Monday, August 23, 2010

query: should buyer get title insurance on land cash deal

Unless you want to put the cash at risk, YES, buy an owner title insurance policy.

query: when does being threatened with adverse possession end

I do hope you confer with a good real estate attorney.  In PA, you can evidence that you granted permission for the use, even if temporary permission and that should defeat an adverse possession claim.  A good real estate attorney can advise you.

I bought a property a few years back and the survey revealed that a neighbor was using my land for parking and generally as a side yard.  The land was on the other side of a creek and if I had not had a survey done, I might never have know it WAS my land.  Interesting, eh?  Anyway, I visited the folks and offered to sell them the land for a small amount plus the cost of doing a subdivision.  They said no, so - to protect myself from an adverse possession claim - I sent them a letter giving them temporary permission to use that portion of my land.  That was all I needed to do to defeat a potential adverse possession claim. 

Some readers might say what's the big deal?  Well, if I am paying taxes on the lot, I want to maintain control.  The neighbors wanted use but were unwilling to pay, so that's life.

Adverse possession is a real threat to property owners and you should take the simple precautions available to you in the law.  Ignoring the use of your property by another is not an option unless you don't care about the loss.

questions on a public forum

Purchased a house about 5 months ago in PA. I have talked to the guy 8 or 10 times now and he has made many excuses and promises.. and yet, I never received the original title back, or the owner's title insurance policy I paid for. I checked with the county, and the purchase has been recorded with them.

So, obviously I will try to press on him by filing BBB complaint, etc, but my concerns are:

1) Is a certified copy of the title just as good as the original?
2) Can I go to a 3rd party to obtain title insurance at this point? Is there some time limit in which it must be purchased?
3) If he didn't issue the lender's title policy (a much bigger expense than the owners), is that going to negatively affect me in some way?
4) Is there anything else I am supposed to get that I didn't?

my answers:
1)  In a real estate transaction, it is not important to have an original deed so long as that deed has been recorded in the county courthouse.
2)  If you already paid for title insurance, you are entitled to receive a policy.  Contact the PA Dept. of Insurance for assistance.  The investigative department will be very interested in this title insurance agency.  Failure to respond to a consumer or to deliver a policy within a reasonable timeframe is a RED FLAG that there are likely other, perhaps more serious, deficiencies in the way this title agency is managed.
3)  Don't worry about the loan policy.  That is between the lender and the title insurance agent.
4)  You'd be better served to file a complaint with the Attorney General rather than the BBB.  The AG has teeth. BBB does not.

Saturday, August 21, 2010

question from Bob

A Lender’s Policy was issued by a Title Company for private financing in the amount of the loan on a single family home with a LTV of 50% or less.  A good portion of the loan proceeds were used to cure delinquent taxes and acquire an adjacent property.

Borrower signed as a Personal Representative of an Estate with minors.  Title Company failed to discover borrower’s PR status had expired.  This error was discovered when borrower petitioned the Estate, represented by the Public Fiduciary, to pay delinquent loan payments and back taxes as Lender had commenced a Trustee’s Sale.

The Public Fiduciary sued Lender in Superior Court asking for a Declaratory Judgment that the Note and Deed of Trust be judged invalid and unenforceable.  Lender filed a claim against Title Company who hired an attorney to represent Lender but, it was discovered, only for the amount of the Policy plus costs.  The Title Company informed Borrower that Borrower must sue Title Company Escrow separately on Title Company’s E&O, a separate agency, to hopes of recovering accrued interest and penalties which are now substantial because of time elapsed.

In the parallel world of home insurance where there has been a total or substantial loss, the insured frequently hires a Public Adjustor to negotiate a settlement taking a percentage of new money when the settlement offered is not satisfactory.

Are there Public Adjustors who specialize in Lender’s Policy issues?

Hi, Bob, and thank you for your question.  I have never heard of Public Adjustors in title insurance.

Loan policies insure the validity of a lien and in this case it seems that the loan policy performed.

I do not understand why the borrower would seek to hold the title agent liable for the borrower's failure to perform as a fiduciary for an estate.  You might argue that the title agent could have noticed and raised the issue but the title agent was charged with issuing a loan policy as a representative of the title insurance company and in that capacity should not also be acting as an attorney for the borrower.

In fact, the question you pose does not mention that the title agent was an attorney and so in any case would not be expected to give advice to the borrower.  The title agent may have presumed that the borrower had knowledge of the responsibility of the fiduciary and was able to execute the loan documents.  That was an error in judgment for which the title insurance company paid a claim.

