Tag: title insurance

Fraud & Hacking Update

With wire fraud and email hacking on the rise, we must all become more diligent in protecting our clients’ information. Here at Tallgrass Title, we take multiple steps to ensure that our clients’ information is protected.  One aspect of protecting our clients’ information is educating prospective buyers, sellers and real estate professionals about the dangers of wire fraud and email hacking.  With this purpose in mind we have created two informational fliers to educate all parties in a transaction. They are for use by real estate agents, banks and other real estate professionals.

We recommend that you provide these fliers to every new client that you represent.  You will also notice that this information will accompany every deed packet sent out by Tallgrass Title to Sellers in a transaction.  Protecting against wire fraud and email hacking requires all parties to a transaction to stay diligent throughout the process.  Should you have questions regarding potential wire fraud, email hacking or anything else that “just doesn’t feel right,” please feel free to contact our office and discuss the issue with our trained closing agents.  It is better to be safe than sorry!

 

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!

What Happens to Your Mortgage When You Sell Your Property?

Many people have at least one mortgage on their real estate. When you intend to sell your real estate, that mortgage must be released so the buyer will receive clear title. You may wonder, how do I get my mortgage paid off for closing? Do I need to contact the mortgage company to get the payoff amount? Will I need to send the payoff money to the mortgage holder after closing?
We are here to tell you that paying off a mortgage at closing really does not have to be as complicated as it sounds. Our closing agents are used to handling this as part of a regular closing.

Mortgages

A mortgage is simply the document that secures repayment of money borrowed by placing a lien on real estate. The mortgage needs to be paid off and released from the real estate; otherwise, the mortgage will remain with the real estate sold. Nobody wants to buy a house with somebody else’s debt attached! The mortgage may either still belong to the original bank that issued the mortgage, or it may have been sold off to a different bank. It may be a surprise, but it usually isn’t more complicated if the mortgage has been sold. The payoff process stays the same.

What is the payoff process?

The process begins with the Seller completing an information release form for us. This form typically accompanies the deed and other documents for the Seller to sign weeks before closing. It only requires a small amount of information from the seller: current mortgage holder name, loan #, signature, and SSN. In most cases, this document may even be signed electronically and sent back to us. Electronic signatures are a big help, because the sooner we get the completed form, the sooner we can get the payoff quote for the settlement statements.
As soon as we receive the filled-out form, we contact the mortgage holder on the Seller’s behalf. The mortgage holder sends us a statement with the total payoff amount and their wire instructions. We add the payoff amount to the closing statements and send the payoff amount immediately after closing.

After the Closing

After the mortgage holder receives payment, the amount is applied to the underlying debt and a “release” is sent to the county for filing. To complete a seamless closing, our agents will typically add a couple extra days-worth of interest in order to make sure enough funds are sent to secure a release of the mortgage. If there are any excess funds, the lender will refund them to the Seller.
If the Seller has set up automatic payments, he or she should contact the mortgage company to cancel the payments following closing. Also, prior to the closing date, the Seller should be aware of when payments are due. If a payment is not made within the grace period, late charges may be applied.
Our closing agents are always happy to answer any questions you may have about the closing process. Give us a call today or visit our website www.tallgrasstitleks.com.

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!

What is the Difference Between a “Warranty Deed, Quit Claim Deed, Corporate Deed, etc.?”

In your contract for the sale or purchase of real estate, you may have seen language that says that the real estate shall be passed by a “good and valid general warranty deed.” What is a warranty deed?  Along those same lines: what is a quit claim deed? Corporate warranty deed? Executor’s deed? Sheriff’s deed?  Which deed do you need for your real estate transaction?

To start, a deed is the document that transfers ownership of real estate from one person or entity to another. Often when folks think of a deed, they get a mental image of a large, cartoonish scroll of paper with ornate writing and metallic stamps.  In reality, a deed is simply piece of printer paper that contains language of conveyance.  This begs the question: well, what prevents anybody from simply making a deed to real estate regardless of whether they own it?  Title insurance! But that is for another post (Understanding your Title Commitment and Policy).

