Wednesday, December 30, 2015

taxes are the topic this week

In one case, the seller told the buyer that the property had a homeowner exclusion which allowed for a discounted rate.  Turns out that wasn't true.  Homeowner exclusions are generally processed once a year by the tax assessor.  Miss the cycle and you pay more tax.  This buyer can apply for the exclusion but got stuck paying for the extra tax for at least this year.

In the other case, a buyer of a condo in a converted building just received a bill from the tax assessor for a catch up period back to the conversion.  This assessment change was pending at the time of the sale but it's not determined if anyone knew who could have informed the buyer.

In both cases, the buyers were careful when they closed.  It's hard to say if either case is worth pursuing the seller or filing a claim against title insurance.  It doesn't cost anything to try a claim, however, title insurance does not cover tax bills that are not yet due and payable. A case would have to be made that the title agents had evidence in hand before closing that these taxes were incorrect or incomplete information.

I wish these homeowners much luck and am posting their situations just to keep you all informed about things that can and do happen.

Wednesday, December 16, 2015


I love the Closing Disclosure forms.  I have to say it.

What is killing me is the collaboration process.  It's like a bomb went off in the industry and we are working with systems and procedures cobbled together in the aftermath of the explosion.

I continue to hope that there will be a normalcy soon.

[HAHA Just noticed I said that "bomb" comment in a previous post.  Just goes to show THAT'S EXACTLY HOW IT FEELS!]

Monday, November 23, 2015

TRID - the beast moves on....

Well, it's November 23rd and I'm getting to like TRID.  I think when everyone gets the hang of it, we'll all be happy.

Monday, November 09, 2015

just a note to say TRID implementation was like exploding a bomb in the middle of the real estate market....

Everyone just needs to take a breath because ALL transactions are on the slo mo trail, even cash.

We have software issues and every lender we are working with also has software issues.

Thursday, November 05, 2015

the trouble with TRID!!!!

Is that it was wholly unnecessary.

Friday, October 30, 2015

Yikes....first TRID closing scheduled

So, how are ya? Feeling like the title world is about to change?  Yea. I hear ya.  Me, too.

Okay, so we have a bunch of TRID transactions in process.  We like to use colors in our office so TRID transactions are in green file folders.  Everything else is in our usual blue.

FYI - We use these colors because the are CALMING colors and every title insurance office needs as many calming influences as we can get, right?

Well, one of these little greenies made its way to "clear to close" status today and here's what happened.

The loan officer said the consumer's expectations were to close on November 6th.  I checked with the lender's closing department and they have a straight "need 10 days notice to schedule" plan in place for TRID closings.  I don't disagree.  I think that's smart so I called everyone and explained the reality of TRID and they said okay to the new date.  PHEW!  Step one okay.

I'll report back as we move through the process.

Keep calm and carry on!

Friday, August 21, 2015

TRID black hole...interesting article

According to the CHLA’s letter, the TRID rules stipulate that a that a lender deliver the Loan Estimate to the borrower within 3 days after receipt of a loan application and at least 7 days before consummation, which is defined as when the loan documents are signed.
The CHLA warns that after the Loan Estimate is delivered to a borrower, a change in in circumstances like the borrower needing to push the closing date could place lenders between a rock and a hard place.

Thursday, June 25, 2015

follow the link to an article worth reading if you are a lender or title insurer

It is this holding that resulted in most of the substantial increase in the disgorgement amount ordered by the Director. The ALJ had held that the RESPA violations occurred at the time of the closing of the underlying loans, and thus limited disgorgement to those loans that had closed after July 21, 2008 (three years prior to the CFPB’s gaining its authority to bring administrative enforcement actions). Director Cordray instead included all payments made by the mortgage insurers to Atrium after July 21, 2008, regardless of when the underlying loans closed. This substantially expanded the number of payments subject to disgorgement.

Tuesday, June 09, 2015

Thursday, April 09, 2015

earnest money aka hand money

When making an offer to purchase real estate, the buyer is typically asked to put up a good faith deposit.  This deposit is referred to as earnest money or hand money.  It means you are serious about the offer and willing to lose this money if you back out of the transaction.

Sales contracts often have contingencies that may allow for a return of the hand money.  For instance, if the sales contract has a contingency for a property inspection and the inspector finds a problem that the seller had not previously disclosed to the buyer, this would be a circumstance in which the hand money would be returned to the buyer if the sale fell through due to the discovery.

