Land Title Blog & Radio Show

MURPHY’S LAW

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Anything that can go wrong will go wrong, especially in real estate, which is why you should take appropriate precautions to minimize financial risk, whether you’re buying a home to live in or an investment property.

Murphy was a competitive mudder, had him the fastest four-wheel-drive on semi-dry land—‘Murphy’s Mud Bucket.’  Like most of us, Murphy wanted to get ahead in life.  He knew he wasn’t going to drive around the state forever picking up trophies for crossing the quagmire quicker than anyone.  He took his winnings and decided to invest.

So he bought a nice little property on bank auction, a house with a front yard just about the perfect size for a good mud bog, but Murphy was going to sell it before he put any tire tracks through across the grass.

Now Murphy knew you didn’t win races if you got stuck between the starting point and the finish line.  You had to get in and get out fast without getting stuck in the middle.  The only way he was going to make any money off this thing was to get in there and get out fast.  He’d bought the house; all he had to do was sell it and he’d be money in pocket, no prizes for second place.

That’s right, folks, you don’t want to get stuck in the middle between the start line and the finish.  The same is true of real estate investments, only Murphy wasn’t so savvy about what he was doing.

You see the previous owner had bought the house and lived there.  Then that owner had gotten a reverse mortgage.  When that owner died, the property reverted to the Bank, and the Bank had sold it to Murphy at auction.  Murphy had made the purchase without a survey and used an out-of-town title company.  He also did not get an ALTA 9 Endorsement.

Murphy fixed up the house and found him a buyer.  BUT, the buyer got a survey and realized that Murphy only owned the front yard—not the house!!  The legal description on the title when the Bank took it over was incorrect.  Murphy had WAY OVERPAID for a front yard that he couldn’t sell.

Next Murphy tried to contact the out-of-town title company, but they didn’t answer.

They didn’t answer.

And they didn’t answer.

Also, because Murphy didn’t get the ALTA 9 Endorsement which protects property owners from survey errors and inaccuracies, Murphy had no recourse.  Murphy was stuck in the mud with no prize money for failure to finish.

There are ways to get across the bog to the good value side of real estate:

  • Use a Local Title Company that can help you if (and too often when) things go wrong.
  • Get a Survey, not just to know where your boundaries are, but also so you can get proper title insurance.
  • Get an ALTA 9 Endorsement, which is an important part of proper owner’s title insurance.

This is based a true story but the names have been changed to protect the innocent.

By Stephen Collins & C. J. Godwin

Land Title of AmericaMURPHY’S LAW
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SHE COULD OWN YOUR HOUSE

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Isn’t she cute?  Did you know this little girl could own your home, evict you, and throw out all your stuff? 

In the State of Florida, if a person lives in a home and has a minor child, that child inherits the house.  What if the previous homeowner had a girlfriend you didn’t know about?  And the girlfriend had a baby with the previous owner?  That child owns the home, not you.

The previous homeowner’s girlfriend’s baby is not going to show up in public records on a title search.  But she could evict you.

Do you have an Owner’s Title Insurance Policy? 

Owner’s Title Insurance provides and pays for the legal defense of your property rights.  For a low, one-time premium you can protect yourself against financial loss to any such title claims.   Call Land Title of America, Inc. today at (904) 797-9600, serving all your real estate closing and title insurance needs.

Not sure if your home has title insurance?  Call us at (904) 797-9600 and we’ll be glad to check the title insurance status of your property free of charge. 

Land Title of America, Inc.

2495 U.S. Highway 1 South

Saint Augustine, Florida 32086

(904) 797-9600

www.GoLandTitle.com

Land Title of AmericaSHE COULD OWN YOUR HOUSE
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IMPLIED EASEMENT OR IMPAIRED EASEMENT?

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Henry the Hunter bought himself a plot of 40 acres right smack in the middle of nowhere. It was the perfect piece of land. Beautiful layout and just the right retreat from the womenfolk. Only thing was, he couldn’t get to it.

The front side of the property was a meandering swamp that swelled up into a raging river in heavy rains. There was a dirt road off a side street, but that was posted private property with a locked gate. Henry had him a sharp set of bolt cutters, but the law wasn’t fully in favor of him using them.

