Tag: title insurance commitment

Closings with Karissa: Why Title Insurance?

I routinely hear the question: Is Title Insurance worth it?. My answer, is yes, it is quite important. You wouldn’t buy a house without homeowners’ insurance or buy a car without car insurance. I’m sure you have Health and Life insurance. If you are protected in other aspects of life, why would you not protect the title to your home as well?  and does not have liens attached? The best part is that title insurance is a one-time fee that is paid at closing and you never have to worry about it again. As long as you own the property it is protected. So it would be crazy not to do it!

Who thought up Title Insurance… and why?

Title Insurance used to be done by opinions given by Conveyancers prior to 1876 when Joshua Morris founded Real Estate Title Insurance Company of Philadelphia.  The purpose was to have land conveyances financially guaranteed instead of the old system of relying on opinion-based reporting without financial backing.  Now, instead of “trust me” the industry offered “if we are wrong, I will pay you.” Other companies in Chicago, Los Angeles, Minneapolis and New York followed shortly after and ALTA was created to assist in standardizing and unifying the Title Insurance industry.

What is ALTA?

In 1907 the American Land Title Association (ALTA) formed as the primary association of the Title Insurance industry. The association set the precedence for title insurance, they did not standardize title insurance policies nationally until 1929.

What can Title Insurance protect against?

Title insurance protects against hidden issues, liens and encumbrances that can be costly to the new homeowner. The following are examples of potential issues:

  • Lack of Access
  • Unpaid Mortgage
  • Seller claims to have ownership, but do they really?
  • Neighbors have an easement through the property
  • Previous owners deceased family member is buried on the property
  • Legal Judgment for previous owner that attached to the property

No one is exempt from uncleared title issues. Even Abraham Lincoln’s father lost his home to title defects when Abe was a little boy…Twice.

So, why title insurance?

No one wants to live with the fear of losing their home due to a claim by someone else or from a lien that could put their home in foreclosure. Especially if they the option to have an insurance policy that says they own their home and no one else has a claim to it. Title Insurance, while not required, is still very important.

Title Insurance can sometimes be overwhelming and appear confusing.  However, the Tallgrass Title team is here to assist with your title insurance questions, just give us a call!

 

Commitment Issues, Vol. 1 – Title Commitment 101

No, no. This is not about problems with Commitments, or even about Buyers shopping for a home for over a year and still not happy with anything. This is a series about the Title Commitments that we issue and how to make sure you understand what you are reading. We want to go in-depth and help break down just what purpose the Commitment serves as well as its different components. The end goal is for you to be able to receive the Commitment and know exactly what the general items and terms are and how to navigate them.

The Nature and Purpose of the Commitment

The Title Commitment is a report prepared by the title company containing specific information about the property to be purchased or that is currently owned. It also legally binds the title company to issue a Title Policy – it’s a commitment. The Title Commitment, issued prior to closing, is the stepping-stone to issuing the final Title Policy, which is issued after closing. The Commitment is not the Policy, and the Policy is not the Commitment, although there will be similar information given and shared between the two.

Your Commitment will contain four parts: the Commitment Jacket, Schedule A, Schedule B I – Requirements and Schedule B II – Exceptions. Let’s parse out each of these components and give a brief run-down of what each one is.

The Commitment Jacket

The Commitment Jacket is general, non-specific coverage that is issued from an insurance underwriter (the Insurance Company) to the title company (the Insurance Agent.) This will be included with each Commitment that we issue.

Schedule A

A “schedule” in its basic meaning is simply a written form or statement of details. Regarding Title Insurance, the schedules give specific information about the property and transaction. Schedule A gives a general description of property concerning its property address, legal description, how title is currently vested, and what types of policies are going to be issued after the closing takes place.

Schedule B – Requirements

Schedule B of the Title Commitment is broken up into two separate sections: Requirements and Exceptions. The first section (Requirements) details specifically what is needed to pass clear title and issue a final Title Policy. If a purchase transaction, you will typically see some form of deed, mortgage, mortgage release, and an affidavit. If refinancing, the only difference will be no deed to convey ownership. There may be some additional items in the Requirements that will need to be addressed, depending on what is found and listed in the Exceptions.

