Spotlight On: Texas Escrow Company

by Inside Republic TitleResourcesTitle Information

If you have real property for sale, which is used in your trade or business, or is held for investment, you may be eligible to defer the capital gains tax when the property is sold by utilizing a deferred 1031 Exchange. In order to receive this tax treatment, you should contact a Qualified Intermediary, like Texas Escrow Company, a subsidiary of Republic Title of Texas, Inc., and complete the documentation necessary to create your exchange before you close the sale of your property.

The property sold needs to be real estate that you have held for investment or used in your trade or business, such as an office building or rent house. Vacation homes for your personal use, or your personal residence, do not qualify for this tax treatment. You should consult your accountant or attorney for advice on the utilization of a 1031 Exchange, especially if your accountant files your income tax return. It is important that the person filing your income tax return agrees that the exchange achieves the tax deferral you want. Your accountant can also estimate the tax payable on your sale so you can evaluate whether you want to do a 1031 Exchange. The 1031 Exchange only defers the capital gains tax (long or short term) on the sale of real property by purchasing replacement real property of an equal or greater value than the property sold.

Using exchange funds to purchase like-kind replacement real property for an investment, or use in your trade or business, and then later selling that replacement property in another 1031 Exchange to purchase other replacement property, will continue to defer the capital gains tax, plus any additional gain that might accrue by virtue of an increased value of the replacement property. In many cases, once you start exchanging real property, you need to continue using 1031 Exchanges to purchase real property if you wish to continue deferring the capital gains tax. When you sell the replacement property without using a 1031 Exchange, capital gains taxes will be due.

We suggest that you review the supplemental Definitions and Rules of a Deferred 1031 Exchange which is written in easy to understand language to familiarize yourself with some of the terms and rules, that are involved in a 1031 Exchange. All the definitions and rules of a deferred 1031 Exchange should be discussed with your tax advisor, accountant, attorney and a Qualified Intermediary before you do any exchange transaction. The rules encompass all kinds of situations and we repeat that it is imperative to consult with your tax advisors and a Qualified Intermediary about the transaction you have in mind before you sell and, in some cases, before you even contract to sell.

For more information on 1031 Exchange, please reach out to our Texas Escrow Company team:

Bill Kramer
Executive Chairman
214.855.8850
bkramer@republictitle.com

Carla Janousek
Sr. Vice President, CES®
214.855.8879
cjanousek@republictitle.com

Helen Wooten
Exchange Assistant
214.855.8879
hwooten@republictitle.com

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Republic Title completes their 100th RON in 2020

by Digital SettlementResourcesTitle Information

Republic Title is proud to announce that we have completed 100 Remote Online eClosings in 2020.

What is a Remote Online eClosing and how does it work? 

Remote Online eClosing takes place…wait for it…online! The signer and the notary need not be in the same room, or even in the same state!

This type of eClosing allows all parties to be remote and perform the closing through videoconference via a webcam. All documents are signed and notarized electronically during the videoconference. This is the most highly regulated type of eClosing, and special commissions are required to electronically notarize documents. Remote online eClosings are very popular and useful for the seller side of the transaction since, in most cases, there are no loan documents involved for the seller.

Republic Title has completed these 100 Remote Online eClosing through eVolve, our newest digital settlement and signing services division, which provides an alternative closing experience for sellers, buyers and real estate agents.  eVolve’s approach is to provide a completely digital real estate closing process from start to finish, through the delivery of title and escrow services by way of secure collaboration and Remote Online eClosings.

eVolve has been operating in the Dallas/Fort Worth, Texas market for the past 12 months and will allow Republic Title to handle digital transactions in every major market in Texas (including Austin, San Antonio and Houston).

Top COVID-19 Contract Questions and Answers

by ResourcesTitle InformationVideo

Title companies are, by definition, an “Essential Business.” We are open for business, processing and conducting closings. At Republic Title, we are offering many low-contact and no-contact closing options to help our customers continue to close real estate transactions, while also supporting the health of our customers, our employees and the communities in which we operate, including Remote Online Notarization, drive-up signings and regular mail and expedited delivery services. We have taken a number of other steps as well, including:

  • Conducting most closings and/or meetings by appointment only
  • Asking that non-essential parties refrain from attending closings and/or meetings
  • Making hand sanitizer available in our branch offices
  • Wiping down our closing room tables and chairs after each closing
  • Providing new pens for each signing and encouraging clients to keep the pens once the closing is completed
  • Providing separate closing rooms, if available
  • Promoting best practices for personal hygiene and workplace cleanliness to employees
  • Restricting non-essential travel as well as employee attendance at industry conferences and events
  • Directing any employee with symptoms of illness to stay home.