The amount of hand money is negotiable and could be determined by local custom.  In some areas you might get away with $500 but in others may be expected to put down $5000.

So for the readers who are buying, expect to have a hand money deposit and if you back out of a sales contract without a legitimate contingency failure, expect to lose the hand money.

For readers who are selling real estate and for Realtors who may be reading this, here are some pitfalls to avoid.

First, get the hand money up front.  I firmly believe that the offer to the seller should be with a copy of the hand money check in hand.  I don't like the idea of giving a buyer several days to come up with the money.  The seller is being asked to make a decision of price and to take their property off the market and if there is no hand money, even for a few days, the buyer has nothing to lose by changing their mind and walking away from the deal.  I suggest that sellers ask for a copy of the hand money check.

Second, make sure the real estate office deposits the check and is not holding it.  You have to move the money into the escrow account to protect it and to have control.  If the check hasn't been cashed then the buyer again has nothing to lose by walking away and stopping payment on the check.

What happens if the hand money check bounces?  When you have a bounced hand money check, you have a big red flag that the buyer may not be truthful.  Yes, it could have been a fluke and just a simple mistake but it also could mean you will have problems with the closing.  If the hand money check bounces, even if you do get a good replacement check, Realtors should tell the seller and the title agent or attorney so those parties can be cautious.

Why might they want to be cautious?  Well, what if the seller allows the buyer early access to the property for repairs, improvements, etc. then in the end the buyer can't get the mortgage or doesn't actually have the money to complete the transaction?

We've had two recent transactions involving fraud.  It turns out that BOTH had bounced hand money checks and in both cases, the buyers provided replacement checks so the Realtors did not tell anyone about the bounce.  One case was terrible as it involved the buyer presenting a counterfeit cashier check for a cash closing. He's incarcerated pending trial.  The other case was stopped before it closed because we got a bad vibe and started asking questions. That's how we learned about the bounced check.  With that info we suggested to parties that they be very careful and so that lead to the discovery that the letter from the bank that had been presented in the cash transaction was a fraud.

The earnest money aka hand money deposit is a meaningful part of the transaction and its importance cannot be overlooked.  It is the first test of the willingness and ability of the buyer to perform under the terms of the sales contract.  Be a savvy buyer, seller, and Realtor.  Make sure that everyone is serious about that first deposit. It lays the foundation for the transaction.

Tuesday, March 31, 2015

Be a savvy consumer. Pay attention at closing.

The company was given $3100 at our closing last June and neglected to pay the School Real Estate Taxes that said money was put in escrow to pay. When we received an invoice showing it was unpaid, the school district had added penalties and fees. We contacted Diane at The Closing Specialists and were told that it was our fault and that we had to pay the fees and penalties. Unacceptable. She then said she would remit the $3100 when she felt like it rather than when it was due. Bad business.

Hi, Sherry: As we discussed yesterday, the escrow agreement you and your husband signed at closing clearly stated in bold that you were responsible for getting a tax bill to our office. The statement we received yesterday was the first statement we received. The amount owing was higher than the escrow balance. The escrow agreement also said that you were responsible for any amounts owed beyond the amount held in escrow. Upon receipt of your statement while talking with you on the phone, you were clearly upset and told me you would not pay the difference. I said we might either send the full $3100 to the tax authority or might hold it and wait for you to send us the difference. 

After having a couple of minutes to think about the best solution to your problem, we cut a check in the amount of $3100 and mailed it to the tax authority. I then sent an email to the email address we had on record, I believe it was your husband's email and let him know we mailed the check and suggested that you send the remaining balance to the tax authority to avoid the filing of a lien against your property. 

All actions performed by The Closing Specialists in this regard are according to the terms of the escrow agreement. We understand after having received your email later in the day that you are in the title business operating as an abstractor. This puts you in an unusual position as a consumer. Unlike most consumers you are professionally familiar with the tax collection process in PA and also, as an abstractor trained to read documents carefully with close attention to detail. Every document related to a real estate closing is important. We do understand that there are many documents that will be signed at the time, however, that doesn't mean that the terms of the documents can be ignored. Thank you for taking the time to post this on Facebook. I'll include it in a discussion on our blog, Title Insurance Talk. It's always good to remind consumers to pay attention. Every party in a transaction has their part to play. 

Best wishes. Diane Cipa

Saturday, March 14, 2015

Did the condo come with parking spaces or not?