Schedule B II – Exceptions

The Exceptions contain all things pertaining to and running with the specific piece of real estate as mentioned in Schedule A. The Buyer/Owner has free and clear title to the ownership and use of the said real estate, with the exception that their rights to use the property are subject to all those items contained therein.

Stay tuned for the next blog in the series, as we will dive further into discussion about each of the components that make up the Commitment. And even if things are still somewhat confusing afterwards, feel free to reach out and give us a call! It’s what we’re here for!

Closings with Karissa: Contract Best Practices

The heart of any real estate transaction is the contract. It is the meat and potatoes.  Everything that the realtors, lenders and title company need to know to close a deal is in the contract and any amendments or addendums that follow.

Therefore, it is important to have everything that the parties desire within the transaction clearly outlined in the contract . This might include a seller credit or home warranty, Or if certain appliances are to stay or go with the seller. All these things must be included in the contract to set a standard of expectation. It also prevents incidences of: “Well that was my washer and dryer” and the seller running off with appliances the buyer is expecting. Or even worse: “That other lot was supposed to be included.” If it wasn’t on the contract, it won’t get conveyed.

 

Here are some helpful tips to make sure there are little to no issues when writing your real estate contract:

Identify the Real Estate

Know what you are selling. Even if all you have is an aerial from Google Maps with a hand drawn outline of what is intended to be sold and an address. Send that to your title company and ask for a preliminary report. In their search process, they will the correct legal description to include on your contract, preventing issues later with lots or tracts being omitted or included by mistake.

Identify the Parties

A preliminary report will include how the real estate is currently vested. So, if John and Jane Smith want to sell their house, the preliminary report will note that the property is actually owned by John A. Smith and Janice Smith (their legal names) or Jane Smith’s Trust.

The Buyer in the transaction will direct how they want to take title to the real estate on the contract.  The buyer might prefer to take title with first, middle and last names or just first and last.  Or they may request to take title via a trust or a company.  This should all be included on the initial contract or a follow up Addendum.

Set a Purchase Price and Terms

Agree on a purchase price. Once the purchase price is decided, set the terms. Who will pay closing costs to the title company, title insurance and any? Will there be a Home Warranty and who will pay that and how much? Is the Seller willing to offer a seller credit to help with the buyers closing costs? What stays and what doesn’t stay with the property? Never assume that appliances stay, even if it seems logical.

Pick a date to close

Closing dates can be very flexible and easily changed with addendums so long as all parties agree to it. Often contracts will state “on or before” and that just means that at any time before the stated close date in the contract the transaction can be closed if all parties agree. In the current market, unless it is a cash deal, give yourself, your client, and lender time and set closing out 30 to 45 days. Best practice is to avoid closing on the very first or last day of the month as these are the busiest days for closings, and it may be difficult to get the time you want unless you schedule early.

Ask questions

If something doesn’t seem right to you, ask questions! For Buyers purchasing or sellers selling a home this is a huge change and can be very tense. We understand the stress of each transaction and are here to help and answer any questions. Even if they seem trivial, we are happy to assist and walk you through the process, it’s our job!

 

 

 

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!

Tips and Tricks for Submitting a New Order

How do I submit a new order and what info do I need?

Here at Tallgrass Title we are always happy to get new orders started for you and hope to make it as easy as possible.  To do this, we offer three simple ways to submit new orders or ask questions. Whether it be a contract, refinance, informational report, or preliminary title, any of these methods should cover you!

Email or Fax

A simple way to contact us is through email. A quick email to [email protected] is all it takes to get us started.  Whether it’s an order, a simple question, or preliminary title you are just getting started, we can get things going for you with minimal information. All it takes is a quick email.

We can also receive new orders through fax at (785)456–8581. Just send over your contract or title order form and we will get a file started for you!

