When most consumers purchase a home, they obtain conventional financing for the purchase. This often takes the form of a 30-year, fixed rate loan. In order to secure the loan made to you, the bank files a mortgage with the register of deeds. This document tells the world that the bank has a first-place lien against the house and if any other creditors file a lien, that lien will be inferior to the first-place loan. Now, let’s say that the same homeowner would like to make improvements to their home, add a pool or build a garage and would like to borrow additional money to do so. The homeowner may also want to borrow funds for reasons unrelated to the home such as consolidation of credit card debt, assisting a child with college tuition or a business venture.
So, rather than to refinance the entire home loan and file a new mortgage, etc, to account for the increase in the loan, a bank will often file a second mortgage. This can also take the form of a home equity line of credit type mortgage (HELOC) which is also usually a second mortgage as well. The difference is typically the bank will automatically release a second mortgage upon payoff. With a HELOC, the bank will keep the mortgage filed and the note open to allow a consumer to re-advance funds as needed. Only upon request of the homeowner will the bank release the mortgage upon payoff. This saves the costs and expense of making a new loan every time a homeowner wants to borrow funds.
HELOC’s and second mortgages can be obtained with the bank that made the first purchase loan or with a different institution as selected by the homeowner. The bank handling the loan will usually order title insurance to insure that the mortgage is secured against all liens, besides the first place mortgage. If a consumer with a second place mortgage or HELOC later decides to sell the real estate, the title company simply pays off the second mortgage the same as it pays the first at closing. The only additional step is to request additional payoff information. Of course, there are many different types of second mortgages and HELOC’s. it is a good idea to discuss options with a finance professional.
Here at Tallgrass Title, we deal with second mortgages and HELOCs on a daily basis. Should you have any questions during your purchase, sale or refinance, feel free to contact our title professionals. We are here to help, its our job!
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:
- Transfer on Death Deed or Joint Tenancy Deed
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!
In the current, fast-paced world, people often times find it difficult to be present at a closing. Perhaps a work or vacation schedule prevents a person from being present at a real estate transaction. Military personnel are often times deployed overseas. Often times folks are forced to relocate quickly and must sell their house from afar. For these and many other reasons, a power of attorney may be the right tool for a closing.
Simply put, a power of attorney is a document that gives a person the authority to do certain acts on your behalf. This person is often referred to as the “power of attorney” or “agent.” In a real estate transaction, this is commonly done with a “limited power of attorney.” This allows the designated person the limited authority to sell or purchase real estate on behalf of a person. The power of attorney document is signed by the person giving the authority prior to the real estate closing. The designated individual provides the document to the title insurance or closing agent. At the closing, the power of attorney simply signs for the absent person.
However, it is important to remember a couple of points to avoid delays or confusion at the closing:
- Plan on having the power of attorney prepared well before closing. Often times the individual signing the document will be overseas. This will require finding a notary or equivalent at a consulate’s office. If in the United States, but simply unavailable, a notary will need to sign the initial power of attorney. Also, an original power of attorney will be needed for the closing.
- Let your real estate agent, title insurance agent, closing agent or banker know as soon as possible that you are using a power of attorney to close. It is extremely important that these individuals know about the presence of the power of attorney in order to prepare the closing correctly. Failure to let these individuals know of that fact could delay closing.
- If the power of attorney is being used to sell a principal residence or “homestead,” Kansas law dictates that specific language be added to the power of attorney. If the language is not present, the power of attorney may lack the proper authority to complete the closing.
- Have a real estate professional assist you with the form. The power of attorney document and its requirements can often appear daunting and confusing. A real estate professional can assure that the document is completed correctly and prevent a delay in closing.
- Decide who will be your power of attorney. Often times this is a stateside spouse, real estate agent or family member. It is important that this person be trustworthy. After all, the family home is most Americans’ largest investment. You do not want just anybody handling this transaction for you.
Tallgrass Title is also happy to assist in the preparation of the power of attorney to ease the closing process. Our office has seasoned real estate attorneys on staff that have prepared countless power of attorney documents for every type of real estate transaction. Additionally, our attorneys are available to answer questions regarding the power of attorney. With a little pre-planning, a seemingly daunting and confusing situation can be made easy.