All posts tagged: financial protection

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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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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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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Logical Conclusion: Owner’s Title Insurance

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This statement is untrue:  the title to your house is clean.

Now, if your home title is clean, then the statement is false, which means your home title has an issue.

…On the other hand, if your home title has an issue, then the statement is true (as being untrue), which means you do not have a title issue.

You could sit there and try to work that out…or you could just get Owner’s Title Insurance.

Owner’s Title Insurance offers financial protection to homeowners in any scenario.

Even if you get a title search, you cannot say conclusively that your property title is clean.  A title search can only see what’s in public records.  It doesn’t account for an old deed in somebody’s sock drawer, or a clerical error, or a previously unknown heir (they happen!!).

While a title search is a necessary precaution to deal with any known problems, Owner’s Title Insurance covers the hidden risk of possible title challenges.

Furthermore, title insurance is low cost, and it’s a premium you pay only once, which covers you for as long as you own the property…and forever after you convey it, covering your financial liability for your link in that chain of title.

Logical Conclusion:  Owner’s Title Insurance is the most cost effective way to financially protect yourself from title issues on your property from now through forever. 

 

Stephen CollinsLogical Conclusion: Owner’s Title Insurance
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Homeowner That I Used To Know

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You can get addicted to a certain kind of sadness

When you don’t have money because you gave it all to an attorney.

You didn’t have to cut yourself off, make out like homeownership never happened.

You could have just gotten title insurance with proper endorsements.

You didn’t have to stoop so low

Because you’d have money to move to a new place if you don’t prevail in court.

You don’t want to live that way, reading into every word public records say—get title insurance with proper endorsements for financial protection against what’s unseen between the lines in courthouse documents.

Refrain!

A challenge to your home ownership can be financially catastrophic.

Don’t be a homeowner that I used to know—insure your title to your property for financial protection if somebody tells you to Walk Off The Earth.

 

Hey, if you’re not yet one of the viral viewers of “Somebody That I Used To Know” performed by Walk Off The Earth, check out this link:  http://www.youtube.com/watch?v=d9NF2edxy-M

It’s a five member band reduced to one guitar—they should have had a Title Policy so they didn’t have to sell their band equipment!

 

Stephen CollinsHomeowner That I Used To Know
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Environmental Protection & Financial Protection

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Sally was a smart woman.  She got title insurance and proper endorsements when she bought her real estate.  Sally had no idea at the time how smart she was.

It was the perfect property—more than an acre of land where she could have her horse, and live in the nice sized home, comfortably laid out for her and her mother.  Sally did everything right.  Like I said, she got owner’s title insurance and proper endorsements, next she did a survey and started to clear the land for her horse and put up a pole barn.  Then this nice little lady from the DEP (Department of Environmental Protection) knocked on the door.  It was not Avon calling.

“Did you know you’re impacting a wetland easement?” the DEP lady asked.  Sally had no idea…and she had no idea what kind of fines she was facing…and she had no idea how this could have happened in the first place.  Let’s take a look:

Bob had inherited the property from his father, Gary.  He had inherited it properly—after Gary’s death, the estate had gone through probate and ownership had lawfully passed to Bob as the only heir.  But Bob already had a house of his own where he and his family lived.  He was all set, he didn’t need another house, and Bob knew he had the lawful right to sell his deceased father’s house.  What Bob didn’t know was that his daddy had made a deal with the Devil—oops, err, oops—the DEP.

Yes siree, the DEP.  Bob’s father, Gary, had granted a Conservation Easement to the DEP when he built the house.  When Gary went to pull building permits for the house, he’d learned that his land had been reclassified as “wetlands.”

If your land has been designated as “wetlands,” then you can only clear without soil disturbance on the property—that means no stump pulling and no fill or draining.  If you can’t clear it with a machete or a chainsaw, you can’t clear it.

Hard not to disturb the soil when you build a house.  So Gary had made a deal with the DEP:  they would give him a postage stamp lot to build his house, his garage, his drain field—but that’s it.  The rest of his property he had to deed to them in a Conservation Easement.  Once it became a Conservation Easement, he couldn’t touch it, not even with a pocket knife.  As far as land use in a Conservation Easement, there’s no nothing but fines.

