As most of you know, we recently opened an office in MHK. We had the opportunity to talk a little about our new adventure! Check out the video below!
As most of you know, we recently opened an office in MHK. We had the opportunity to talk a little about our new adventure! Check out the video below!
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!
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.
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.
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.
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.
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?
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:
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!
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:
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.
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).
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.
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.
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.
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!