The Judge said: “Build a bridge.” Regardless of permitting issues, traffic flow, or environmental impact in a wetland—the Judge did not care about convenience. He looked at records of where the lot came down from and the Right of Access was attached to that highway, not the dirt road. Right of necessity is another matter, and what is legal does not equal what is convenient for the landowner.

Henry didn’t have the money for permits and construction to build a bridge, but he did have a pair of waders. Way he saw it, that Judge just made his property more valuable. If his hunting camp was remote before, it was now nigh unto impossible to get to, and there was no way his wife was going to put on a pair of rubber boots to come find him.

In Florida, you can’t stop a person from accessing their real estate. You have Implied Easement to allow you access to your property, the question is where. You need more than a title search to learn about your Right of Access; you need a full land abstract to see where your lot comes down from and which road it is attached to.

* True story. Some of the details are changed to protect the parties involved.

Land Title of AmericaIMPLIED EASEMENT OR IMPAIRED EASEMENT?
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WHAT’S BURIED IN YOUR BACKYARD?

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What’s buried in your backyard:  a jar of cash, the family pet, human remains?  A home inspection doesn’t usually involve shovel work, and even a good survey can’t cite unmarked graves.

True Story:  There was a man who bought a new home in a new development.  Each of the lots was five acres, and on this man’s new property, the front yard had a nice grass lawn, trimmed with shrubs and flowers.  The back section was wooded.  Now the developer had disclosed that there were stones in the backyard that seemed out of place, in other words, not of a natural formation or deposit, but he gave no further details.

The developer really didn’t know what they were.  That part of the five-acre property did not fall into the construction area of the house, nor into the landscaped part of the yard.  The man moved in and was very happy with his new house on his new property, but when he went to clear a garden, he discovered a cemetery in the woods!

Nineteen headstones marked slave graves, untouched for over a century.

The man wanted none of this.  He didn’t hold a séance; he started a sue-ance.  He sued the developer, the real estate agent, and the title company.  The man felt the property was contaminated, compromised.  He didn’t want the bodies relocated—he wanted to be relocated instead!

In the end, the nineteen bodies were relocated, the developer resold the property, and the man lived unhaunted ever after.

What to do if you find human remains in your backyard:

  1. STOP.
  2. Call the Medical Examiner. In St. Johns County the phone number is (904) 209-0820.

The Medical Examiner will determine the age of the remains.  If more than seventy-five years, then an archaeologist gets involved.  If less than seventy-five years, you may have a police investigation in your own backyard.

This is not as much a property rights issue as it brings up issues of crime, public health, historical value, and respect for human remains.

* True story.  Some of the details are changed to protect the parties involved.

Land Title of AmericaWHAT’S BURIED IN YOUR BACKYARD?
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WHAT MAKES TITLE INSURANCE DIFFERENT?

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Owner’s title insurance is like health insurance in that you never want to use it, but you’re glad to have it if you need it. But unlike health insurance, title insurance has a low, one-time premium that gives you a lifetime of coverage for a property.

Owner’s title insurance is different than other types of insurance because it’s not casualty insurance.

Title Insurance fees are regulated by the State of Florida. The base rate is $5.75 per thousand up to $100,000, and $5.00 per thousand thereafter up to $1 million. Check with your title company for specifics on discounts available for some transactions. Proper title endorsements to the policy are also a part of your complete coverage and those vary depending on the property. The base rate and the endorsements don’t come near the legal cost you’d have to pay to defend your ownership rights. And remember, you only have to pay the premium once for owner’s title insurance and you’re good for life.

Title insurance is good for all real estate ownership. If you are unsure whether or not you have title insurance on your inherited or gifted property, contact Land Title of America, Inc. at 1-904-797-9600, and we’ll be glad to check your title insurance status for free.

Land Title of AmericaWHAT MAKES TITLE INSURANCE DIFFERENT?
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WAD OF CASH

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How big of a wad of cash can you flush down the toilet?  Is $10,000 too much?  I mean you might have friends coming over, what if only a few thousand dollars clogged the system?  Are hundred dollar bills septic safe?  Those are the questions you have to ask if you own real estate without an owner’s title insurance policy.

