Tag: title insurance commitment

Importance of a Real Estate Agent in a Transaction

How do I negotiate a contract? What does “in escrow” mean? What is an appropriate “counter-offer?”  How much will my proceeds be from the sale of my house?  What the heck is title insurance and who sells it?  Which title insurance/closing company should we use?

An American’s home is his or her largest investment. The majority of us do not regularly purchase and sell real estate.  For this reason, the purchase or the sale of your house can be incredibly stressful.  Real estate agents or Realtors are real estate professionals that navigate through these tough questions daily.  Real estate agents are not just salespeople.  In fact, I would say that the majority of a real estate agent’s experience is in assisting a buyer or seller understand the transaction.  An agent will help you write a contract for purchase of real estate, advise on technical terms, and assist in making offers and counter-offers.  Additionally, an agent may help in coordinating financing for the purchase of real estate.  One must remember that a real estate agent has studied the profession and is licensed and works in the profession.  An average homeowner in the United States will usually own less than five homes in his or her lifetime.  This will most likely result in many years passing between sales and purchases.  It can be difficult to remember the details of a smooth transaction in these gaps.  Additionally, Americans are becoming more mobile across state lines and internationally.  A homeowner may understand how a real estate transaction takes place in Louisiana, but a Kansas transaction will have its own unique issues.
In addition to assisting homeowners in the art of negotiating and closing real estate transactions, real estate agents understand the market.  Understanding what the market will bear is invaluable in a real estate sale or purchase.  Real estate agents work in the field, they assist in sales constantly, and they know what property is worth.  As a Seller, you will be tasked with setting a list price for your home or real estate.  Your agent will know strategy for setting a listing price.  Additionally, as a Buyer, you will at some point make an offer on a house.  An agent will advise whether the price you would like to offer is appropriate or likely to result in a purchase.
Lastly, as title insurance professionals, we work with real estate agents on a daily basis.  They are incredibly valuable in the transaction process.  Real estate agents assist in securing signatures on various documents, coordinating closings and financing for their clients, and directing the disbursement of funds for various costs.   For these reasons, Tallgrass Title is a proud affiliate member of the Manhattan Association of Realtors which covers Riley, Pottawatomie, Wabaunsee, Marshall, Clay and Washington Counties.  Here at Tallgrass Title, we believe in the importance of real estate agents and encourage all buyers and sellers to work with a real estate agent in their transactions.

Is the Mobile Home Part of the Real Estate?

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!

Basics of Oil and Gas Leases in Kansas

You have just received a commitment for title insurance and an exception appears:

“Oil and gas lease filed for record at book 300, page 242, on August 2, 1996.”

What is this? Why is it here? Do I need to do something about it? Are the “mineral rights intact?” “Will there be an oil well pump jack in my front yard?” The purpose of this post is to arm you with the basic knowledge to answer these questions and to take the confusion out of your transaction.

Oil and gas rights, also known as “mineral interests” are the right to the oil and gas potentially existing under the surface of real estate. A deed from one person to another automatically passes both the surface rights and the oil and gas rights to the new owners unless the deed specifically states otherwise.   If the oil and gas rights have been “severed” or are not “intact,” your commitment will clearly state this fact in the legal description and/or in the exceptions.  Simply put, one person can own the oil and gas rights below the surface and another can own the surface rights.  Both may be passed to different buyers by deed to the surface and deed to the mineral rights. Typically, in Kansas, surface rights and oil and gas rights are not severed.  Most commonly, oil and gas rights are “leased.”

An oil and gas lease is like a surface lease in that the owner gives the right to use real estate for a period of time in exchange for payment. Therefore, the owner is giving the right to another person (typically an oil and gas company) to explore and produce oil from the subsurface for a period of time.  Most oil and gas leases in Kansas range from five to ten years unless production or exploration is active.  If production or exploration is active, an oil and gas lease continues until such time as it is inactive for the term of the lease.  Interestingly, the vast majority of real estate subject to an oil and gas lease is never explored.  Companies purchase the lease and in the event oil and gas is found in the area, they can continue the exploration and production.

