It is likely that an underlying lienhold

It is likely that an underlying lienholder will be notified that the borrower sold the property if the lienholder receives the tax bill.

To include a Due on Sale clause in a sel

To include a Due on Sale clause in a seller finance loan, check the box on the seller finance addendum requiring lender’s consent to sell.

Texas Homeland Title can issue title pol

Texas Homeland Title can issue title policies on wraparound liens if the parties sign certain disclosures and acknowledgments.

Using a wraparound lien to seller financ

Using a wraparound lien to seller finance could trigger the due on sale clause.

A Due on Sale clause allows the lender t

A Due on Sale clause allows the lender to call the loan due if the borrower sells all or part of the property.

Helping Our Clients in All Ways Possible…

Much of our time here at Texas Homeland Title is spent in what we like to call “consultation” with our clients on their real estate title issues. While we love the deals that come into the office that open and close without a hitch, the real estate title business, at least ours here at Texas Homeland, is much more than a conveyor belt of real estate contracts opening and closing, opening and closing. opening and closing.  Rather, our business is about helping our clients in all ways possible. (As I’ve written before, our clients are real estate brokers, loan officers, real estate investors and builders who direct business to us. Our customers are their customers.)

This means that we actually spend lots of time working with clients before they ever have a contract on a given piece of property. For example prudent clients will come to us prior to listing an acreage tract and have us do at least some minimal preliminary title work to determine if the person who has represented himself as the seller is at least likely to be the vested owner of the property.  That always helps!  Or, clients often come in or call to get a head start on an heirship issue that they think is likely to rear its head.  Doing these things prior to execution of a contract, or even prior to (or contemporaneously with) taking a listing, can cut down on delays.  And we all know that its delays, maybe more than anything else, that kill deals.  We have many clients who come into our office on a regular basis to discuss the latest deals they’re working on because they know that talking about deals at the title company often reveals issues that they had not even thought about or considered.  Some, I like to think, simply come in to say hi because they just like us.

We really do value our customers and we want to help them in any way we can.  Sometimes a client will come in and ask for help on a certain issue, and somebody here, or more than one person even, will stop and drop what they’re doing and jump immediately on that client’s problem.  Occasionally, we find ourselves swamped, covered up by a stack of client issues that are not associated with contracts.  These are stacks of work for which we typically charge no fee whatsoever.  But we tackle problems, we tackle issues, and we tackle the circumstances our clients bring us.

We do this because we care.  Of course, we hope that these clients for whom we do no-fee title work will remember this and will bring us their contracts to close.  But this does not always happen.  We do not discriminate when it comes to helping out.  We help clients and non-clients alike.  Maybe we shouldn’t.  Maybe we should put no-fee work from non-clients under the stack, at the bottom of the pile, and get to it when we can, if we can.  But that just wouldn’t seem right.  We serve.  And we do it with a smile, usually.  If a person wants to bring us their no-fee title work, only to continue taking their contracts down the street to close, that’s up to them.  We’ll keep on helping.

If you need some help with a title issue, come on by.  We’ll even give you a cup of coffee and a cookie!

Why Confusion Over Escrow Fees?

A common source of confusion in the title business in Texas is the Escrow Fee. Upon presenting the settlement statement, we often hear a buyer ask a question like, “I’m not escrowing, so why am I paying an Escrow Fee?”

The buyer has recognized the word “escrow” as it applies to mortgage lending, i.e., paying a portion of the yearly property taxes and hazard insurance premium each month along with the principal and interest to the lender for the lender to hold in its escrow account so that it can pay those bills at the end of the year on behalf of the borrower. The buyer’s confusion arises from the fact that escrowing in the mortgage lending context has nothing to do with the Escrow Fee charged by Texas title companies.

In Texas, the Escrow Fee is charged by title companies on virtually every transaction. While many may describe it as an “administrative fee” or a “service fee,” it is more accurately described as the fee charged by title companies for the use of their escrow account and for escrow services. An escrow account is a special bank account setup by the title company for the sole purpose of holding clients’ money.

Escrow services can be generally described as those services necessitated by receiving and holding client funds (earnest money, buyer purchase money funds, loan funds, etc.) and then disbursing those funds by either check or wire to the various payees. This involves escrow accounting. A separate accounting ledger is set up and maintained for each transaction, and all funds must be received before any funds can be disbursed. The lender often “nets out” its own loan fees from the loan funds wire, and the account must be balanced before any checks are cut.

As you can see, both the buyer and the seller benefit by a title company’s escrow services. This is why contracts (including the TREC promulgated form contracts) often call for the buyer and seller each to pay half.

So next time your buyer or seller complains about the Escrow Fee, explore their complaint by asking questions to determine whether they might be confused as to what the Escrow Fee actually is. If they are, a quick explanation of title company escrow services can usually clear things up and make them happy.