Question: Is there a termination provision in the TREC 1-4 contract that covers the COVID-19 pandemic?

Answer: No. There is not a provision that covers a pandemic. We received a few inquiries asking about paragraph 14 of the TREC 1-4 contract and if that paragraph covers the current pandemic situation, and the answer is no – paragraph 14 contemplates storm or fire related damage to the property, not a pandemic. If a client has any questions as to what constitutes a casualty loss, they should speak to their own attorney.

Question: There is now a COVID-19 Addendum issued by TXR, can you give us the highlights?

Answer:  In short, the COVID-19 Addendum outlines certain contingency plans to either extend the closing date or terminate the contract. If it appears that the closing date is not feasible because of voluntary or mandatory quarantine or there is a closure, the parties can extend the closing date for a period of 30 days.

Question: Can the COVID-19 Addendum be attached to existing contract or does it only apply to new contracts?

Answer: The Covid-19 Addendum can be added to an existing contract and to a new contract. A party, however, cannot unilaterally add the amendment, both parties have to agree and execute the addendum.

Question: Does the 30 day extension for closing in the COVID-19 Addendum relate to other deadlines in the contract?

Answer: No, the other critical dates are still in effect unless amended by the parties. The COVID-19 Addendum only changes the closing date in paragraph 9 of the Contract.

Question: Assuming the parties have a COVID-19 Addendum as part of the contract, what if the contract also contains a third-party financing addendum and the buyer is past the approval period in paragraph 2A and the buyer loses their job – can the buyer still terminate and receive the earnest money?

Answer: Yes, if the buyer’s loss of income is due to COVID-19 related issues, then either party may terminate and the earnest money will be refunded to the buyer.

Question: What if the seller or someone in the seller’s family has tested positive for COVID-19, do they need to disclose?

Answer: Yes.  Section 9 of the Seller’s Disclosure Notice asks if the seller is aware of “any condition on the property which materially affects the health or safety of an individual.” Testing positive for COVID-19 is most certainly a condition on the property because of the contagiousness of the virus and the fact that it can live on surfaces in the property which can materially affect the health of an individual.

Question: Can the buyer demand that the seller deep clean and sanitize the house?

Answer: TREC 1-4 contract paragraph 7 d2 states, “Buyer accepts the Property As Is provided Seller, at Seller’s expense, shall complete the following specific repairs and treatments: __________.” This provides a buyer the opportunity to make a demand on the seller to deep clean and sanitize the house.

 

This video is intended for educational and informational purposes only. Nothing contained in this video should be considered as the rendering of legal advice for specific cases, and viewers are responsible for obtaining such advice from their own legal counsel.

Coronavirus (COVID-19) Outbreak Laboratory Research & Quality Control on a high technology equipment.

A Message to our Customers Regarding COVID-19

by Inside Republic TitleResourcesTitle InformationUncategorized

At Republic Title, the health and well-being of our customers, employees and communities is our top priority. As the effects of COVID-19 continue to evolve, we want to reach out with information about our efforts to ensure the safety of all involved while continuing to provide uninterrupted service to our valued clients.

Our offices are open for business. Should the need arise to temporarily close any of our offices, we have contingency plans in place to conduct business at alternate offices with limited interruptions so that we are still able to handle your transactions. In the event of a possible closure, advance notice will be communicated to our customers as well as posted on our website. Any updates will be posted regularly. If you have further questions, we encourage you to reach out to your closing team.

Cleanliness of our offices is always a top priority but in light of recent COVID-19 news, Republic Title is taking additional precautions to protect our customers and employees. This includes providing hand sanitizer at our offices and extra sanitizing after each closing. 

Out of an abundance of caution, Republic Title will be postponing all classes that we have scheduled through Friday, April 10. The health of our employees and customers is of the utmost importance and we feel this is best to minimize risk.

We are monitoring this situation closely. We realize that our clients are experiencing the same challenges we are in terms of business continuity and are trying to determine the best way to protect all parties involved and help prevent further spread of the virus. We are here for you and will communicate with you should there be any changes to our normal business process.

