A Commitment is a document the title company provides to all parties connected with a particular real estate transaction. It discloses the title of record to the property as well as all the liens, defects, burdens and obligations that affect the subject properties. It is comprised of four schedules.
Schedules A, B, C and D are as follows:
Actual Facts Is the Who, What, Where and How Much section of the Commitment. You will see the names of the buyer, record owner (seller), a legal description of the property, the sales price and the name of the lender, if applicable. It is a good idea to double check this information with the contract.
Buyer Notification This section lists the general and specific exceptions to the property. It will list items such as survey matters, taxes, easements, setback lines and a variety of other items that will not be covered by the title policy. It is important to review and discuss any questions you have with your title company.
Clear in Order to Close These items must be resolved in order to transfer title to the new owner. They might include such things as a mortgage that will be paid off at closing, liens for home improvements or unpaid taxes. All items shown on Schedule C should be discussed and resolved before the closing.
Disclosure This section outlines the ownership of the title company and all the parties who will share in any part of the insurance premium collected to issue the policy. It includes underwriters, title agents and attorneys.
This information is not to be substituted as legal advice and is descriptive only. If you have any concerns about any portion of your title commitment or any portion of Schedule A,B,C, or D, please contact your attorney.
For a PDF version of the ABCs of the Title Commitment, click here.
The May 2020 DFW area real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!
To see past month’s reports, please visit our resources section here.
For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.
There’s a plethora of resources at your fingertips that can help you grow your business and be a better REALTOR® to your clients. Here are a few of our favorites and where to find them.
STATS, INFOGRAPHICS & MARKETING MATERIALS RPR® RPR, or Realtors Property Resource, provides REALTORS® with data. Easily search properties, create and send branded reports, and view local market statistics, anytime, anyplace. www.narrpr.com or the NTREIS dashboard
ListReports Generate marketing materials for your listing including open house flyers, property reports, neighborhood demographics, infographics with local information & more. www.listreports.com
Breakthrough™ Broker Brand professionally created infographics for real estate agents, as well as postcards, social media posts and other marketing materials. Breakthrough™ Broker also has lead generation strategies and business planning tools as well. www.breakthroughbroker.com
NTREIS Trends An interactive market analytics tool, based on MLS data. It allows the user to instantly access nearly any view of the local housing market, all with an immersive interface. NTREIS dashboard
Texas A&M Real Estate Center Housing activity statistics from over 50 MLS systems in Texas, released monthly. www.recenter.tamu.edu
TOOLS FOR FARMING REiSource® Specializing in data mining and lead generation, REiSource® is a nationwide database tool that helps you narrowly focus your business contacts and leads as well as helps to identify your most viable prospects based on sophisticated search options. Contact Republic Title Business Development Rep.
Remine Remine puts REALTORS® in the center of the transaction. Remine’s interactive map and data-based filters help REALTORS® quickly and easily find new leads, track current and past opportunities. NTREIS dashboard
Realist® Tax Realist® from CoreLogic® is a public-record database that seamlessly integrates with MLS to provide in-depth property and ownership data, market information, street and aerial maps, as well as market trends to its users. NTREIS dashboard
SOCIAL MEDIA CONTENT Canva Easily create beautiful and professional designs and documents to use in your business for social media, email marketing and even postcards & flyers. www.canva.com
Ripl Create branded videos and images in minutes, then instantly post to all your social media accounts at once. www.ripl.com
Planoly Plan, edit, and schedule your social media content now so you don’t have to later. All the Instagram and Pinterest visual planning and management tools you need in one easy tool. www.planoly.com
Unsplash With over 1 million free high-resolution photographs, Unsplash is the perfect place to start when looking for images to use in correlation with your social content. www.unsplash.com
Remote Online eClosing (“RON”) is a new, technology-driven notarial process that allows the signer to appear before the notary over a live audio-video feed when executing digital documents.
Step 1 Identity Verification
RON uses the latest identity verification technologies to make notarizations more secure. A. Signer passes a knowledge-based identity quiz B. Signer submits ID for review C. Third-party software performs forensic test on ID
Step 2 Audio-Video Conference
The notary and signer talk to each other over a webcam in real-time and observe the necessary digital documents.
Step 3 “Tamper-Sealed” Documents
The notary adds a “tamper-seal” to date/time-stamp the notarized documents. The seal will indicate whether any of the documents are altered in the future. The signer downloads a PDF of the completed, digitally signed and digitally notarized, document.
Step 4 Audit Trail and Notary Records
Like with traditional notarizations, the notary keeps a journal logging the basic details of the notarization. The journal can be kept in a secure digital format that includes a video of the notarial act, which can be used to prove who actually digitally signed the document.
Click here if you would like more information on our digital settlement services.
1031 Exchange An event where a taxpayer exchanges or trades real property held for investment or used in a trade or business for other real property and defers the capital gains tax on the transaction.