We bought a condo unit that has had two indoor parking spaces since this building went condo in 1985. This unit was a REO foreclosure by the VA and was subsequently listed for sale by a local agent. The MLS listing showed the two spaces clearly identified. After our cash offer was accepted and we got the various forms to review and sign, we noticed that there was no mention of the parking spaces and we and our agent questioned the selling agent, and the title company that the seller has selected to handle the closing, several times about the lack of this inclusion. They kept assuring us that there was no problem. We went to closing prepared to refuse to close unless it was resolved.

> The closing attorney went to great pains to tell us that everything was above board and that detailing the specific parking spaces was not done anymore on the deed as they could be bought and sold outside of the unit itself. He said as long as the deed had the statement “including limited common elements” then we were protected. So reluctantly we went through with the closing, signing the various pages that required signatures. He then made copies, assembled the various documents with the signature pages and gave us the whole package in a folder. He had a copy of the deed from the previous foreclosed owner that he also gave us. I know the proper thing to do was to just walk away from it until things were resolved but relied on his objective statements that it was done properly. A number of warning flags should have caused me to be suspicious, especially when he did not go over every document in detail before having us sign it. Evidently, he felt that the subject had been already discussed in detail so there was no need to go over the deed.

Once we got away from there and I reviewed the deed, I saw that there was no mention of “including limited common elements” at all. I saw a number of items of concern on the deed. The preparing attorneys stated that they did no title search nor made any representation about the accuracy of the legal description, as well as the legal description omissions. I determined to do my own title search and went to the Alexandria VA courthouse and tracked each deed for this unit. Every deed back to the original condominium document assigning indoor parking spaces to specific units had the appropriate comment  “…, including limited common element parking spaces 96 and 97, established by Condominium Instruments…” in the legal description, except one. To my surprise, and which had been omitted from discussion at the closing, there was another deed between the deed of the foreclosed owner and mine, which I should have known if I had thought about it. When the VA foreclosed there was a Trustee’s Deed prepared that made no mention of the “including limited common elements”. I can only assume that the attorneys that prepared the deed that we got at closing used the Trustee’s Deed from which to copy the legal description.

Now if I can find this with a little looking at the courthouse then anyone doing a title search before issuing owners title insurance would have easily seen the difference and taken corrective action, or so it seems to me. There is no indication that a title search was made, or if it was done, was done incorrectly.

I relayed this problem to the management office of the condo assn. and they sent me a strongly worded letter stating that since I cannot prove ownership of the two spaces, I am prohibited from using them and they will keep watch that I don’t disregard their letter. I have copies of the previous deeds, the letter from the condo, the title insurance, the HUD-1, and am going to write a letter to the titling companies, the VA, the selling agent, and anyone else that might have an interest in this situation.

That is my story, do you have any concerns that I should be aware of, or strategy to follow?


Hi, D.  First,please be aware that I am not an attorney and am not offering legal advice. To be certain you are covering all bases, I would suggest hiring an attorney to straighten out this mess.

That said, the first thing I would do is to look at the title insurance policy if you have received it. It may take up to 60 days after closing to get the policy.  If you don't yet have the policy, look at the title insurance commitment.  You should have received this prior to closing so you would have a chance to review what property was to be insured and what the exceptions are.  If you did not receive a title insurance commitment prior to closing, report this to your state insurance department.

If you have either the policy or commitment in hand look for the page that describes the property.  It might be called Schedule C.  The legal description should identify the condo unit and typically would also make note of common elements included with the unit.  If you see common elements listed there then the title insurance company has insured that whatever is described there is part of what you own.

I would also get a copy of the Declaration of Condominium.  Look to see how your unit is described in the Declaration.  There may be a specific reference to the common elements assigned to your unit.

Don't get hung up yet on the condo association comments because in my experience very few condo managers or officers actually have read or understand the condo documents.  You need to read them yourself and either on your own or with the help of an attorney get them to understand what common elements go with your unit.

Don't get hung up on what deeds say.  If the Declaration says that each unit gets two parking spaces, then you get them even if it's not in your deed. Every deed does not have to specify all information that is already on record at the courthouse.  For instance, if you buy a house in a plan, the plan says there are roads. Your deed doesn't have to describe the roads, they are already described on the plan document.  As long as the deed describes the correct unit and the correct condominium, then whatever the Declaration says you get, you get.

