any interest or late fees. They will not just throw a number at you and expect you to take their word for it.  They give evidence and hard numbers to back up their claim, and they give you, the tax payer, a chance to appeal the claim or question the amount owed.

So, if you are on the receiving end of one of these scams, do not panic. Take a deep breath. Take note of their phone number. Get the spelling of their name (it may be a fake name), and hang up the phone. You can then notify your tax preparer, and/or you can contact the Treasury Inspector General for Tax Administration.  You should also report it to the Federal Trade Commission.

Contact the TIGTA at the “IRS Impersonation Scam Reporting” web page

Or

Contact the FTC at the “FTC Complaint Assistant” on FTC.gov.  Please add “IRS Telephone Scam” to the comments of your report.

Taxes are stressful enough. Do not add to your stress this year by worrying about coming up with money to pay off the IRS scammers. Just keep telling yourself;

The IRS will not call and threaten me! 

*This information was taken directly from https://www.irs.gov/newsroom/scam-calls-and-emails-using-irs-as-bait-persist. Check it out for more information regarding Tax Telephone and Phishing scams! 

For additional information check out this IRS YouTube video.

Basics of Oil and Gas Leases in Kansas

You have just received a commitment for title insurance and an exception appears:

“Oil and gas lease filed for record at book 300, page 242, on August 2, 1996.”

What is this? Why is it here? Do I need to do something about it? Are the “mineral rights intact?” “Will there be an oil well pump jack in my front yard?” The purpose of this post is to arm you with the basic knowledge to answer these questions and to take the confusion out of your transaction.

Oil and gas rights, also known as “mineral interests” are the right to the oil and gas potentially existing under the surface of real estate. A deed from one person to another automatically passes both the surface rights and the oil and gas rights to the new owners unless the deed specifically states otherwise.   If the oil and gas rights have been “severed” or are not “intact,” your commitment will clearly state this fact in the legal description and/or in the exceptions.  Simply put, one person can own the oil and gas rights below the surface and another can own the surface rights.  Both may be passed to different buyers by deed to the surface and deed to the mineral rights. Typically, in Kansas, surface rights and oil and gas rights are not severed.  Most commonly, oil and gas rights are “leased.”

An oil and gas lease is like a surface lease in that the owner gives the right to use real estate for a period of time in exchange for payment. Therefore, the owner is giving the right to another person (typically an oil and gas company) to explore and produce oil from the subsurface for a period of time.  Most oil and gas leases in Kansas range from five to ten years unless production or exploration is active.  If production or exploration is active, an oil and gas lease continues until such time as it is inactive for the term of the lease.  Interestingly, the vast majority of real estate subject to an oil and gas lease is never explored.  Companies purchase the lease and in the event oil and gas is found in the area, they can continue the exploration and production.

A title insurance company will list the oil and gas lease on a commitment to make the buyer aware of the fact that a lease exists on the real estate; that somebody potentially has the right to drill an oil well or place an oil well in your front yard. Quite often though, the lease period has expired and no oil has been produced.  If this is the case, and somebody familiar with the land will swear to this fact, the exception can be removed from the commitment.

Oil and gas rights can be a complicated subject for even the most seasoned buyer, seller, real estate agent or banker. If you have any questions about mineral rights in a transaction, Tallgrass Title has real estate attorneys that specialize in oil and gas law who are happy to discuss these questions with you.  It’s our job!

Understanding Your Policy

Following the closing of your transaction, you will receive a “title insurance policy.” This document looks a lot like the “commitment” you received prior to closing your transaction. As you remember from the previous post, the commitment legally binds the title company to issue a title insurance policy if the requirements of the commitment are met. Now that the transaction is complete, and the requirements of the commitment are met, as a buyer, you will receive an “owners title insurance policy.”
Like the commitment, the first few pages of your title policy will include a policy jacket full of standard information and a privacy policy that is not transaction specific. I have omitted these pages from this post to focus our attention on the information about your real estate. The diagram below points out the highlights of your title policy.
Once you receive a title policy, put it in a safe place. It is what insures the fact that you own your real estate.
Again, here at Tallgrass Title, we love to answer questions about title insurance. Feel free to call or email anytime. That’s what we do!