Title Insurance On Residential Bank Owned Real Estate – Buying Distressed Properties

Limits on Title Insurance Available to Buyers of Distressed Residential Real Estate Properties

Real Estate Owned properties, or REO properties, are real estate properties that are owned by a Bank or Lender following a foreclosure. A Lender can become the owner of property through foreclosure by sale (if the Lender is the only bid on the property at auction), strict foreclosure (if the owner does not redeem within 30 days) , or by deed in lieu of foreclosure (by agreement between owner and Lender).

Once the property is owned by the bank or lender, they want to sell it as fast as possible to get cash on hand. After all, the bank is in the business of lending money, not holding, leasing or selling real estate. Therefore, Buyers can get great deals on bank owned real estate. However, buying bank owned real estate does not come without risk. One of the considerations when buying bank owned real estate is the type of title insurance available.

When buying real estate, the buyer’s lender, in addition to a title search to show that Seller has proper title, will require the purchase of Title Insurance. Title insurance covers the unknown and undiscoverable defects which might eventually lead to another person making a claim against the buyers ownership of the property and therefore the lenders collateral on the loan. There is also an Expanded Title Insurance policy available only to owners which in addition to the standard policy also covers:

  • Cost of moving or repairing a house forced by zoning violations or lack of building permits;
  • Costs of removing structures because they encroach on neighbors;
  • Claims that the property is not properly zoned for single family residential use;
  • Expenses if neighbor builds structures on your property;
  • Expenses created by violation of restrictions on the property; and
  • Expenses if your house is not located on the property described in the title.

The purchase of an expanded policy requires the execution of an Owners’ Affidavit by the Seller as someone ‘who has personal knowledge of the property’. Since a bank or lender cannot have ‘personal knowledge’ of the property, and cannot provide Buyer with an Owners’ Affidavit, Expanded Title Insurance policies are NOT available for Buyers of bank owned real estate.

While Buyers of bank owned real estate might be getting a good deal, a safer bet is buying properties that are in pre-foreclosure, where a lis pendens has been filed but the title to the property has not yet passed to the lender, or buying property as a short sale, where the lender agrees to accept less than the full amount of the loan for the property. In both pre-foreclosure and short sale real estate transactions, the Seller is still the homeowner, and can satisfactorily execute an Owners’ Affidavit, allowing the Buyer to get Expanded Title Insurance protection.

Increased Consumer Protection Brings Changes in Real Estate Closing Procedures

Upcoming Changes in Real Estate Closing Procedures

Closing Disclosure Form & ALTA Best Practices

The real estate mortgage bubble has brought some changes to the real estate arena, but it seems the biggest changes are yet to come. The Consumer Financial Protection Bureau is replacing the long used HUD-1 Settlement Form with the Closing Disclosure form effective August 1, 2015.

The HUD-1 was a 3 page document that outline the closing transaction and was prepared by the Buyers attorney for closing, and was usually approved by the bank the day before or day of the closing. The Closing Disclosure form will be a reported 7 pages, will be prepared by the bank, and delivered to the closing attorney 3 business days before closing.

The result here is that lenders and attorneys need to become involved in the real estate transaction much earlier in the purchase process, and closing dates will be further out from the date of contract signing. Further, if any issues arise that require changes in the Closing Disclosure form, it will be at the lenders discretion whether changes are needed, and if they are, closing will need to be delayed by at least 3 days!

Further, since the new protections are creating more responsibility, and therefore liability, for the lenders, the lenders are requiring closing settlement attorneys to follow stricter guidelines. Many lender will be requiring that attorneys form and execute an ALTA (American Land Trust Association) Best Practices compliance guide, and if they fail to do so, they will not be able to close on loans from that lender.

Real Estate attorneys can no longer rely on “the way it has always been done”. The real estate closing procedures are changing, and attorneys need to adapt with them in order to properly represent their clients. Clients need to understand that the newer protections remove some of the control from the hands of the attorney, but that ultimately those requirements are there to protect the client.

Buying a Condominium – Greater Danbury Area Real Estate Closings

Are you buying a condominium in Danbury or one of the surrounding towns such as Brookfield, Bethel, New Milford or New Fairfield?

I would like to point out two difference between buying a house and buying a condominium that some people do not consider.

The first difference is that condominiums have by laws. As opposed to a house, where you can pretty much do whatever you want (within reason), a condominium complex will have by laws, or rules, that every owner or tenant must follow. They can contain guidelines as to parking, noise, pets, and even where you can place a grill. Every condominium complex has it’s own by laws. Breaking by laws can result in fines. When you are buying your condominium, your real estate attorney will request these by laws and provide you with a copy.