Now, it is entirely possible that the REO people who marketed the property had incorrect information about parking spaces.  If that is the case, when you look at the Declaration, you will find that you don't get parking.  Perhaps it is sold separately.  In that case, your attorney will help you sort out who did what wrong and how it can be fixed.

The key to everything is reading the Declaration document - including any revisions or amendments.

Good luck and I would like you to report back to let me know if the parking was in the Declaration.  I'm kinda curious!


Thursday, March 12, 2015

Hello and happy spring!

Just wanted to let you know I'm still living.  ;)

I have a post ruminating about an incident with a counterfeit cashier check. Will get that one up as the story matures.

In the meantime I've been answering lots of questions by email.  Keep em coming!

Thursday, January 22, 2015

Hey, why do I have to escrow money if the estate paid a deposit for PA inheritance taxes?

Hi, Diane,
I really enjoy your blog. 
My brother passed away.  We are selling his house.  As you have mentioned on your blog, the title agent is escrowing Pa Inheritance Tax.  The problem is, we have already paid the tax of $6546.  The title agent is escrowing $16,200.  There is no negotiating.  The buyer is a cash buyer and is not buying title insurance.  So when the title agent said "its the title insurance company" there is no title insurance company.  At least that's what I think I've learned from reading your blog.
We paid the tax with the 3% discount but can't file the return until the attorney gets some additional things done.  The attorney talked to the title agent but it didn't seem to matter.
I thought I would check with you to get your opinion.
Thank you for all your help,

Hi, J:

Cash buyers often buy title insurance so there may be insurance involved.  If they aren't buying insurance and they are working with an attorney, the attorney might be giving a personal guarantee of title.  If they are working with a non-attorney title insurance agent and that agent is not issuing a title insurance policy, the title insurance agent is acting outside of their license to conduct business.

All that said, we would also require an escrow if the inheritance tax return isn't filed even though a payment has been made.  You cannot believe how many returns are improperly filed or not filed at all.  We regularly have abandoned inheritance tax escrows.

Some title agents will accept an attorney letter of guarantee that they will file the proper return and pay all taxes.  This is a personal guarantee from the attorney.  We accept these letters if we have a high comfort level, but agents are not required to accept guarantees.

The bottom line is that until that inheritance tax return is properly filed and the title agent can surmise that all taxes have been paid, they have a right to refuse to insure.  The alternative to an escrow is to postpone closing until the return is filed. Most attorneys can hustle and get a return prepped quickly if they need to.  If your attorney can't get this done prior to closing, perhaps this gives an incentive to get it done quickly for the escrow release.

Hope this helps.  BTW The amount of these escrows are not the amount of estimated tax.  A title agent till guesstimate the tax based on the relationship of the heirs to the deceased, then they will increase the escrow to a point that provides an incentive to the estate to get the job done quickly.  No title agent wants to hold an escrow.  It's a bunch of work that we don't really get paid for.  So, on that note, they are actually trying to help you close, rather than postpone.  ;)


Saturday, December 06, 2014

Houston, we have a problem......and I can't find my title policy!

Hi Diane, Hope you can help me with this one. I am about to sell my home in which I bought late 2006 and was a HUD home, the title company was a franchise to a large company still in business nation wide First American title company but looks like the office did the title went out of business like I have been told by the currant title company that handle the transaction for the sale of my home they said the old title company made a mistake/error regarding previous home foreclosure that was turned to HUD because the loan was FHA. I lost all the paper work/documents the one I got from the old title company and the currant title company asked for such document and told that I lost them. They will not disclose what kind of error but told they discovered the error and the old title company did not. Now I am not sure if my home will be sold and closing date will be in few days and not sure of the nature of the error it can be something to do with the loan from the bank who gave the loan with FHA approval for the previous owner but what I know the bank tried to sell the home before turned over to HUD, my question, who will be held responsible for this kind of error if the sale of my home will not take place? Is it the parent title company since one of it's offices/franchise went out of business? What should be done and keep in mind that I lost all documents regarding my title insurance. My home is in PA since I know each state has it's own law.

Any help you can give will be appreciated and thank you for your time reading this email.

Best regards,


Morning M,  I have two thoughts.  First, the title agent who says they found an error has an obligation to be specific about their finding.  Tell them you want an email explaining the problem and a copy of the title insurance commitment they issued for the new buyer so you can see exactly what they reported as a problem.  If you are working with a real estate agent they should be able to help you get this information.

