Tag: title insurance policy

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!

 

Closings with Karissa: Security & Real Estate Transactions

Real estate fraud is alive and well as fraudsters find new ways to cheat people out of their money. Whether it be through fraudulent emails or posing as a realtor and calling clients to get them to send money. Title companies, banks and realtors strive to protect buyers’ and sellers’ money as if it was their own money. It is our job to protect our clients and ensure a smooth closing process for everyone. We were asked recently what we do to protect our clients’ sensitive information and protect their assets.  We take this very seriously and want to share a few ways we do this.

ID Verification

When Sellers come to our office to sign documents to sell real estate, we check photo identification. We ensure the party “selling” is in fact the party in title and not a fraudster claiming real estate as their own.

Remote Online Notarization (RON)

Believe it or not, signing documents through a RON environment is more secure than signing in person. Signers must submit their photo ID while on a live audio-visual session, like in person.  But they also answer KBA (Knowledge-based authentication) questions to verify their identity. We simply do not have that kind of capability in person and this adds an extra layer of identity verification.

Secure Wire Instructions

We work with CertifID to send and verify wire instructions. It takes a little extra time to verify your identity and banking information with this process. However, we do this to guarantee funds are getting to where they are supposed to be instead of being sent to a fraudsters personal account.

Earnnest

“You spelled that wrong.”

We hear this a lot, however, I assure you we know how to spell. Earnnest is a payment portal we use to request earnest money from our clients to satisfy the terms of the contract. It works a lot like Cash App or Venmo, is secure, and the Earnest Money goes straight from the buyers bank account to ours. We simply send your buyer a link to our custom payment portal and they complete payment.  This reduces the need to navigate wire instructions and the possibility for human error. There is also a cost savings over cost of sending a wire, in most cases.

E-Signature Platforms

Our office utilizes Dotloop and HelloSign to get documents to clients securely. We can send view only documents or we can send documents with a request for information and signatures. This eliminates the requirement for password protecting a PDF in email and still applies the security necessary to protect sensitive information.

Password Protected

If our office does send out sensitive information via email, we will always password protect it to secure information that is not public knowledge, such as settlement statements. At any time, a fraudster could be hanging out in your email and open attachments that are not secured to see what the proceeds would be for a transaction, then reach out to you with bad wire instructions requesting you send your hard-earned money to then instead of to the title company for your transaction.

Why?

Wire fraud and other forms of cybercrime in the real estate sector resulted in $350 million in losses in 2021, up from $213 million in 2020. While only 12,000 people a year are victims, one in three real estate transactions is a target. This is why we remain vigilant in our own practices and in our efforts to educate our clients.[1]

A staggering 35% of fraud attempts reported in 2021 were traced back to email. If you suspect a fraudulent email was sent to you, do not respond to it, click any links, or open its attachments. Reach out to your realtor, title company, lender, client using known information from a source outside of the email. Stay tuned for a follow-up blog on email security tips!

We are here to answer any questions you may have, protect your information, and help make your closing experience as smooth as possible.

[1] https://blog.alta.org/2022/03/cyber-losses-hit-69b-in-2021.html

Marital Status and Holding Title

When it comes to selling your property, getting that contract signed and sent to your local title company is the first step to a smooth closing. To ensure the process goes as effortlessly as possible, there are few additional things to keep in mind when you put your John Hancock on that very important sheet of paper.

Marital Status

We often see this left off the initial contract, but it is very significant, especially for the seller. The popular maxim- “what’s yours is mine, what’s mine is yours”- is a good way of understanding why indicating marital status is so important. The State of Kansas recognizes that spouses have rights to real estate through what is termed marital interest. Even if you bought a property in your name individually, your spouse has an interest in that property and must participate in the future sale.  Therefore, we require disclosure of both parties’ marital status.  This allows us to ensure any married persons’ spouses are involved in order to pass clear title.

Taking Title

There are two common ways of taking title when buying real estate and it’s crucial that your contract indicates how you intend to hold title.

Joint Tenants with Rights of Survivorship

The most well-known way of taking title is by Joint Tenants with Rights of Survivorship, also known as JTWROS. This means that the two (or more) people buying a property will have full ownership interest upon the death of any others who are on the deed.  There are no restrictions on who can take title in this manner: it could be you and your spouse as a married couple, or it could be you and your three siblings. The surviving title holder(s) automatically receives the interest of the other title holder upon their death.

Tenants in Common

The second common way of holding title is as Tenants in Common.  Whoever receives interest in this manner retains their rights to the property for their heirs or whoever they choose to pass it to. For example, Bob and Joe, identical twin brothers, buy a few hundred acres of land with the intention of starting up a cattle ranch, taking title as Tenants in Common. Rather quickly, Bob discovers he is much better suited for his old Title examiner job in the city and wants out. Joe loves it, however, and refuses. Bob decides to sell his portion of interest anyways. He cannot transfer Joe’s rights, only his own, so whoever he sells to, will only have a 50% interest in that property. The interest in the land is split, and will continue this way, unless one of the interest holders deeds his interest to the other, or both of them to a common third party.

