Opening Titles and Closing Remarks

This is a final reminder that if you purchased a property in Indiana in 2008, there are only four days left (until December 30^th, since most county offices will be closed on the 24^th, 26^th and the 31^st) to file for your Homestead and other credits with your County Auditor. If you are living in the property as your principle residence, you are entitled to a Homestead credit.

Run - don't walk to the Auditor's office.

This credit will save you hundreds and possibly several thousands of dollars on next year's real estate taxes. At this late date do this in person. Don't trust the mail.

If you already filed for your credits, find your receipt and keep it in a safe place. In the event of a mix-up, the burden of proof will be on you to prove that you filed. Don't expect the County to cut you any slack. They won't. 

A couple of weeks ago we mailed Homestead Tax Credit reminders to each of our purchasers during the past year, about 800 in total. We received more than one-dozen calls from folks who had forgotten to file or not realized that they should file. All were quite appreciative that we took the time to remind them. I confess though, my primary motivation in doing the mailing is to avoid unpleasant phone calls after the tax bills come out next spring.

Our Closers explain this in every closing. There are usually two or three forms signed wherein the Buyer acknowledges that we've told them. Yet, human nature being what it is, people don't hear us or don't follow through.

When the tax bill comes, it's too late.

So don't wait any longer. Missing out on this will cost you plenty in extra real estate taxes.

Indiana Real Estate or Mortgage professionals please feel free to republish this post for your clients.

The bankruptcy induced fire sale of the LandAmerica title insurance underwriters to Fidelity National is becoming more complicated. Matt Carter at Inman News updated the story Friday. You can read the entire article here.

The unsecured creditors of LandAmerica are raising questions about the valuation given the title underwriters in the deal with Fidelity. Don't be surprised by that development. Once Fidelity cancelled the original deal, LandAmerica's status as a going concern became tenuous at best. Fidelity jumped on that opportunity to pick up the plum assets with few of the liabilities. The bankruptcy of LandAmerica probably makes the deal easier for the Federal Trade Commission to approve, as well.

Another development is that Stewart Title reportedly made an offer for the underwriting companies with the Nebraska Insurance Department that is the first regulator that must approve any deal. I personally favor a Stewart acquisition. Having about 85 percent of the national title insurance distribution system split roughly equally between three companies is preferable to having two companies control 75 percent of the market. Three large companies create more competition for good title agents and their clients. Three large companies also make it less likely that Fidelity and First American (two companies that mostly hate each other but now have common business objectives) could impose their will on the market place unchallenged.

Its being widely reported this morning that a condition of Fidelity's offer is that the acquisition of Lawyers Title and Commonwealth Title must be approved by December 22^nd. So the coming week is potentially the most important week in the history of title insurance.

Finally, I can't resist quoting Ted Chandler, Chairman and CEO of LandAmerica when announcing the bankruptcy filing and sale to Fidelity. "I am deeply disappointed over the need to file for bankruptcy protection . . . However, this sale . . . to Fidelity National . . . offers our stakeholders the best result available in this brutal real estate, credit and capital market environment."

As part of this deal, Fidelity reportedly agreed to assume the liability of $45 million in deferred compensation owed the management of LandAmerica.

Way to look out for your "stakeholders", Ted.

Don't forget to wish your employees "Happy Holidays."

It's not unusual for a client who just recently bought or refinanced their property (like even just a month or two ago) to be back in my office for another real estate closing because they're either flipping that property or maybe refinancing their mortgage because rates came down. When we're in the closing room looking over the settlement statement for their new transaction, I occasionally get some variation of this question.

"I just bought title insurance ____ months/years ago (fill in the blank), why do I need it again. "

Answer: If you are buying a property, you want to know that the seller actually owns it, right? If you are lending money and taking back a mortgage on property as security, you want to know that the borrower actually owns the security, right? And you want some reasonable proof of that, too. So the seller or borrower says to you "I can't prove that I own the property now, but I have this title insurance policy that says I owned it as of six months ago when I did my last deal." Doesn't quite give you all the warm and fuzzy assurances you'd like does it?

A title policy only insures the title up to the date of the policy, not beyond it. When you sell or mortgage the property later (even a day later), you need to prove to the buyer or lender that you still own the property. A title company will do another search of all the public records starting from the old policy date if they have a copy. The title company makes sure that you still own the property, and that since the last policy date you haven't incurred any new liens, forgotten to pay your taxes or been sued, among dozens of other things. Then you can complete your new transaction with a new, up to date title policy.

Give the title company a copy of your old title policy when the order is placed. Don't forget to ask about any short term or reissue rate discounts that are often available. Because you were just there recently, the Title Company's job is easier. Most will reflect that in what they charge you on your new deal.

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 This post is the first in what I plan to make an ongoing series of simple answers to the kinds of questions people from outside the industry often ask. If you're a realtor® or lender I hope these posts will prove helpful in explaining things to your clients. I will be tagging them as "Ask the Title Guy", so when you stop back, you'll know exactly where to look. And if you have a question you'd like me to address either leave a comment or email me directly.

Images purchased http://www.123rf.com/

No, we're not trying to be the boss of you, but at least 25 percent of our real estate closings involve a question of authority. That is, does each of the parties sitting in my closing room have the authority to complete their part of the transaction?

If a party at a closing is an individual with a valid I.D. and isn't acting crazy, stoned or otherwise impaired, we assume that they can properly complete their end of the transaction. But often, a party to a closing is not an individual. It may be a corporation, a trust, or someone acting in a fiduciary capacity. What then? Well, our suspicious and untrusting title instincts kick in; we look them in the eye and slowly ask "show me your authority . . . please."

Individual stockholders own corporations. Individuals grant power to trustees and attorneys in fact. Executors represent the interests of individual heirs and devisees. Individuals are at the root of all these entities. A title company must establish that those individuals have properly granted their authority to whoever is going to complete the transaction.

We might require a resolution from a corporation's board of directors. We might want to examine the powers of the trustee clause of the trust agreement. In the case of an estate, we may need a court order. All of this establishes the authority of every individual participating in the transaction.

And once we've established who is the boss of you, we can ensure (and insure) that all of the closing documents are properly executed and enforceable.

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