Let’s review for clarity:  Once a Conservation Easement is in place, no further clearing is permitted by hand or otherwise—the landowner cannot touch the land, not even with a pocket knife.

Gary did the deal so he could build his house on the land he’d already paid for, but the deal with the DEP was never recorded because Gary died before it could be completed.  So there was no public record of the Conservation Easement, and Bob didn’t know about it so he couldn’t disclose it with he’d sold the property to Sally.  When she got title insurance, the title search didn’t reveal it because it wasn’t in public records.  Gary had done the deal with the DEP, built his house, but passed away before he could get the Conservation Easement recorded.  And by no fault of her own, or the title company’s, that’s how Sally wound up with the whole entire mess.

Any resemblance of these characters to actual people is more than coincidental.  This is a true story.  The names have been changed to respect the privacy of those involved in a very public matter:  landowner rights.

The only good side to this story is that Sally had gotten title insurance with proper endorsements.  Despite the fact that she may have to leave the property that was perfect for her, and find a new place for herself and her mom and where she could keep her horse, Sally will not have to pay the cost to resolve this issue.  By no fault or negligence of her own, the title company, or the seller, the land use restrictions had been violated.

Title claims are not something you hear about all the time (unless of course you’re me), but title insurance with proper endorsements is vital to personal financial protection if you do have a challenge to your ownership.  Conservation Easements can be one of those challenges, especially if not recorded correctly.

Conservation Easements are pretty restrictive on their own, but they can be economically crippling if you don’t know about them.  Just when you think you own your property, Bambi, Thumper, or Flower could claim it because they were given a Conservation Easement!

Guard against undisclosed Conservation Easements and all other flaws in public records by securing your ownership interest with owner’s title insurance with proper endorsements.  

P.S. Beware of Bambi!

 

Stephen CollinsEnvironmental Protection & Financial Protection
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Real Value of Owner’s Title Insurance in Florida

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The misconception of Title Insurance is costing Florida homeowners dearly.  I would like to clarify the real value of Owner’s Title Insurance for all those impacted by the Florida real estate market, from the individual homeowner to the State economy.

When an Owner’s Title Insurance is purchased, primarily it is for the prevention of claims against home ownership.  When a company provides title insurance, a title search is part of the risk assessment done before issuing a policy.  The title insurance company’s objective is in lockstep with the consumer’s best interest:  to avoid questions or challenges of the homeowner’s title.  Thus in the examination of public records, the title company has a vested concern to find any and all complications to the ownership title.  We just do not say, as quoted in a famous movie, “This house is clean.”*   You saw how well that went—they should have gotten a policy as their house is being sucked into oblivion!  We put our money where our mouth is and insure it.

Though title insurance works mostly through prevention, it offers security via financial protection from the massive costs of litigation and other legal expenses should a problem, challenge, or complication to a Florida homeowner’s title arise.  No matter how much effort is put into this prevention, bad things still happen.  It’s expensive to be right when someone thinks you’re wrong.  Owner’s Title Insurance provides and pays for all costs associated with a title claim (whether through settlement, legal defense, and / or reimbursement of the policy amount to the homeowner if that defense does not prevail).

The cost of Owner’s Title Insurance is promulgated by the State of Florida, and the current rate has been the same for 20 years.  It is a nominal fee when compared to what litigation costs are.  Furthermore, Owner’s Title insurance is a one-time fee, typically paid at the closing of a real estate transaction.  Once it’s paid, it’s paid—no monthly premiums, no annual fees—no additional charge to the consumer, the homeowner.

With Owner’s Title Insurance, consumers pay a set amount for financial protection against the unknown cost of hidden risk to home ownership. 

Please refer to the numerous posts in my blog for examples of hidden risk to home ownership.  These issues are real and can be devastating to those who are not insured.

Homeowners need Owner’s Title Insurance now more than ever.  Title Insurance plays a vital role in Florida’s recovering housing market.  As a source of financial protection, Owner’s Title Insurance assures potential Florida buyers they can invest in real estate with stable value backing that investment.

Owner’s Title Insurance is good home economics.  It nurtures financial security for the homeowner, the State budget, and the Florida economy.  Owner’s Title Insurance adds real value to real estate rights, thus it benefits every Florida citizen.

*Poltergeist

 

Stephen CollinsReal Value of Owner’s Title Insurance in Florida
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