Title claims happen in the best of families, and in the worst.

Even with a title search, there can still be questions of property ownership due to clerical errors, unrecorded deeds and documents, and a whole range of other circumstances.  It is the homeowner’s responsibility to defend their ownership rights against such claims.  Even if the claims have no validity whatsoever, it is still your responsibility to stand up in court and say, “No, that’s mine!”  Otherwise you could automatically lose your home.

If you don’t have title insurance, then you have to pay the legal fees to defend your ownership rights.  The real tragedy is that you could foot the bill in court—the lawyers, the filing fees, and other legal costs—and you could still lose.  That means your money is gone AND your house is gone.  You could be left without a pot…to throw your money away in.

Here’s an idea:  don’t risk your money or your house—get an owner’s title insurance policy. 

An owner’s title insurance policy not only pays the court costs, the policy also provides the legal defense.  Yep, they bring the lawyer.  How much does title insurance cost?  A lot less than a plumber.  For a low, one-time premium, you can purchase a lifetime of title insurance that covers your financial obligation toward the property.  Furthermore, if you do get sued for title to your house, and if your case does not prevail in court, then you get the amount of the policy.

Even with title insurance, you could still lose your case, but you don’t lose everything.  Without title insurance, you might as well chuck wads of cash down the toilet and find out how much you can afford to flush.

Land Title of AmericaWAD OF CASH
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TITLE INSURANCE IS YOUR FINANCIAL SEAT BELT

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Are you really that stupid that you would own real estate without an owners’ title insurance policy?  Whether you purchased or inherited, the risk is the same.  Look ya’ll, I’m gotta house!  Risk is in all real estate; however, you can reduce your financial risk with an owners’ title insurance policy.

Now why would I want to go and spend more money on an owners’ title insurance policy when I’m trying to save money?

Let’s put it this way:  whether you drive a minivan or a convertible, you wear a seat belt for safety.  You may have financed your old minivan and made a cash deal on your convertible—either way, the accident risk is the same.  Title insurance is your real estate seat belt.  You never want to use it, but it saves your financial life.

Wear your seatbelt, EVEN ON A CASH DEAL.

ESPECIALLY ON A CASH DEAL!!

IF IT’S A CASH DEAL, IT’S YOUR CASH ON THE LINE.

If something goes funny with your ownership rights, then you stand to lose everything you put into it, and then some.  The circumstances of real estate transactions aren’t always cut and clean.  Where there’s room for doubt, there’s room for a lawsuit.  Do you know how much lawyers cost?  Do you want to find out?

Idiots abound, but you don’t have to be one.  You can do everything right—do the title search and get the survey—but that doesn’t stop some idiot from challenging your legitimate ownership of that property.  And as the owner, it’s your responsibility to defend your legal rights to the property.  Title insurance not only takes the burden of the legal defense, they also pay the bill.

Did you get that?  For a low, one-time premium, title insurance provides AND pays for the legal defense of your ownership rights. 

You can’t always stop stupid, but you can financially protect your property with title insurance.

* Please understand all title insurance policies have exceptions in their coverage.  Be sure to have an attorney review those exceptions with you.

Land Title of AmericaTITLE INSURANCE IS YOUR FINANCIAL SEAT BELT
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NO GUARANTEES IN FORECLOSURE PURCHASES

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If you’re in the foreclosure market, then you’re in the highest risk in real estate—there are no guarantees!  Yes, you can make money from nightmares, but sometimes nightmares are just nightmares.

Foreclosure properties often have a lower purchase price, and you can get a great deal…a great deal of trouble.  With opportunity, there’s risk.  Little opportunity means little risk.  Big opportunity equals bigger risk. Mitigate your risk.  Here’s what you do if you want to invest in foreclosures:

  1. REALTOR

Know your property.  Make sure the value is there.  Know the property and know the area.  The best way to do the research is to get a good competent Realtor to assist you because in the end, nothing but the property value matters.

Once that’s taken care of properly, then you can worry about the next steps.