Next, the parent of the old title agency you worked with is the actual title insurer.  Contact First American immediately and file a claim giving them all information you have available.  Without a copy of your title insurance policy or your HUD-1 settlement statement, they might give you a hard time but if so, you could also contact the PA Dept of Insurance and explain that you lost the paperwork and that First American should have a system in place to be able to find your insurance policy with your name and address.  That's a last resort, though.  Try to get First American to figure out who has the custody of your old file.  If the title agent you used was owned by them, First American may have your file in their custody.  So contact them asap and file a claim.

Once a claim is open, First American will either show the new title agent that they are incorrect, or offer indemnification, or step up and fix the problem.  If it's a problem that has to be fixed, it might take time.  If that happens, they may offer to give your buyer title insurance while they do the fix. That is a legitimate offer that the buyer can consider.

Good luck!

Monday, November 03, 2014

What? No owner policy!

Hi Diane, 
I moved into a house and thought my lawyer had included a buyer's title insurance policy because I asked for one. However, it turns out the lawyer was in a conflict of interest situation as he was also the lawyer for the mortgage company. The lawyer had had me pay for title insurance for the mortgage company and admitted as much when I questioned him about it at a later date.
I need to make a claim because an inspection of my home by a city inspector found several building code and by-law infractions in renovations, construction and structural work that was done before I purchased the house. I was presented with an order to have them remedied. 
This would be a huge expense expense for me so was glad I had purchased title insurance - or so I thought I had done.  I purchased title insurance after I received the order from the city and the policy date is my possession date for the house. 
Will the policy still cover these violations? Or, is my only recourse to sue my lawyer?
Thanks in advance for your help,

Morning, Jim:  Well, I guess the good news is that there's a good chance these items would not be covered by an owner policy.  I think it depends on whether you would have purchase enhanced coverage and what type of enhanced coverage is available in your state.  Zoning violations and by-law infractions are often exceptions to coverage.

I think you should have an attorney review your transaction.  I wouldn't think too much about the conflict of interest angle as this is very common with the attorney's serving both the buyer and the lender.  I would mainly look at his fiduciary duty to take care of you with the same level of care that he gave the lender.  In PA a buyer has to sign a hard worded waiver to skip the owner policy. Perhaps your state has a similar document.

Good luck.


Wednesday, August 20, 2014

scheduling your closing

When a sales contract is negotiated the contract typically contains a target date for closing.  In most cases it is an "on or before" date.  If this date is very important to you, please make sure you make that clear to your mortgage lender and your title insurance agent.

Most dates are wishy washy and subject to change and so these professionals will not consider that a hard target unless told.

As you approach that date, do not assume that you have been scheduled for that day.  You must speak directly with the title insurance agent to verify the status of your scheduling.  Do not make all of your moving plans until you have a firmly scheduled closing confirmed.

Note that if you are getting a mortgage, the title insurance agent will need to wait for the mortgage lender's "clear to close" permission before scheduling.  This sometimes happens within a few days of the target date so things can be very last minute.  Just stay calm and your job is to make certain you provide any requested information or documents quickly.  Any delay can postpone your closing.

Getting to the closing table is a team effort and you are a member of that team along with the seller, real estate agent, mortgage lender, and title insurance agent.  Everyone must do their part to move the transaction forward and meet the goal.

The actual time of your closing will be set by the title insurance agent and if you have selected a date that is popular with many consumers, then timing is a first come first serve proposition.  Keep that in mind and again, confirm the closing schedule before making moving plans.

Thursday, June 26, 2014

foreclosure error discovered before closing brings transaction to a halt


I have begun to do some research in regards to a delay in my house closing because of an error from the sellers title company. Here is the scenario:

I am purchasing a home that is bank owned and was listed under a real estate company.  I went thru my agent who I have been dealing with for the past 7 years.  We looked at the house 1 day after it was listed, liked it and made an offer which was held for 7 days  to see if there where other offers.  We got the house.  we began the purchasing process.  Had all documents necessary to close on the date of 6-20 including financing in 17 days.  The day before the close the title company states they do not have record of the mortgage holder being served to sign the deed over.  What there is record of is the sheriffs office served papers to a tenant that was living there and not the mortgage holder. 