In my opinion, the borrower would not have standing to go after a title agent for an error created by the borrower's own negligence.

So, that's my non-attorney title agent two cents.

I'm not certain if this response is helpful, but I hope it is. If there are readers out there with another take on this issue, please chime in with a comment.  

Thanks for raising the issue, Bob, and thanks for reading. 

Thursday, August 12, 2010

2008 taxes used for 2010 closing?

Diane: After we closed on our property we discovered the title company had made an error when they did the title search regarding the taxes. They said they based them on the 2008 taxes because the 2009 tax bills were not out yet, we closed Feb. 22, 2010. They said their title search found the 2008 taxes were $1130 when in fact the 2008 taxes were $2950. The amounts that were allowed for taxes during closing was short by over $1,800. We purchased title insurance with the understanding that this would cover us in the event of an error such as this. Who should be responsible for the under payment for the taxes? We went to the title company first, they jerked us around for several weeks before they finally submitted the claim to the title insurance company, now I think we are being given the run around by the insurance company. We just need to  know who should be responsible for compensating us for the $1,800 owed for 2009 taxes.The title company who made the error, the title insurance company or the bank that we purchased the property from? Does the title insurance company represent us if we need to recover the tax money from the bank? No one seems to be giving us any answers. Thank you for any information you  can give us regarding this error. Kris

Hi, Kris:  Here are some general comments that might be helpful.  Find out when the 2009 taxes were due at discount.  That date is crucial.  If the taxes were due at discount before the date of the issuance of your title insurance policy, then you've got the basis for a claim against the title insurance company.  Most title policies contain an exception for taxes that are not yet due and payable, so if the bills came out after your policy was issued, then this typical exception would negate a claim.

If the issue is that the taxes were underestimated when setting up a lender escrow account or perhaps underestimated in the tax proration calculations between you and the seller, that's really a harder case for assessing blame.  Presumably the real estate agent or the seller would have provided tax figures when you viewed the property.  Any reasonable person looking to purchase property would consider the cost of taxes when negotiating price. 

The title agent has no personal knowledge of the property and so if there is an error that could or should be recognized by the parties at a closing, the parties - seller or buyer or real estate agent - have an obligation to point out the error.

Taxes do change from year to year and title agents rely upon the best information available which is usually a tax certification from the tax authority.  You might ask for a copy of that certification so you can better understand what happened.  Sometimes the tax collector quotes incorrect information.  Sometimes the title agent hasn't done a good job of getting up to date info.

I hope this helps.  Good luck with it and thanks for reading. ;)


Monday, August 09, 2010

happy insured

Hi Diane,  thought I would follow up to share the outcome of this title insurance claim for the costly non-permitted construction on our house...

Even though our legal matter with the sellers was far down the road (and stalled) and only then had we decided to file the claim, First American agreed to pay the full amount of the policy cap of 25K for such claims (hey, it's something!).   So in this case, we're very lucky we decided to pay for the enhanced policy way back when we bought the home.  I also think our intense record keeping on the matter provided the title company with the information they needed to evaluate the claim without any prolonged investigation or agony on anyone's part.

While we would have rather avoided this whole mess, at least we have found this bright spot in what we once, as first time home buyers, thought was just an obligatory part of the closing process.  It was a nice feeling to realize that a signing a couple of pages and a small check resulted in this little policy that has been quietly protecting our interest all these years.

Very happy to hear that.  Thanks for reporting back.  ;)

Thursday, August 05, 2010

just curious

How many states or underwriters require a written quality control plan for title agencies?  I just had an inquiry from a reader in Kentucky who is looking for a plan.

JC's response to the last post.

JC says, if anything, what he hears most often now from borrowers is, "Is that all?", and I think that's just darn exciting.  RESPA 2010 has turned the world of the Good Faith Estimate on its head.

Tuesday, August 03, 2010

the great silence.....can you hear it?

I cannot remember the last time a consumer called or cried about their amount of cash required for closing.

How amazing is that?  It's wonderful.  It is life changing.

HUD, thank you.

Your plan worked.  The new GFE and HUD-1 2010 RESPA standards have accomplished what years of training couldn't - accountability in disclosure.

Put the fear of real penalties in the hearts of loan officers and eliminate bait and switch or just plan sloppy work.  You did it.  You stood up to the lending and title insurance establishment and did something REAL, something that actually helped.