General Warranty Deed

A “general” warranty deed in Kansas is just that; a standard, plain, warranty deed. The “warranty” portion of the deed is stating that the grantor (seller) of the real estate is “warranting” or “defending” the fact that the grantor actually owns the real estate. They are also guaranteeing that they are passing title to the real estate.  A warranty deed is guaranteeing that no other person owns the interest in the real estate being transferred.  It works like a warranty on a new car that guarantees the car will perform as promised for a period of time. Additional language regarding the extent of the warranty being given is included in the deed.

Deeds from Businesses or Estates

When the words “corporate”, “executor” or “conservator” appear in the title of a warranty deed, it is basically to identify the entity or authority of the grantor (seller) to transfer the real estate in the transaction. Additional language about the entity or individual transferring title is accompanied in the deed.  However, at the end of the day, the title being conveyed by one of these deeds is the same as a general warranty deed.

Sheriff’s Deed

A “sheriff’s deed” is a deed that results from the county sheriff passing title to real estate. This is typical through a foreclosure sale or tax sale.  This type of deed can be quite complicated and must contain certain language regarding how the sheriff came into authority to transfer such real estate.  It is advised to consult with a real estate professional when dealing with a sheriff’s deed in Kansas.

Quit Claim Deeds

Lastly, a “quit claim deed” makes no warranty to the grantee (buyer) of the real estate about the ownership held by the grantor (seller) or the ownership to be conveyed upon the grantee. It simply means that any ownership that the grantor may have is being given to the grantee.

Real estate transactions and title insurance can be complicated and confusing. Tallgrass Title professionals are always available and willing to discuss your questions regarding deeds or any other aspect of your real estate transaction. It’s our job!

How Do Flood Zones Affect My Real Estate?

If the property you own or plan to own is located near a waterway, creek, river bottom or other low-lying area, it may be in a flood zone. These zones are areas that may have a likelihood of flooding. Did you know that your homeowner’s insurance policy probably won’t cover flood damage? What can you do to protect your property? What will a Lender require if you purchase real estate in a flood zone? Flood zones are also not covered by title insurance.  Since there are several flood zones in Riley, Pottawatomie and Wabaunsee Counties, we at Tallgrass Title would like to provide some basic information about them.

  1. Who determines where a flood zone is located?

The agency who oversees flood zones is FEMA (Federal Emergency Management Agency). This agency works with a floodplain administrator and community officials to produce maps showing where the risk areas are. Over time, flood zones may change, and new maps are drawn. According to FEMA, a flood zone is a “Special Flood Hazard Area” and is commonly referred to as a 100-year floodplain. This does not mean you can expect a flood once every 100 years. It means that a Special Flood Hazard Area has a one-percent chance of flooding each year.

  1. Is the real estate in a flood zone?

If you are purchasing real estate near a waterway or other low-lying area, it is a good idea to check whether the property is in a flood zone. Your realtor can usually assist with this question, but you can also check for yourself at the following link: https://msc.fema.gov/portal.

  1. If your real estate is in a flood zone, what will be required?

If you have a lender, they will require flood insurance if the house or structures are in a flood zone. This is a requirement that banks are forced to follow by bank regulations. It is wise to check the coverage of the policy to determine what is actually covered by the insurance. In most conventional residential loans, you will see a “flood zone determination” sheet. Usually, this simply notifies you that the lender checked to see if the real estate is in a flood zone. If the real estate is in a flood zone, there will be some additional paperwork.  If you have questions, speak with your lender or real estate agent.  The following link will answer a great deal of questions: https://www.fema.gov/national-flood-insurance-program

  1. Can my real estate be removed from a flood zone?

In some cases, it is possible to have the structure on your real estate reassessed and removed from the flood zone. There are certain procedures to follow to make that happen. The document that grants the amendment is called a LOMA (Letter of Map Amendment). The application for this document can be downloaded from the FEMA website. Most of the time, a licensed surveyor or other engineer will be required to provide elevations and a site map. FEMA will review the elevation and other data to make the determination. However, this process can take several months to complete.  Also, there are no guarantees as to whether the LOMA will be granted.

As you can see, there are questions that often arise with flood zones in real estate transactions. Our closing agents are trained to understand these concerns and answer questions you may have.

Kansas Farm Lease Basics

A common issue that comes up with the sale of agricultural real estate in Kansas is whether the real estate is currently leased to a farmer or rancher and when that tenancy ends. Simply put, if you purchase real estate that is currently leased to another person, you take the property subject to that lease.  This could mean that even though you purchased the real estate and received a deed, you may not have possession of that real estate until many months in the future!  If you know this fact in advance, it may be addressed in the contract to protect the interests of the buyers.