The issue now is finding the owner.  My agent is telling me they may need to do a quiet title and that could take additional month or two.  I want to know if I seek compensation from the title company for there mistakes.  In the contract from the selling agency. It states that if I am unable to close on the date noted that for each additional day after that they would collect $50 per day. 

I have several appliance that are to be delivered and they will not hold any longer after this week. I am looking to get into the house as we have just added a new baby to our home.
Let me know your thoughts.

Hi, S:  This is unfortunately not so uncommon.  Title examinations performed on behalf of a buyer and.or their lender for properties sold after foreclosure often find foreclosure errors.  This is why it is so important to use your own title agent, not the one being used by the REO seller.

The problem in this scenario is the expectation of timing.  Think of the title examination as you would a home inspection.  You want the results before you make definite plans because any big problem discovered in the process might cause a delay or even a desire to get out of the contract.

Most buyers and real estate agents have not experienced the finding of serious title problems and so they ignore the risks of moving forward with plans before the result of the title examination is revealed.

On the seller side, expect them to agree to an extension but don't expect them to cover any damages you may have due to the delay.  Your choice at this stage is to wait it out or get out of the contract and look for a different house.

Sorry for the bad news but the title examiner did what they were hired to do and that is to vet the title.


Saturday, June 21, 2014

If you want your name on the deed, you need to verify at closing that it's on the deed. Don't trust anyone else to check that for you.


In 2007, my husband and I purchased a home.  Due to student loans, the mortgage was obtained only by my husband.  At closing both of us were present as I was to sign the deed.  My husband passed away three years ago and without a will.  His death was ruled a suicide and no insurance money was paid.  I am still in the home and would like to keep it.  Since my name was not on the mortgage, the bank will not communicate with me.

I went to the records department at the courthouse and have discovered that the title company wrongly put my name on the deed of trust and only put my husbands name on the deed.  Is the title company liable?  How do I correct this?

Thank you,

Hi, L:  I am not an attorney and cannot give you legal advice.  You may wish to consult with an attorney to be sure you are protecting your interests.

The suggestion I have is to read the deed of trust carefully and look for the language that says "heirs and assigns" because this is how you will tie your authority to the document and thus to your lender.  If you did not raise an estate for your husband, talk with the Register of Wills at the courthouse and explain that he died without a will and ask them how you can open an estate to deal with his assets.

My father died without a will and what I had to do was to take a death certificate to the Register of Wills and take an oath to administer the estate.  Once an oath was taken, I received what is called a short certificate.  The short certificate tells whomever needs to know that I am the official representative of the deceased. You should have a similar procedure in your state which I do hope helps.

As for title insurance, the policy is unlikely to offer you assistance for this situation because your husband was the insured, not you, if you weren't on the deed.  You can always file a claim to see what they say. The way something like this is viewed is that you have an obligation to read the documents you sign to protect your interest.  If you wanted to be on the deed, you should have checked that at closing.  If you did not have an attorney representing you at that time, then you were acting in your own interest without representation.

If you have evidence that you gave written instructions to the title agent that you were to be included on the deed or even if your name was on the sales agreement and you did not agree to remove your name as buyer, then you should consult an attorney and discuss suing the title agent for negligence.  This might also be a basis for a title insurance claim. An attorney can help you to weigh options.

Good luck and I am sorry for your loss.  Hope you can get the lender to work with you.  If all else fails, you can contact the CFPB [Consumer Finance Protection Bureau] to see if they can intervene with the lender to work things out for you.


Wednesday, May 28, 2014

M has an interesting question about a shared retaining wall. Who is responsible for fixing it?

Hello Diane,

I just saw your blog and it caught my eye on a situation I am going through.

Last summer 2013 I closed on a house.  A couple months ago, my neighbor (who's backyard faces up to mine --- I'm on a hill, her yard is at the bottom of it) started complaining about a retaining wall that divides her backyard and mine.  This wall is deteriorating and buckling on her side.  She says the wall is 100% my property and I need to fix it.  The wall is made of concrete cinder block and runs from one end of the block/street to the other, dividing all the houses on my block from the houses on her block.  The wall is connected so there is no "stop and end" in each person's yard.

My survey didn't indicate this wall.  I contacted my surveyor about this and he revised it to show the wall.  He said it now shows the wall is on the property line both hers and mine.  My neighbor showed me her survey and hers shows the wall is all on my property.  (No history of this wall's construction can be found as it was built in the mid 1950's.)

