Tag: Deed

How Does Title Insurance Work?

Here at Tallgrass Title, we have discussed many topics about the nuts and bolts of real estate transactions: closings, probates, commitments, policies, etc.  But what is title insurance and how does it actually work?

Title insurance is essentially insurance that either insures that you actually own a tract of real estate and/or that a bank’s mortgage is valid and filed of record.  Title insurance, like other types of insurance, is governed by the individual state.  Insurance in Kansas is established and governed by state statutes that establish the types of insurance allowed to be sold in the state and various regulations governing the sale.  The major types are life, health, hazard, liability, property and title.  Further, Kansas Statutes establish the Kansas Insurance Department and Commissioner of Insurance. The Kansas Commissioner of Insurance is tasked with enforcing Kansas Statutes relating to insurance, licensing and regulating the sale of insurance.

When purchasing an insurance policy, an individual or entity enters into a contract with the insurance company.  The contract establishes the amount of coverage sold, the terms of the policy, exceptions to coverage and what constitutes a claim.  Kansas state law also establishes how fees are established and charged, how the money is accumulated, and who is entitled to the proceeds.  This ensures that when a claim (loss) happens, that the insurance company has retained sufficient funds to pay potential claims.  Otherwise, an unscrupulous company could sell policies and spend the premiums paid and then be without sufficient funds to pay a claim.  For example, if a consumer purchases a title policy insuring the person as an owner of the real estate with a policy amount of $100,000 and it is later shown that the property is actually owned by another party, a title insurance company is bound to pay up to the amount of $100,000 loss.  Now, there are a multitude of corrective measures and potential outcomes of any claim.  The bottom line is that a title insurance company is bound to hold a certain amount per $1000 of insurance sold for potential claims.

Kansas insurance statutes also require that reinsurance be purchased when a particular title insurance company’s “reserve” or “pool” is not large enough to cover the size of policy sold by the company.  This is done by purchasing reinsurance from another title company or other insurance company.  This protects the customer from an insurance company failing to have the reserves to cover certain sized policies.

In Kansas, most title insurance is sold through independent agents (including Tallgrass Title!).  An independent agent sells title insurance on behalf of a title insurance company, otherwise known as an underwriter.  An underwriter and independent agent enter into an agreement allowing the independent agent to sell its title policies with a certain division of the premiums.  Here at Tallgrass Title, we currently write title policies for three underwriters.  In our experience, each offers a unique product and the variety of options available allows us to better serve our customers.

In the end, title insurance is simply another form of coverage that specifically protects property rights.  Here at Tallgrass Title, we are proud to serve our customers in this regard.  This includes explaining any aspect of your real estate transaction or title policy.  If you have a question, feel free to ask one of our real estate professionals.  We love to talk title!

Different Types of Deeds and Interest

Quite frequently we are asked what deed is appropriate to transfer real estate in particular situations. The truth is there is not one deed for all transactions. There are different scenarios that require different verbiage to complete the transfer of real estate. Below is a brief explanation of what the different deed and interest types are and when they would be used in a real estate transaction.

Deeds

General Warranty Deed – A General Warranty Deed transfers real estate from one party to another.  Most importantly, the grantor is “warranting” that they own the real estate and guaranteeing that the grantee is receiving title to the real estate. It is the most commonly used deed and affords a grantee the grantor’s warranty of ownership..

Trustee’s Deed – A Trustee of a Trust in accordance with the Trust Agreement would sign a Trustee’s Deed to transfer real estate.  Again, most often Trustee’s deeds will appear as a warranty deed.

Administrator’s Deed – If the title holder passes away intestate (without a will) and the real estate is part of a court action, the Administrator may sign an Administrator’s Deed with permission from the court to transfer real estate.

Executor’s Deed – If the title holder passes away testate (with a will) and the real estate is part of a court action, the Executor may sign an Executor’s Deed to act in accordance with the Will of the decedent to transfer real estate.