  1. TITLE CHECK

Get a title check from a competent title professional.  Why?  Because:

  • Did you know that you might be purchasing a second mortgage? If this is the case, you’ll be required to pay the first mortgage.
  • Are the taxes current?
  • Is the association current? What might the association fees be?
  • Were all junior liens properly named?
  • Is IRS involved?
  • How does a 120-day wait sound to you before you can work on the property?

These are some of the title issues that might affect your purchase of a foreclosure property, and that’s without even talking about survey-related issues that you’re not going to know prior to the sale.

  1. FORECLOSURE AUCTION REGISTRATION

If the title issues are taken care of or at least addressed, then the next step is to make sure you’re properly registered with the county in which you want to bid.  Foreclosures are all cash transactions, no financing, and the money normally has to be with the clerk within hours after the sale.  Most counties in Florida require five percent of your maximum bid prior to auctioning, that isn’t a quick process.  Sometimes it can take days before you’re eligible to bid.

Conclusion

These are just a few things to think about when investing in foreclosures.  It’s not for the novice investor; it’s for the seasoned veterans who have lots of experience.  Don’t get caught looking in the distance at the beautiful scenery and get stuck in the quicksand.

Truly you’d be surprised at how much better off you are to just find a local Realtor and buy a standard property without all the excitement, bidding, stress, and extra risk of the foreclosure market.  You’ll be able to take a deep breath, do the proper analysis, and find out what you really want and need.

Land Title of AmericaNO GUARANTEES IN FORECLOSURE PURCHASES
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MORTGAGE COMPETENTLY

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“Confidence” and “competence” are not the same. Just because you can click a button to get a mortgage doesn’t mean it’s a good deal. You can be completely confident in absolute incompetence. If you use an online company for your closing and your loan, chances are you’ll pay an astronomical amount for lack of ground control when it comes closing cost and other concerns.

Online mortgage companies offer one-stop shopping, in that you get your mortgage loan and your closing from the same source. However, one-stop shopping isn’t so convenient when it comes with an extra pricey payload.

First of all there’s closing cost. Real Estate is a location-specific commodity, and different regions have different customs regarding fees charged at closing. Online lenders aren’t familiar with local customs. They may tag on a fee standard for their area which does not apply for the location in which you’re buying. However, a local closing company will only apply fees specific to the area—you won’t have superfluous expenses. Also, online lenders may add fees for working long distance, fees that would not be charged when using a local title company.

And secondly, there’s oversight cost. A title company owned by the lender and run by the lender does not have the oversight that an independent, locally owned title company does. “Houston, we have a problem.” Lack of oversight can be costly!! A lender-owned title company is only really concerned about the deals that they get audited on. A local title company is concerned about EVERY deal.

Conclusion

You don’t have to be a rocket scientist or be in a rock band to get a good mortgage. If you pay, you choose—you don’t have to use the lender’s title company. Even with an online lender, you can choose a local title company for a smart financial decision.

Mortgage competently with a local title company.

Land Title of AmericaMORTGAGE COMPETENTLY
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YOUR CHOICE

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If you were buying a new Ford F-250, would you let your mother-in-law pick the color?

Would you get a telemarketer to name your firstborn?

Would you take fishing advice from a flight attendant (well, maybe if she’s from Alabama)?

Then why in the world would you let your lender tell you where to have your real estate closing?

If you pay, you choose.  The bank cannot force you to use their title company.

Nothing is free.  The lender may claim that they pay the closing costs, but the rate of the loan will be affected by them covering your title fees.  They’re making money at your expense—financially and maybe emotionally too.  That “one-stop” shopping—get your financing and your closing from your lender—is not as convenient as it is expensive!

Typical pitfalls of a lender-owned (or real estate broker-owned) title company include:

  • Extra charges for non-applicable fees
  • Not honoring applicable discounts
  • Motivation to just get the deal closed no matter what the fine print says

A locally owned third-party title company avoids these pitfalls, saving you money, and also gives you a fresh set of eyes reviewing your closing documents with you.  Don’t put all your eggs in one basket!  Seek some oversight when big money is on the table.

Look ya’ll, I’m buyin’ a house!

You can do it the smart way with a locally owned third-party title company and get better service and save money, or you can use the lender’s or real estate-owned title company—it’s your choice.  Be smart!!

Land Title of AmericaYOUR CHOICE
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