I went back again to my surveyor and he is revising the survey yet again (for second time since my closing in 2013).  

My question is: who is responsible for fixing this wall if both surveys are different ? Regardless of this, wouldn't I be able to file a claim with surveyor or title insurance because my original survey did not represent this wall on it ?  Had I known about this wall before my closing, I would have waited on purchasing this house.

Trying to avoid an expensive lawsuit here and my neighbor is starting to get everyone involved that lives on both sides of both blocks.

Thank you,

Hi, M:  Thanks for sending your question.  I am always interested in these types of situations.If this is an old plan chances are that the developer constructed the retaining wall for the benefit of lot owners above and below the wall.  It may have been a requirement of the local government who approved the plans but in any event, I think you are unlikely to find someone to take responsibility for the maintenance of the retaining wall. It's just one of those things that no one pays attention to until there is a problem. It's sort of like a private road.  Many have no maintenance agreements, they are just there.  Once the road falls apart, then lot owners have to come to an agreement or let the road go to pot.

I would pursue - with the help of a competent attorney - finding an agreement amongst all of the lot owners above and below the wall.  Afterall, if the land slides, the houses on both sides will be damaged and it serves no good purpose to let the wall fall for lack of agreement when some shared cost of maintenance will help everyone.  I hope this helps and good luck.


Tuesday, May 20, 2014

too bad the seller did not have title insurance

We have a title insurance order in process and our examination revealed that the seller bought the property from a bank who had foreclosed.  As usual, the our title examination included a review of the foreclosure to make certain that the bank had done everything correctly.  They did not.  Crap.  The bank's attorney had failed to give good service to a lien holder.  Crap.

The prior owner had a 2nd mortgage with Beneficial Consumer Discount Company. For some crazy reason the bank's attorney gave service to Household Realty Corp.  Now these two entities were under the same corporate family at the time, however, they are still two different entities.

Our seller is an estate. The deceased purchased the property from the bank for cash and did not opt to purchase title insurance.  Too bad.  If he had, someone might have noticed the flaw and fixed it a long time ago.  The estate attorney says his client probably thought the bank knew what they were doing and opted to forego any title examination - with or without title insurance.  Not a smart move. A buyer must always be savvy and have title examined and covered by a competent title insurer - even when paying cash for real estate. The first and primary purpose of title insurance is RISK AVOIDANCE. Look for problems and fix them before you buy.

Let's say the seller had purchased title insurance and his title insurer had missed the error in the foreclosure.  That's certainly possible.  A secondary - and just as important - reason for title insurance is that HUMANS MAKE MISTAKES.  The bank's attorney made a mistake and it's possible that a title examiner could miss it.  You could have a situation in which you are trying to sell real property and a problem isn't discovered until your buyer has a title insurance examination performed.

If our seller had an owner policy, we could have asked for indemnification and closed.  This is a reasonable circumstance for indemnification.  The error involved an entity under the same corporate umbrella.  Several years have passed and there has been no collection effort on the Beneficial mortgage.  It is reasonable to presume that Beneficial thought they had been served and were divested.  This is a technical flaw in title but a flaw none the less.  Indemnification coverage from a prior owner policy would have done the trick, but we have no title insurance to fall back on in our transaction, so what do we do?

In this case we offered our buyer - who is also paying cash - an option to allow us to put an exception in their owner coverage.  We did this with a suggestion that they negotiate with the seller for an escrow to be held pending the attorney obtaining acknowledgement of good service from Beneficial.  I don't want to insure over this because I'm not certain that the attorney will be successful.  Our buyer, however, is free to assume the risk.  The buyer decided to go for the escrow. They asked the seller to put $6000 aside for a few months during which the seller's attorney would attempt to get the acknowledgement.  If at the end of the period, the attorney could not, the buyer would get to keep the money.

Our seller stands to lose $6000 if this matter is not resolved.  They are lucky that they have a cash buyer willing to assume the risk.  Too bad the seller did not have title insurance.

Tuesday, March 25, 2014

news from the American Land Title Association - thought you might be interested

On Friday, President Obama signed the Homeowner Flood Insurance Affordability Act of 2014 (H.R. 3370) into law. H.R. 3370 helps ensure that property owners have access to affordable flood insurance and rolls back large flood insurance rate increases seen by many homeowners this year.