Mineral Rights in Subdivisions…

With the recent increase in natural gas production in Texas, more and more property owners are interested in mineral rights. If you don’t already know that you’re a mineral rights owner, then you probably don’t own any. If you own property in a subdivision, for instance, the developer of the subdivision almost certainly reserved the mineral rights (if even he owned them himself) when he sold off the lots. If you have purchased acreage, there is a better than average chance that the minerals were sold off or reserved at some point in the past.

Title companies in Texas will not usually insure the title to minerals. Instead, we take exception on Schedule B of the title commitment, and the subsequent policy, to any documents that we find during our title search which affect or purport to affect the mineral interest of the property, and to “All leases, grants, exceptions or reservations of coal, lignite, oil, gas and other minerals, together with all rights, privileges, and immunities relating thereto, appearing in the Public Records whether listed in Schedule B or not.” In short, we do not guarantee minerals ownership, or lack of ownership for that matter.

Still, some buyers and sellers persist in asking title companies to tell them whether or not they own the mineral rights on their property. What I always tell them is that they probably do not own the minerals, but if they want to be absolutely sure, one way or the other, they can engage an attorney to give them a written “Title Opinion.” This usually means spending quite a tidy sum. In addition, it could take you a few weeks to get receive the title opinion. But, it is a sure-fire way to tell for sure who owns the mineral rights to a tract of land.

You can save a good bit of money if the property owned is in a subdivision. The attorney may be able to locate the minerals reservation by the developer quite easily and confirm that you do not own minerals. The cost for this negative determination could be relatively inexpensive. Still, I have not come across many people who want to pay an attorney to tell them they do not have mineral rights.

Release of Lien Should Be Filed Upon Payoff of Purchase Money Loan

When a homeowner refinances a purchase money loan using a home equity loan, and the purchase money loan is going to be paid off in its entirety upon closing the home equity loan, the title company closing the new loan is supposed to see to it that a Release of Lien is filed of record. The Release of Lien gives to the public that the original purchase money loan is paid off.

Without the Release on file, the homeowner will almost certainly run into delays when he decides to put the home up for sale in the future. What usually happens when no release of lien is filed goes something like this: The homeowner puts his house up for sale and gets a contract on it. They open title, and set the closing date. The title commitment is issued and shows TWO liens on the property, the current home equity loan, AND the original purchase money loan. The title company calls and the homeowner says that the purchase money loan was paid off when he refinanced the house. Now the title company gets to work. First, they ask the homeowner for a copy of the settlement statement from the refinance. Upon examination, it appears that the purchase money loan was paid off. Now the current title company contacts the title company that closed the home equity loan to obtain an “indemnity letter,” which is a letter that gives coverage to the current title company by the previous title company for any claim based on the non-payment of the purchase money loan. (There are other ways to clear the lien, but we’ll save those for later blogs posts.)

Here’s where the delay occurs. Many title companies can take a week or even two weeks to pull their files, examine the title, determine that a Release of Lien should have been filed but was not, and issue the indemnity letter. Once the indemnity letter is received, the current title company can proceed to close the sale and issue a title policy to the new owner with confidence that the title is free and clear of all prior liens.

So the moral of the story: A homeowner would be wise to ask for a copy of the filed release of the purchase money lien by simply calling the title company which closed the home equity loan a couple of months after the closing.

Still time to buy a home before school starts…

Its Friday the 13th of August and the kids are getting ready to go back to school. You were hoping to buy a new home and get moved before they go back, but you got busy this summer and couldn’t make it happen. So you’ll wait until next year.

But why wait. Buying a home doesn’t have to take as long as you might think. In fact we routinely close home purchases within only a few days. Of course, these are usually cash purchases, where the buyer is simply writing a check for the whole purchase price plus closing costs. But what if you’re like most of us, and you actually have to get a loan? Is it too late? Maybe not.

Lets look at a contract we received a here at Texas Homeland Title on Tuesday, August 10th. That very day the buyers signed their contract (negotiated only the night before), locked in their rate with a mortgage company, and provided all the requested documentation (IRS Form 1040′s, W-2′s, etc.). Today the appraisal was ordered. It will be received by the lender by the 16th or 17th, and if the appraisal supports the contract sales price, the complete loan package will be submitted to underwriting by the 17th or 18th. This particular mortgage company is currently running 4-6 days in underwriting. That puts us somewhere around the 25th or 26th to get the “clear to close.” Then its just a matter of receiving the loan documents and scheduling the closing. This deal is VERY likely to close sometime between August 27th and August 31st. That’s between 17 and 21 days from the date we received the contract.

So buying a home can be a relatively quick process, especially if there are no hitches during the loan process and no title issues, and if you get the various providers, particularly the lender and the title company on board with the RUSH!