A title insurance company will list the oil and gas lease on a commitment to make the buyer aware of the fact that a lease exists on the real estate; that somebody potentially has the right to drill an oil well or place an oil well in your front yard. Quite often though, the lease period has expired and no oil has been produced.  If this is the case, and somebody familiar with the land will swear to this fact, the exception can be removed from the commitment.

Oil and gas rights can be a complicated subject for even the most seasoned buyer, seller, real estate agent or banker. If you have any questions about mineral rights in a transaction, Tallgrass Title has real estate attorneys that specialize in oil and gas law who are happy to discuss these questions with you.  It’s our job!

Understanding Your Policy

Following the closing of your transaction, you will receive a “title insurance policy.” This document looks a lot like the “commitment” you received prior to closing your transaction. As you remember from the previous post, the commitment legally binds the title company to issue a title insurance policy if the requirements of the commitment are met. Now that the transaction is complete, and the requirements of the commitment are met, as a buyer, you will receive an “owners title insurance policy.”
Like the commitment, the first few pages of your title policy will include a policy jacket full of standard information and a privacy policy that is not transaction specific. I have omitted these pages from this post to focus our attention on the information about your real estate. The diagram below points out the highlights of your title policy.
Once you receive a title policy, put it in a safe place. It is what insures the fact that you own your real estate.
Again, here at Tallgrass Title, we love to answer questions about title insurance. Feel free to call or email anytime. That’s what we do!

 

Reading Your Title Insurance Commitment

A commitment for title insurance is a report your title company prepares containing information about your current or prospective real estate. If the requirements of the commitment are met, we are bound by law to issue you a “title insurance policy.” The policy is ultimately what insures your ownership in the real estate. However, the commitment is the document you will receive prior to closing. After entering into a contract, you will receive a commitment from your title company. This is your opportunity to understand whether there are any defects in the title or whether there are certain liens or easements that will prevent you from purchasing the real estate.

The first few pages of your title commitment will include a commitment jacket full of standard information and a privacy policy that is not transaction specific. I have omitted these pages from this post to focus our attention on the information about your real estate. The below diagram points out the highlights of your commitment.

Even with this diagram, understanding a title commitment can be confusing. If at any time you have questions regarding your title commitment or any phase of the transaction, please feel free to contact our office. We are here to help and answer any questions you have. That’s our job!

Real Estate Tax Proration in Real Estate Closings

A common question that arises during the closing process is how a real estate tax proration works in Kansas. Every county in Kansas, including Pottawatomie, Wabaunsee and Riley Counties, has a tax levied against real estate.  It is based upon the value of the property owned by an individual.  There are also different tax rates for residential, commercial and agricultural real estate.  Taxes are due for each year a person owns real estate and are charged against the owner of the real estate at the time the tax becomes due.  In Kansas, real estate taxes are not due until the month of December of the year of the accrued tax.  Additionally, the actual amount of tax is also not known until shortly before the tax is owed. So, basically, that year’s taxes are always paid at the end of the year in December.  To add further confusion, an owner of real estate may pay all the tax owed for that year in December or can pay one-half of the tax in December and pay the second half in May of the next year.

So, if you close a real estate transaction on any day besides January 1, the Seller will have occupied the real estate for a portion of the tax year and the Buyer will occupy for a portion of the tax year.  Therefore, to be fair, the Seller pays for the portion of the taxes that accrued while he occupied the real estate and the Buyer for his portion.  However, the actual tax amount is not known until around December, right?  If a transaction closes in July, how do we charge each side its amount?  As real estate taxes are based on value and value typically does not fluctuate wildly year to year, we estimate the amount of the taxes for that year based upon the previous year’s real estate taxes owed.  If your closing takes place when taxes are known, we will use the actual real estate tax figures from the county for that year.

Lastly, real estate taxes for that year cannot be paid until they come due in December.  Therefore, the Seller pays the Buyer the Seller’s portion of the taxes at the closing table.  The Buyer is then responsible for all of the taxes when they come due.  To simplify the process even further, we usually just show this as a credit at the closing table.  Meaning, we reduce the purchase price to be paid to the Seller by the Buyer by the amount of the real estate taxes that are the responsibility of the Seller.

Real estate taxes in Kansas can be quite confusing.  Therefore, if you have additional questions about real estate taxes in your closing, simply call our office for further assistance.  That’s why we are here!