Most importantly, the law prevents the Federal Emergency Management Agency (FEMA, which manages the flood insurance program) from increasing premium rates when a property is sold or a new flood map is developed. The legislation also calls for refunds of some of the recent rate increases homeowners have paid. Further, it limits premium increases to 18% annually. To pay for these fixes, the bill requires policyholders to pay a $25 surcharge on residential policies and a $250 surcharge on the premiums for policies covering non-residential properties and non-primary residences.

Friday, March 21, 2014

I know you are getting sick and tired of hearing about Act 93, but I have news.

Examined a title in Somerset County yesterday and we have our first transaction impacted by Act 93 of 2013.  Our seller owns 5 properties in the county that have delinquent taxes owing for 2012 and 2013.

Since the 2013 taxes haven't yet reached the "claim absolute" stage, we aren't concerning ourselves with them.  The 2012 taxes, however, are claims absolute and therefore are "reduced to judgment" and must be paid in order to clear the title for our buyers.

Total additional tab to our sellers?  They are paying roughly $6000 to clear 2012 taxes on the 4 extra properties so that they can convey the 1 property to our insured buyer.

We can mark this one as a win for the municipality since the deal did not fall thru.  The sellers are elderly and own the property free and clear.

Friday, March 14, 2014

another unintended consequence of Act 93 of 2013

As we have discussed in previous posts, PA Act 93 of 2013 creates a system by which municipalities can file personal judgments against property owners who also have in rem delinquent property tax liens. I have been arguing that this new law will set in motion a whole lot of unintended consequences never envisioned by lawmakers.


Google that and you'll find that personal judgments are found in the FICO process and impact FICO scores, even when the judgment has been paid.  If you have a bad debt and a judgment related to one incident, they both impact the FICO score so theoretically if FICO has the ability to see an in rem property tax lien - possible in some counties - and also sees the Act 93 personal judgment, the property tax obligation has a two stage punch on the property owner's FICO score.

Judgments, whether satisfied or not, impact FICO and sit on a credit report for up to 7 years.

QUESTION:  How will lawmakers react when constituents start calling to say they can't get a new mortgage because Act 93 judgments - even if paid - are sitting out there lowering their credit scores?

Thus far most of my arguments against Act 93 of 2013 have been on behalf of consumers who own more than one property.  This FICO angle is a concern for EVERY property owner who gets into temporary financial difficulty.  Who doesn't know someone who had a bad financial set back beyond their control?  If a consumer gets behind on their property taxes for more than one year in PA, even if they pay the tax in the second year, their FICO credit score moving forward for the next SEVEN years will be lower.

Lower FICO credit scores .... what are the long term consequences?

Act 93 of 2013 was born in good intentions but the more we think about it the worse it looks, eh?

Wednesday, March 12, 2014

Are non-vested spouses obligated as borrowers?

I found your email address through a Google search I had made regarding being non-vested on a mortgage and what exactly that means.

I was married for the second time in 2011.  At that point, my husband had a house and a mortgage.  Last year, we re-mortgaged.  He stayed with the same bank and took a slightly higher interest rate than what is out there today by doing a re-mortgage for the same $ amount, without any fees and no points.  At that point, he told the bank he was now married.  I co-signed the paperwork and believe I am listed as non-vested on his mortgage.  I'm still not 100% sure what that means for me???  Now he is thinking of doing a totally new re-mortgage with a different bank for a lower interest rate, however, this time he would like to add a line of credit he has to the mortgage and possibly some other debt HE has.  Of course, he wants this to be a joint mortgage, but I have some concerns.  As a quick background, I left my first marriage with debt and finally am back on my feet again.  I don't want to go there again as I am almost 50.  He says this will help both of us because it will give us a lower interest rate and free up money for us.  I'm having difficulty trying to have him see my concerns.  I don't really want to assume additional debt.  Anything you could suggest? 


Good question, M.  

If you are asked to sign the NOTE, you are a "borrower" and thus obligated to repay the debt.  That's the question to ask. Is the lender expecting that you will sign the NOTE?  If the answer is no, then they will have you sign the mortgage and perhaps a couple of other documents as a non-vested spouse just as you did the last time.  These documents simply allow the lender to place a lien on the property that takes priority over your marital rights.

A lender wants first position in the event of the worst case scenario, a foreclosure. They do not want you to have the ability to stop the process.  So, you'll be required to grant permission for the lien but you would not be required to be a "borrower" for this purpose unless your husband needs your income to get the new loan.