Sheriff’s Deed – If the real estate being transferred was sold at a sheriff’s sale as part of a foreclosure or other civil procedure, a Sheriff will give a purchaser a Sheriff’s deed.  Such a deed will contain the specifics of how the sheriff gained the authority to make such a deed. 

Quitclaim Deed – A Quitclaim Deed is used when a party may have an interest that needs to be transferred to another party. The Grantor of the Quitclaim Deed is not Warranting that they have an interest, instead they are relinquishing any interest they may have.

Interest

Joint Tenancy with Right of Survivorship – When two parties own real estate together, if one were to pass away all their interest would transfer to the other party by filing a Death Certificate, Affidavit of Death, or filing the Will with the court.  Real Estate held between spouses is generally held as Joint Tenacy with Right of Survivorship.

Tenants in Common – When two parties own real estate together, if one were to pass away their interest would transfer to their heirs at law or by a will or other estate planning device.  This type of interest is common when two or more parties who are not married to each other own real estate together.

Life Estate – This is when a party retains an interest in the real estate for the duration of their life. They have the all the rights of use they would if they held title but only for the duration of their life. The real estate may be transferred to another party by the party holding the life estate but the tenancy terminates upon death of the original life estate holder.

Our team is knowledgeable and passionate about title insurance related inquiries. If you still have questions or would like more information, please do not hesitate to give us a call. We are here to help.

What the Heck is a “Notary” Anyway and Why Do Certain Documents Need One?

A “Notary Public” or simply “Notary” for short, is a public officer that has received legal authority to perform certain functions intended to prevent fraud and forgery.  Each state has its own set of laws that govern the duties of notaries.  Notaries in Kansas perform five basic functions:

  1. Take acknowledgments
  2. Administer oaths and affirmations
  3. Take a verification upon oath or affirmation
  4. Witness or attest a signature
  5. Certify or attest a copy

With real estate transactions, you will most likely encounter a notary for the purposes of witnessing a signature and administering an oath.  In witnessing the signing of a document, the notary will verify that you are the person you claim to be, watch you sign a document and then stamp the document with their notarial seal.  When administering an oath, the notary will have you raise a hand and swear that the information contained in the document is true and correct. Most people will encounter this scenario in their lives.

But what is the notary actually doing and why do you need them to perform these functions?

With a non-notarized signature, another individual viewing a signed document must identify, prove, or trust that the signature was actually made by the person purporting to sign.  If you consider that a deed in a real estate transaction can pass real estate worth hundreds of thousands or even millions of dollars, it is easy to see that the area could be rife with fraud.  A Kansas Notary, as stated above, is a public officer that has been vetted by the Kansas Secretary of State and deemed trustworthy to perform the duties of a notary.  A notary also must provide a “bond” insuring their duties as a notary.

In witnessing a person sign a document, the notary is creating a presumption that a person is the individual that signed the document.  In the law, a presumption means that the burden of proving a fact has shifted to the other side.  Therefore, when a signature is notarized, it is presumed, or more likely than not, that the signature is authentic.  A person challenging the authenticity of a notarized document has the burden of presenting evidence that is persuasive enough to overcome the presumption in proving that a person did not sign a document.

Additionally, in Kansas, all documents that are filed with a county’s Register of Deeds must  be notarized as required by law.  So, for most real estate transactions, this includes a deed and mortgage.  These are also the documents that are responsible for the conveyance of the interest in real estate, making it easy to understand why such a requirement exists.

In real estate transactions, affidavits (sworn statements of fact) are the most common sworn statements encountered.  Usually, these come in the form of affidavits of death, affidavits of equitable interest, or affidavits of debts and liens.  Most of the time, they are used to clarify or clear a title concern and are required by a lender or title company as part of a transaction.

As one can see, Notary Publics serve a very important role of preventing fraud and forgery in every real estate transaction. At Tallgrass Title, every one of our team members is a Notary Public and understands the importance of that role and duty that it carries. Should this post present questions regarding the role of a notary in a real estate transaction, feel free to contact our office.  We are happy to assist!

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!