The condominium complex will also have a master policy for hazard insurance and liability insurance on the property. This means that when you are buying your condominium, you will not need to buy additional insurance to satisfy your lender, as you would have to buy with a stand alone house. Also, you will be covered for any injuries suffered by guests that are visiting and hurt by defects in the property. When you are buying your condominium, your real estate attorney can request a declarations page and certificate of insurance contain the coverages of the master policy.

 

 

 

Connecticut DEP Prohibits Running Bamboo

Connecticut Law Creates Liability for Growing Running Bamboo

Do you have bamboo growing on your property? Is there bamboo growing on a property you are looking to purchase?

A new Connecticut law, Public Act 14-100, prohibits owners of real property from growing “running bamboo” (i.e., bamboo in the genus Phyllostachys, including yellow-groove bamboo) within 40 feet of adjacent property or a public right of way.  The new bamboo law came into effect on June 6, 2014 and created two forms of liability for property owners growing running bamboo.

The first liability makes the property owners subject to a $100 fine per occurrence with each day of a continuing violation as a separate occurrence. Either The Department of Energy and Environmental Protection, any duly authorized municipal constable, municipal tree warden, zoning enforcement officer, or inland wetlands and watercourses enforcement officer may enforce the 40-foot buffer zone.

Secondly, the law creates a civil liability for running bamboo that grows beyond a person’s property boundaries by considering it a nuisance. Therefore, any person who violates the statute is liable for any damages caused to any neighboring property.

Further, businesses who deal in bamboo must also become aware of this law. Retailers of running bamboo must provide a warning to potential consumers that discloses that running bamboo is a fast growing plant that may spread if not properly contained, and must provide recommendations on how to properly contain running bamboo.

This law creates considerations that must be addressed by current or potential property owners. Owning or buying property with running bamboo can potentially cost the property owner a lot of money. An experienced real estate attorney can help their clients avoid such pitfalls of owning property.

Download the complete act below:

What Does a Buyers Attorney Do? – Real Estate Closing

Role of Buyers Attorney in Real Estate Closing

Whether you are looking to buy a home or a business location, you will need the services of a buyers closing attorney. A buyers closing attorney can make sure their client is protected legally and financially. What does a buyers closing attorney do?

A buyers closing attorney helps coordinate the purchase of the property by making sure all laws are followed, his client is getting the property as promised, and by managing the finances. A buyers closing attorney performs the following functions:

  • Review the agreement between the buyer and their real estate agent (if hired soon enough);
  • Reviews preliminary title report for mortgages, liens, restriction, taxes and ownership;
  • Review and negotiate contract of sale with sellers closing attorney;
  • Review mortgage commitment issued by the mortgage company;
  • Prepare or review the title search;
  • Prepare buyers closing documents such as power of attorney;
  • Review sellers closing documents;
  • Review loan documents;
  • Attend closing with, or on behalf of, the client;
  • Handle all funds through escrow;
  • Provide an accounting of funds to the client; and
  • Record all documents at Town Hall.

A sellers closing attorney can relieve the stress of buying a house or business property by making sure the client is protected. Buying a home or business location? Make sure the seller is legally compliant and your liabilities are limited by contact The Law Office of Eugene Glouzgall, LLC to handle your real estate closing matters. We charge flat rate fees on closings, and we offer FREE consultations, so you can make sure we are the right attorney for you.

How Do I Pick a Real Estate Attorney?

How do I pick a real estate attorney?

Whether you are selling or purchasing a home or business location, you will need a real estate attorney to handle your closing. You may ask yourself: How do I pick a real estate attorney?

There are plenty of real estate attorney’s out there, but how do you pick just one? You should consider two things, cost and trust.

The first factor to consider is cost. You should pick a real estate attorney that you can afford. If a real estate attorney is charging above average fees, ask them why they think their representation is worth the extra money. Similarly, if a real estate attorney is charging below average fees, ask them why. In either situation, the answers might surprise you, and either way, it’ll tell you a little more about the attorney and how they handle difficult questions.

The second factor to consider is the level of trust you have in the real estate attorney. After all, this person is going to be handling hundreds of thousands of dollars on your behalf. They will be organizing and coordinating all of the paperwork regarding the sale or purchase of the real estate. They will be drafting the sales and purchase contract in an effort to protect your interests in the sale or purchase. Finally, they will be your primary point of contact for resolving any issues that arise of the sale of purchase. In essence, your real estate attorney will be the glue holding the entire deal together. You need to be able to trust them to be thorough, diligent, with good attention to detail, and most of all, honest.

You need to make sure that your attorney is right for you. That is why The Law Office of Eugene Glouzgal offers free consultations with no obligation to all our clients. Contact us today for a FREE CONSULTATION WITH NO OBLIGATION by email at Glouzgal@CTAttorney.us or by phone at 203-794-6691.