Tag: title insurance commitment

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!

Judgments That Appear on the Commitment – and what to do about them

Our job as a title insurance provider is to insure the parties are passing clear title to the real estate. We perform an in-depth search of the real estate to prove that. We also perform a judgment search on both sellers and buyers. We check for court cases filed against each party and any liens that have been filed against the real estate. If we find any open matters that need to be resolved, we add requirements to the commitment. Once the required documents are provided to us, we can clear the lien from the real estate.

Child Support

If a divorce has been filed by one (or more) of the parties, there may be a court order for child support or spousal maintenance. The title insurance commitment will list a requirement for proof that the payments are current.

Tax Liens

In some cases, the real estate taxes may be delinquent. When this happens, the delinquent taxes must be paid off during closing. The seller can certainly pay the taxes before closing, but we are usually asked to pay them off out of the seller’s proceeds. We obtain a payoff statement from the county treasurer’s office and add the total payoff amount to the settlement statement. If the seller chooses to pay the back taxes early, we will update the commitment as soon as we receive proof of payment.

Mechanics Liens

Contractors who do certain types of repairs or improvements have a period of time to file a lien. For example, if a homeowner doesn’t pay a bill for their driveway being paved, the buyers could be stuck with paying it. The unpaid contractor has up to a few months to file a lien at the county. This is why we have each seller sign the Affidavit of Debts and Liens. By doing so, they are swearing that there are no other outstanding debts that could attach to the real estate.

Civil Matters

If there has been a civil case filed against one of the parties, we have one of our attorneys review the documents to be sure it will not attach to the real estate. We may require additional documents or a payoff in order to release the suit.

Here at Tallgrass Title we understand that each real estate transaction has unique twists. Feel free to call or email if you have any questions about your transactions. As always, we are here to help!

Title Insurance 101 – Refresher Course

Most of you have probably been in the real estate world long enough to know what title insurance is. However, we thought it would be helpful to provide a “refresher” course to help answer your client’s questions.

Let’s face it, most people closing on real estate don’t read through the details of all of their closing documents. However, there are people who look at the settlement statement and want to know what they are paying for. Also, suppose you have clients who are keeping a close eye on finances. If they want to save some money, they might ask if title insurance is necessary. Here are some pointers to help out your clients, or those professionals who are still new to the real estate world.

“Title Insurance protects property rights.”

This is the simplest definition of title insurance. A title insurance policy insures that the property owner actually has full title to the real estate. When a real estate legal description or address is brought to us, we start an extensive search. Our search follows the “chain of title”, the deeds that show how the real estate changed hands over the years. Any mortgages filed against that real estate must have been properly released. Not only do we look at the records for that tract of real estate, but we also look for judgments against the buyers and sellers. We look for any law suits or claims that could potentially attach to the real estate as liens.

Title Insurance brings peace of mind.

The title commitment is our promise to issue a title insurance policy once the requirements have been met. The title insurance policy is issued after closing, once the deed and mortgage have been filed, and the liens properly released. Once the new property owners receive their policy, they can be assured that they truly own their real estate. If a claim is made by someone challenging their ownership, they have the policy to back them up.

Here at Tallgrass Title we work hard to provide the information and assistance everyone needs for a smooth closing. Feel free to contact one of our agents today to help get your real estate questions answered.

Selling or Purchasing Property with a Trust

When buying or selling real estate involving a trust, many questions can arise. Who signs the documents on behalf of a trust?  What is needed to prove that a particular seller has the authority to sell property?  Are there additional documents that require filing with the County Register of Deeds in order to transfer real estate to and from a trust?  The purpose of this post is to help people involved in a real estate transaction to become more comfortable with these issues.

A trust is simply a contract between the creator of the trust and a person that promises to carry out the wishes of the creator.  The creator of the trust and the trusted person, “trustee”, are often the same person.  I know, it’s weird, but that is the basic arrangement.  So, basically, in a real estate transaction involving a trust, land is deeded to the trustee to hold at the direction of the written contract or “trust agreement.”  Oftentimes, people will state that property is “in a trust” or “held by a trust.”