To wrap up

An important conclusion from this is that your marital status does not determine the way in which you take title. Therefore, we require both pieces of information on the contract. In Kansas, if the deed does not specify how title is to be held, it is automatically considered tenants in common.  It is important to clarify the way you desire to take title as married couples generally opt to take title as JTWROS to ensure that their spouse receives their interest in full at one’s passing.  Similarly, if marital status is not stated on the deed, it leaves the door open to issues down the road, such as claims of interest from a past untitled spouse.  Keeping these things in mind will be helpful when you are buying or selling real estate.

If you or your clients have questions about marital status or vesting on a current or upcoming transaction, please give us a call! It’s our job to help.

What’s new at Tallgrass Title in 2022?

We hope that you had a wonderful Christmas season and we wish you good luck in the coming year. The past two years have been incredibly eventful at Tallgrass Title and we are grateful to every buyer, seller, realtor, lender, and vendor we’ve have the opportunity to work with during such unprecedented times. We’ve seen many businesses bloom as the region responds to growth and an everchanging market. It has been so good to do business with you.  We want to make note of a couple of changes you might notice around Tallgrass in the New Year.

RON is coming to Tallgrass

RON Swanson? Weasley? Not quite! Remote Online Notarization.  Kansas passed legislation last spring that allows Kansas Notaries to complete notarizations through remote audio-visual conferences, beginning in January 2022.  With this capability, we will be able to conduct a deed packet signing or close a loan with your client over a video call. We will be able to close your deals anywhere in the state of Kansas!  Look for an announcement about this service in the coming weeks. This is a service we cannot wait to provide!

New Rates & Fees

Tallgrass takes pride in providing top-notch customer service and the best value for title insurance premiums and closing costs. In order to maintain our high level of customer service, we have made a small adjustment to our premiums for the new year.  To compliment our rate adjustment, we have opted to give back to the consumer by including complimentary endorsements in the cost of our loan policy on simultaneous issue packages.  While growth requires adjustments, we believe we will remain the most competitive option for the services we provide in our tri-county service area.

Again, it is a true delight to serve you and your clients.  We look forward to seeing much more of each other in 2022!

Defining Deed Packets

Getting Deed Packets signed early is an essential part of the closing process. It helps your Closer calculate certain fees, pull payoffs if there are any, and makes it possible to verify information for post-closing tasks well in advance

There are quite a few documents in every deed packet and it might be difficult to remember what they all mean if your client asks, so today I will walk through our Deed Packets and what each document is used for.  As always, our team remains available to answer questions that you or your client might have about completing these documents. So don’t hesitate to give us a call!

Fraud Warning Fact Sheet

We use this form to make our clients aware of wire fraud and our partnership with CertifID to ensure that all wire instructions are verified and insured when the funds leave our office via wire transfer. Each statement will need to be read and initialed and then signed at the bottom.

Authorization for Release of Information (Payoff Requests)

This form allows us to request payoffs for existing mortgages in order to clear them at closing. The more information provided, the easier it is for the closing agent to obtain the payoff. Along with the signature line is a place to include the Sellers SSN and the date they signed the release.

1099 Tax Information Sheet

The top portion of this form will need to be filled out completely with the Seller’s Address, Phone number, and SSN or EIN. This will help us send out accurate 1099s the following January.

Proceeds Instruction Sheet

These are instructions for us to disburse the proceeds and how to get them to the Seller in the transaction. Once a selection has been made from the list we will need the form signed and returned with the rest of the packet. These instructions can always be changed by signing a new form with new instructions.

Authorization to Pay Commission

If there is a realtor, this one allows us to get the realtor paid at closing in the accurate commission amount as designated by the Agreement. It will need to be filled out whether there is a commission percentage or flat fee. If there is a Seller Realtor Admin fee, there is a place to include that as well and then it will be signed by both Seller and Listing Agent.

Homeowners Information Sheet

Not all packets will include this form. If the real estate is not located in a subdivision or we know that there are no HOAs in a certain subdivision, we will not include this. If it is in the packet, we will need to know if there are HOAs. If there are not, the “No” box will be checked and you can move to the next form. If there are HOAs then the “Yes” box will be checked; please complete as much of the HOA contact information as possible.

Authorization for Release of Information to Designated Realtor

This form will not change how we treat the transaction. Sellers have the option to direct us not to share their private information with the Buyers Realtor. If the top box is checked, directing us not to share information with anyone other than their realtor or lender, then we cannot and will not share a settlement statement with anyone, even those involved in the transaction, other than their realtor and lender.