Our Website

We can also receive new orders through our website: tallgrasstitleks.com! All it takes is to go to the website and follow the link on the main page to Submit Order or follow the Services drop down and click on “Get Started”.

This will lead you to an online fillable order form. Just fill this in, to the best of your ability, and hit submit at the bottom. The fields marked with an * will help guide you through required information.

We will receive your order like this and get a file started for you.

Just remember to include your name and contact information so we can contact you with any questions!

PaperlessCloser

Another way to submit a new order to us is through PaperlessCloser. Access to this program can be found on the main page of our website or through the Client Login drop down. This will direct you to the log on for PaperlessCloser. Once logged in there will be a button for New Order in the bottom right corner.

Fill in the fields with your information and hit Add Order. This will send your order directly to our system so we can get it started for you.

We can get pretty much anything started with an address or current owner so don’t let the details slow you down; feel free to submit what you have, and we will help you with the rest.  However, if you can provide information regarding the buyer or sellers marital status, that will help us immensely in the initial stages! For more information on placing orders or all things title insurance, feel free to give us a call or send an email! We are so happy to help.

MHK Office

 

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!

 

 

The Secret is Out!

Please save the date! Tallgrass Title is opening a new office in Manhattan, and we’re hosting a bash at the Hartford Building on April 18 from 5 to 7 p.m. that we’d like for you to attend.

At Tallgrass Title we know how to throw a great party, so expect more than a typical grand opening. We are excited to meet you and learn more about your needs as a real estate professional.

We’ve heard from many of our customers they’d like for us to open an office in Manhattan, and as your newest neighbors, we want to hear how we can best serve you. In the coming days, look for updates and an invite containing details regarding food, cocktails and music.

The event will be held at our new office located in the Hartford Building located at 210 N. 4th.

We cannot wait to see you there!

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!

Easement Basics

Easements to real estate are simply an interest in some other person’s land for the limited purpose identified in the easement. In plain language, it is the right of another person to use your land for some limited purpose.  Easements can be exclusive; meaning that the use is restricted to a certain person or persons.  Easements can also be limited to a certain amount of time or can be perpetual and “run with the land.” As there are countless different variations of easements, it is impossible to explain all the law surrounding easements.  The purpose of this post is to point out two of the most common types of easements and give a brief overview of common issues.

Some of the most common forms of easements are travel easements and utility easements. A travel easement is the right for another individual to cross real estate not owned by them.  Usually this is for the purpose of accessing their own real estate.  Commonly, a travel easement (otherwise known as “ingress-egress” easement) is granted to a homeowner who owns real estate that is only accessible by crossing another person’s land.  With agricultural real estate, a travel easement is typically given to a farmer so that they may access their field or pasture as there is no direct access from a road.  Most of these types of travel easements are perpetual or “run with the land.”  This means that if the owner of the easement sells their real estate that is accessed by the easement, the new owner will have the right to continue to use the easement.  When representing buyers of real estate, if there is not apparent direct access from a government roadway, it is wise to inquire as to whether there is a travel easement and whether it transfers to your buyers.  Nobody wants to purchase real estate only to find out they cannot access it!

The other major type of easement is a utility easement. Based upon reading the first portion of this post, it should come as no surprise that a utility easement is simply the right to cross another person’s real estate with utilities.  These types of easements range from a small water line running to a house all the way to high voltage transmission lines.  The most important thing to take into consideration with utility easements is whether the easement will affect the planned use of a potential buyer.  Utility easements commonly do not allow a person to build any structure over or under an easement.  For example, if a Buyer had plans to build a garage, the location of an easement could affect these plans.

An easy way to determine whether there are easements on real estate being purchased or sold is to review the title commitment. This report should list all easements that are affecting the real estate being transferred.  The easements will be listed under the “exceptions” section or following the legal description.  Often the commitment will only list the existence of the easement and not specify the details.  At Tallgrass Title, we happily supply the underlying document listed in our commitments upon request.  That’s our job!

Probate Information for the Real Estate Agent

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:

  1. Transfer on Death Deed or Joint Tenancy Deed
  2. Trust
  3. Will

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!