When deeding property to a trustee, it is important for the buyer to understand how to properly title the deed.  Most often, it will read something like “John Smith, Trustee of the John Smith Revocable Living Trust date 1-1-2018.”  If you are buying real estate to be titled in the name of a trustee, you will need to provide this information to the title company.   If you are uncertain, please contact your attorney that prepared your trust document or provide a copy to the title company.  Often, the document will indicate how real estate is to be titled.

When selling real estate owned by a trust, the trust agreement must specifically give the authority of the trustee to sell or “alienate” real estate.  The title company handling the transaction will require to see this portion of the trust document or have the trustee complete a “certificate of trust” document that states that the trust grants them the authority to sell property.

Lastly, if the original trustee has passed away or resigned as trustee, the role of the trustee passes to a “successor trustee.”  Again, in order to prove that a successor trustee has authority to act on behalf of a trust, the trust agreement or some documentation of the transfer of authority will be required.

As real estate transactions involving trusts may require additional information, it is important to timely provide documentation as required by your title company.  Additionally, here at Tallgrass Title, our closing agents and title examiners are knowledgeable in how to handle transactions involving trusts.  If you have questions, feel free to contact our office.

Construction Loans – Mainly for Lenders

As a Lender, do you have clients who want to build a new house on their lot? Here at Tallgrass Title, we offer a construction hold-open, also known as a construction commitment or policy. We get questions about this product quite often, so we thought we could help clear up some of the confusion surrounding this topic.

How it works:
You, as the lender, contact us, the title company, to request the title work. An email sent to order@tallgrasstitleks.com is sufficient, or you can fill in the online order form on our website. We complete the title search and send the commitment to you. The commitment will contain a specific set of construction language and the date of the first search. Here is an example of what that commitment language might look like:

The title search must be updated every 120 days. This is because title insurance commitments have expiration dates. Here at Tallgrass Title, we keep an eye on the expiration dates and remind you when it is time to request an update. You can just send us a quick email to “officially” request the update. We keep the message in our file for our underwriters to see. Our initial construction loan fee covers the cost of the initial search, plus two update searches.

When construction is complete, the loan can be closed. At that time, the lender can determine if the initial mortgage will stay in place or if a new mortgage will be filed. The cost of the final policy is charged at the final loan closing as soon as the title company has been notified of the final mortgage amount. The lender’s policy is generated and sent to the lender after the final loan closing has happened.

FAQ’s:

• The property owners want to remodel, will a construction loan work?
– At this time, the title construction commitment is only for new construction, not for a remodel of an existing structure. If the house is already standing, the construction commitment is not something we can offer you. It has to be a new structure, or a brand-new wing added on to an existing structure. You may need to consider a 2nd mortgage, HELOC or some other financing product.

• The construction is going over-budget. How does that affect the construction commitment?
– We are very flexible when it comes to the projected loan amount. If the amount needs to be increased, we can certainly do that once you send us the request.

• Our clients haven’t yet purchased the lot they want to build on. Do they have to purchase the lot, then get a construction loan?
– We can work with lenders on the lot purchase and construction hold-open as parts of the same transaction. We can issue the owner’s policy soon after the initial sale closing and issue the lender’s policy later, once the construction is complete.

• The sale transaction closed, when will we get the lender’s policy?
– As mentioned above, we cannot issue the lender’s policy until the final mortgage has closed and has been filed. As soon as construction is complete and the mortgage finalized we can go ahead and issue the lender’s policy.

Here at Tallgrass Title, we work to make the deal go as smoothly as possible. Give us a call today and we will be happy to answer any questions you may have about construction title policies!