Tax Deferred The capital gains tax which would have been paid on the sale of the real property is not paid but is deferred to be paid at a later time when the property traded for is sold in a non-exchange sale.
Property Held for use in a Trade or Business Any real property used by a taxpayer in its business. This could be an office building, warehouse, ranch, shop, garage, farm, etc.
Investment Property This is real estate purchased to produce an investment income or an investment gain on resale. It can include, but is not limited to apartments, a rent house or raw land.
Like-Kind Property In the exchange world, “like-kind” does NOT mean you must exchange an apartment project (investment property) for another apartment project, or raw land for raw land, it means that you must exchange real estate for real estate. This permits, within the categories of “held for investment” or “used in your trade or business”, the exchange of apartments for land, or office buildings for apartments, etc., as long as the old properties sold and the new properties acquired are either held for investment or used in a trade of business. The property sold and the property acquired do not have to be exactly alike, they just have to be real estate and fall in the category of “held for investment” or “used in your trade or business”.
Relinquished Property Relinquished Property is the real estate held for investment or use in your trade or business which is sold or “relinquished”. Think of the Relinquished Property as the property being sold and the Replacement Property as the real property being acquired.
Replacement Property Replacement Property is the real estate acquired by the taxpayer/seller in a 1031 exchange as replacement for the relinquished property.
Exchange Proceeds The cash received by the Qualified Intermediary through the sale by the taxpayer of the Relinquished Property and any debt paid on the property sold. In order to defer all of the tax on a sale you must spend all of the cash proceeds received or more if you want to and you must borrow the same amount of money or more if you need or want to that was used to pay off any loan or loans on the property sold. You will pay the tax on any cash proceeds not used to buy Replacement Property or any loan paid off in your sale that was not replaced with same or greater payoff amount of loan on the Replacement property.
The 45-Day Rule You must identify by written notice (signed by you) to your Qualified Intermediary the Replacement Property or Properties (you can identify more than one possible Replacement Property) you want to buy within 45 days after you close the Relinquished Property. Do not count the date of closing; count 45 days after the closing date and that is the end of the “Designation or Identification Period” – the true end, whether it’s a Saturday, Sunday or any legal holiday. Better get this part completed on that date as a minimum. Before that date is better. After that date, your exchange may be disqualified.
The 180 Day Rule You must close, fund, and acquire (do it all) the Replacement Properties within 180 days after you close the Relinquished Property. Do not count the date of closing; count 180 days after the closing and that’s the “drop-dead” date to completely acquire the Replacement Property – the true end, whether it’s a Saturday, Sunday or any legal holiday. Better complete this part on this day as a minimum. Before that date is better. After that date, your exchange may be disqualified.
Three Property Rule Try to designate three Replacement Properties or less to purchase, generally, because if you stay with three or less, you don’t have to worry with anything other than being sure it is like-kind property. If you designate four or more, then you must deal with the “200% Rule”.
The 200% Rule This rule only comes into play if you designate more than three properties as possible Replacement Properties. If you do, add up the “fair market values” of all the properties designated and be sure that this aggregate number is not more than the gross sales price of the Relinquished Properties times 2. If it is more and you don’t fall within the “95% Rule”, your exchange is outside the safe harbor and may fail.
The 95% Rule This is an exception to the consequences of violating the 200% Rule, which applies if you violate the “Three Property Rule”. If your sum of the fair market values of more than three Replacement Properties is greater than two times your sales price of the Relinquished Property, you are still “safe” if you acquire 95% in value of these designated properties, which means that you really need to buy all of the Replacement Properties you designated.
Exception to the 180 Day Rule You don’t get 180 days to complete the exchange if you have to file your Federal income tax return for the year in which your relinquished property sold before the 180th day. If your tax return for the year in which your relinquished property sold is due on April 15th and your 180th day falls in May, you have to complete your acquisition of the replacement property before April 15th even if there are more days left in the 180 day time frame. BUT, if you file an extension to your tax return, then this exception doesn’t apply. Remember to file the extension if you are in this situation.
Direct Deeding 1031 Exchange allow Direct Deeding, making it all much simpler. In previous years, the exchange taxpayer deeded the property to be sold to the Qualified Intermediary who would then deed to the buyer of the Relinquished Property, and the seller of the Replacement Property would deed to the Qualified Intermediary who would deed to the exchange taxpayer. You don’t have to do this anymore. You can deed the Relinquished Property directly to your buyer, and receive the Replacement Property deed direct from the seller.
For more information on 1031 Exchange, please reach out to our Texas Escrow Company team:
Disclaimer: This information is a summary of some of the common terms involved with 1031 deferred tax exchanges. Do not rely on this summary alone to make an exchange decision, or think that there isn’t much more involved than what is described in these simple definitions. Exchange decisions should be based on conversations with a tax advisor, an accountant, a Qualified Intermediary, and a tax attorney.