NOTE: To prove commissions have been applied appropriately we can send a heavily redacted version of the ALTA settlement statement that only shows commission amounts and the Sellers signatures.

Covid-19 Notice of Possible Delays

This one is a notice that lets everyone know that there could be delays related to Covid-19 with getting documents recorded, back from recording and getting final policies issued.

Notary Instruction, Identification Verification and Notary Information and Certification

When documents are notarized, our office needs proof that the notary checked the identification of the signor and that the notary is in good standing with the state in which they are bonded in. It will also help in the event that we need to contact the notary if we have any questions regarding the notary’s information.

Affidavit as to Debts, Liens and Indemnity

This affidavit is a statement made by the seller that there are no liens or potential liens, or that no one holds an interest in the real estate that we would need to clear up prior to closing. This will need to be signed in front of a notary.

Limited Power of Attorney

We include a Limited Power of Attorney in all of our packets for Sellers to utilize. If signed it allows the realtor to sign settlement statements and any Buyer loan docs on behalf of the Seller. It is not required and is solely at the option of the Seller to sign.

Deed

The Deed varies as much as the transaction itself as to what kind of Deed is used to transfer the real estate. This will need to be signed by everyone who holds an interest in the real estate to complete a free and clear transfer. We hold the deed in our office until the transaction is closed and funds have been disbursed. At that time we record the deed with the county register of deeds to complete the transfer. The original will be sent to the buyer with the final loan policy.

In addition to the above, other documents may appear in a deed packet on a case by case basis.

Affidavit of Non-Production – Used to clear existing expired oil and gas liens.

Affidavit of Child Support or Spousal Maintenance – Used to clear divorce/child support cases.

Certificate of Trust – Used to prove the trustee signing has authority to sign.

Corporate Resolution – Used to prove the signor of a company has authority to sign on behalf of the company.

Affidavit of Death – Takes the place of a death certificate to clear title.

The earlier in the process we can get these documents signed and back to our office, the smoother we can make the whole closing process. Everyone in our office is a notary and we are more than happy to meet with clients to get Deed Packets signed.

We do offer a free courier service and can send someone to you to get everything signed if you just can’t get away. Just call our office and set an appointment for a time that works best for you.

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!

Construction Hold-Open Commitments

The 2020 residential building season is now upon us!   Building season brings construction loans and the title concerns that come with this type of financing.   There can be concerns about the duplication of title services and costs that come along with it as well as insuring that the title to the real estate does not collect liens and other title issues prior to permanent financing.   At Tallgrass Title, we are pleased to offer a “construction hold-open” type commitment to assist in the construction of residential property.

Tallgrass Title is proud to say that we can assist in this area!

Q:  How is residential construction financed?

A:  People constructing a home will typically borrow money in order to finance the construction with a “construction loan.”  A construction loan is short term financing of real estate construction.  Generally, a construction loan is followed by long term financing called an “End Loan” that is issued upon completion of improvements.

Q:  Do both loans need title insurance?

A:  Because of the nature of a construction loan, Lenders are often concerned about the length of time a commitment is valid from its issuance.  Commonly, the commitment expires before the construction can be completed and  before going to end loan. To solve this issue, lenders will pay for a full title policy on the construction loan and then again on the end-loan.  The downside is that this creates duplicated costs.

How we can help:

Tallgrass Title is the only title insurance company in the area that offers a “Construction Hold-Open Commitment.”  A Construction Hold Open Commitment provides periodic updates of the construction loan commitment every 120 days keeping the title coverage valid until the end loan is closed.  Therefore, the costs are not duplicated between the construction loan and the end loan.

How to request:

Simply order a Construction Hold-Open Commitment from Tallgrass Title and we will perform the initial search and issue a Commitment for a $200 fee.  The Construction Hold-Open Commitment is then valid for 120 days from the Commitment Date and can be renewed for an additional 120 days with an update. We will perform two updates as part of the initial fee.  We will typically send out an update reminder when the expiration date is near. However, we do not perform updates without a request from the lender. After the second update, if further updates are required there will be an additional $50 fee per update. Construction Hold-opens can remain open indefinitely with the appropriate updates.

When the construction is complete and the mortgage is ready to go to End Loan or final policy we will do a final update at no additional charge. When the Final Mortgage is ready to be filed we collect the Premium and any Endorsement fees and record the New Mortgage. Our office must record the Mortgage and any other required documents with the Register of Deeds Office to ensure that the title is free and clear of any possible new liens. When the recorded documents come back from the county and all the requirements are met we will issue the Policy.

For those of you that use our Paperless Closer system, simply note that the loan is for new construction and type into the notes that you want a Construction Hold-Open Commitment.  If you prefer to email the order, please note the request on your order form.

Please contact our office if you have any questions!  We look forward to assisting you in the 2020 building season. 

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!