Escrowing Insurance Premiums and Taxes

When folks purchase residential real estate and require financing, most likely an “escrow account” will be established during the loan process for the payment of insurance and taxes. This is different than “putting a contract into escrow.”  “Putting a contract into escrow” means that the contract signed by the buyer and seller has been delivered to a title company to begin working towards a transaction.  An “escrow account” established for the payment of insurance and taxes basically means that you will make a monthly mortgage payment to your bank and a portion of that payment will be set aside to pay your homeowners insurance and real estate taxes automatically.  This is done for a couple of reasons.  First and foremost, lending regulations require a bank to establish an escrow account with most residential real estate loans.  Secondly, because the home is the bank’s security for the repayment of the loan, it wants to make sure that its security is protected.  Therefore, the bank wants to make sure the home is insured against loss and they also do not want the home taken away for the failure to pay the real estate taxes.

During the loan process, you will be informed of how much the monthly insurance and taxes escrow will be. Also, because your transaction will most likely not happen on the 31st of December, some proration of taxes will be required.  Proration means that the seller will be responsible for the taxes while he/she owns the home and you will pay the taxes when you own the home.  However, taxes are only payable at the end of the year.  Therefore, the seller gives a portion of the taxes to the buyer and the buyer pays all the taxes at the end of the year.

Also, the bank will collect additional funds to be placed into the escrow funds at the time of closing your loan. Those beginning funds will be added with the monthly payments to pay the insurance and taxes when they come due.  The bank handling the escrow account will receive the yearly bill for insurance and taxes and pay them when each comes due.  You will still receive a statement from the County Treasurer and your insurance provider, but this is simply for your information.  Additionally, you are always welcome to choose or change your homeowner’s coverage and insurance company.

Upon selling your house, you may have funds left in the escrow account that will not be needed to pay any future insurance or taxes. These funds will be returned to you following the sale of your real estate.  It is important to work with the escrow service to make sure they are mailed to your new address.  Questions about escrow accounts, homeowner’s insurance coverage and real estate taxes during the loan process are quite common and can seem complicated.  If you have questions, speak with your banker or our closing agents here at Tallgrass Title.  We are happy to explain the process.  It’s our job!

Inspections in a Residential Home Purchase

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.

Water, Water and Water (Part I – Drinking Water)

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.

Tallgrass Title Going Paperless

With the continuous technology development going on right now, advisors in the title industry have been encouraging title companies to go paperless. Going paperless is not a new idea for us. We have been talking and planning for this for some time. We have already started uploading certain search and closing documents for new files. When someone sends or gives us a document, we scan it and publish it as soon as possible. However, we intend to officially go paperless in the next couple of weeks.

What This Means for You:

Our search documents will be uploaded to Paperless Closer. This is the program we use to securely store documents with a portal that you can access. Access the portal through our website using the “Client Login” button at the top of the page. We already upload the contract, receipts, closing statements, and invoices during the closing process, but you will be able to view even more information. You will be able to see the deeds, restrictive covenants, plats, etc. that we researched during the search process. This should make it easier, especially for realtors, to see which documents have already been given to us, as well as help you collect the documents you need to keep for your records.

A tip for cutting down on paper: we only need originals of notarized documents back in our office for closing. In the deed packet, a seller may sign all of the non-notarized documents electronically. Just be sure to send us a copy od the completed documents and we will add them to paperless closer. As a reminder, please do not send documents with personal information through email without making sure it is protected. Scammers and hackers are becoming more and more common, and none of us want to see our clients’ identities stolen!

If you (or an auditor) are going through your files and notice a missing document, look for it on paperless closer. For older files, if you don’t see it, just send us an email or quick call and we can publish it immediately. You won’t have long to wait since it is a very quick and easy process for us to pull something from our electronic archives.

Not familiar with Paperless Closer?

For those who are not as familiar with Paperless Closer, just let us know and we can get you some training. It only takes minutes to create a new account if you don’t have one. And, it is a simple, user-friendly program that won’t take up much of your time.

As always, please call or email if you have any questions or need any assistance with Paperless Closer. We are happy to answer any questions you may have!