The information in this post is meant to educate the buyer of rural real estate so that there are no unexpected surprises following closing. In Kansas, absent a written agreement to the contrary, leases are governed by the Kansas Landlord Tenant Act.  This is basically a series of statutes (laws) that dictate the arrangement between land owners and tenants.  Again, written agreements may change this arrangement so long as they do not violate the Landlord Tenant Act.

Basically, all farm tenancies are year-to-year beginning and ending on March 1 of each year. If the owner of the real estate does not properly terminate the lease, it will automatically renew for another year.  One section that causes continuous issues, is the termination of farm tenancy statute.  If the owner of the real estate wishes to terminate a farm tenancy, written notice must be given to the tenant at least 30 days prior to March 1 and set the termination date for March 1.  Now, there are typically 28 days in February, which sets the typical termination date at January 29.  In a leap year, the termination date would be January 30.  As there are 31 days in January, this is counterintuitive as the termination dates do not fall on the last day of the month.  However, if there are already fall planted crops (typically wheat) on the real estate at the time of termination, the termination does not take place until the harvest of the crops or August 1, whichever is sooner.

Often, agricultural real estate is sold in February-April.  A contract for sale could foreseeably close after the tenancy termination deadline has expired and the Buyer would be subject to the existing lease.   An easy solution before entering into a contract during this time of year would be to request that the contract would be contingent upon adequate proof of termination of the tenancy.  Lastly, if there is a written contract, they often run on the calendar year and not the March 1-March 1 statutory term.  In order to avoid issues with written agreements, one needs to simply ask to review the contract, and any termination notice, prior to entering into an agreement to purchase.

Kansas agricultural leases can be a complicated subject.  Should you have any questions regarding your rural real estate transaction, feel free to call and ask to discuss the issue.

Email Fraud – the Everyday Scam

Over the last couple of years, there has been a growing concern about email hackers, scammers, and phishers. Here at Tallgrass Title we receive fishy-looking emails on a regular basis. Our title agents go through regular training sessions to help detect these potentially dangerous messages. In order to help you protect your clients and yourselves from these pitfalls, we would like to share some things we have learned.

Here are some red flags that usually indicate an email is not legit:

  1. The message contains grammar and punctuation errors. A lot of emails coming from scammers sound like they come from someone living in a foreign country. If the language does not make sense to you, don’t follow their instructions.
  2. The sending email is usually misspelled, even it it’s just one letter missing or added to it. This is a big one and is easily missed since it is so small. Instead of order@tallgrasstitleks.com you may see order@tallgrastitleks.com. (See, it can be very difficult to detect…)
  3. If you hover over the sender’s email address, it may show a different address. The email may say “from: order@tallgrasstitleks.com”, but when you move your cursor over it, there is a different email address or a whole string of random letters and characters.
  4. Another thing that should be an immediate cause of concern is any phrase that conveys a sense of urgency. Phrases like “do this immediately” or “as soon as possible” are often used. Also, the message might ask you to do something sooner or in a different order than you expected.

Here are some actions you can take:

  1. Google the company name in the auto sig. Does the address under the signature match the information on the company website?
  2. If you ever get a feeling that an email just doesn’t sound right, call the sender. Remember that you might not want to use the phone number listed in the suspicious email. Try to use a number you already have saved from before. Most people will be reasonable about it as soon as they realize that you are trying to protect them.
  3. Never send a client’s contact information or other personal information by email without protecting it. For example, do not email a completed deed packet back to us with the 1099 form. If the 1099 form has been filled out, it will have your client’s Social Security Number, address, and phone. This is a good opportunity for a scammer to steal your client’s identity!
  4. Use our paperless closer program to send documents to us. Access it through the client login on our website, www.tallgrasstitleks.com. We are able to view the document as soon as you upload it.
  5. Educate your clients. Go ahead and mention to your clients that there is a concern about this. Let them know a couple of things to watch out for.

Here at Tallgrass Title we are very serious about protecting our client’s information. Something very important to remember is, we will never ever email wire instructions without password protection. If someone emails wire information to us, we will call the sender to confirm. Please be sure to contact us if you have questions or concerns about a message you have received. We are always happy to take a phone call to confirm any instructions or requests we have sent to you.