Real estate agent and customers shaking hands together celebrating finished contract after about home insurance and investment loan, handshake and successful deal.

Important Compliance Update from TREC

by Real Estate ArticlesResourcesTitle Information

Realtors Subject to New TREC Rules Prohibiting Pay-to-Play Programs

Reminder: RESPA, P-53 and Anti-Rebating Statutes Remain in Effect for Title Agents and Are Enforced

The Texas Real Estate Commission (TREC) recently amended their rules related to rebates and specifically highlighted the prohibition of pay-to-play arrangements in the real estate marketplace. TREC said their amended rules are intended to strengthen settlement service provider independence and provide clarity for TREC license holders regarding consumer protections that also exist under state and federal rules and statutes.

To enhance your understanding of TREC’s expanded regulations, we recommend you read TREC’s explanation of their pay-to-play rule revisions. 

Here’s TREC’s expanded §535.148 related to receipt of undisclosed commissions or rebates:

(d) A license holder may not pay or receive a fee or other valuable consideration to or from any other settlement service provider for, but not limited to, the following:

  1. the referral of inspections, lenders, mortgage brokers, or title companies;
  2. inclusion on a list of inspectors, preferred settlement providers, or similar arrangements; or
  3. inclusion on lists of inspectors or other settlement providers contingent on other financial agreements.

(e) In this section, “settlement service” means a service provided in connection with a prospective or actual settlement, and “settlement service provider” includes, but is not limited to, any one or more of the following:

  1. a federally related mortgage loan originator;
  2. a mortgage broker;
  3. a lender or other person who provides any service related to the origination, processing or funding of a real estate loan;
  4. a title service provider;

Read TREC’s explanation of the changes »

Title Agents Are Subject to P-53, RESPA, and Anti-Rebating Statutes 

Title agents are subject to federal and state rules and statutes–including the Real Estate Settlement Procedures Act (RESPA) and TDI’s Rule P-53–prohibiting marketing-related rebating practices.

In response to questions from title industry professionals regarding the continued applicability of TDI’s P-53 rule, TLTA has compiled background information, FAQs, and other helpful resources related to the state and federal statutes that prohibit marketing-related rebating practices.

TLTA’s Anti-Rebating Resources for Title Professionals »

Background
In 2004, the Texas Department of Insurance (TDI) adopted Procedural Rule 53 (P-53), which prohibits rebates and discounts for the soliciting or referring of title insurance business. P-53 is an important market conduct rule that serves to protect consumers and maintain an ethical Texas title insurance industry.  

There are also federal and state statutes that prohibit marketing-related rebating practices, as follows:

Federal Law

Under the federal government’s Real Estate Settlement Procedures Act (RESPA), kickbacks and unearned fees are prohibited, and a person cannot give or accept anything of value for a referral incident relating to or part of a settlement service involving a federally related mortgage loan. Consumer Financial Protection Bureau (CFPB) is responsible for enforcing RESPA, as well as state attorneys general.

Review the federal statute: RESPA – Section 8
Review CFPB’s rule: 12 CFR § 1024.14 

State Law

The state statute goes a step further than federal law, specifically citing the title insurance industry. In addition to prohibiting rebates and discounts, the statute states that any “thing of value” may not be “directly or indirectly paid, allowed, or permitted by a person engaged in the business of title insurance or received or accepted by a person for engaging in the business of title insurance or for soliciting or referring title insurance business.”

Review the state statute: Texas Insurance Code  §2502.051

FAQs

Is P-53 enforced?
Yes, TDI’s disciplinary orders include P-53 violations. Disciplinary orders dated 2013 and older must be requested via open records request.

What is the difference between RESPA and P-53?
RESPA is the federal statute addressing the referral of settlement services and includes the typical activities of Texas title agents. RESPA is enforced by the CFPB. Procedural Rule 53 implements and clarifies the Texas statute as it relates to discounts and things of value used to solicit or refer title insurance business. TDI enforces P-53.

How do I determine if I’m in compliance?
In general, the TDI rule and other applicable statutes were not written with black-and-white examples to guide you. If you’re unsure about your actions and how P-53 might be applied to them, please consult your regulatory counsel.

The statute and rule do offer some clear guidance on how to comply, however. For instance, a title agent or company cannot give a thing of value conditioned on the referral of title insurance or provide a rebate to the consumer.

Past examples of violations include any activities that subsidize or pay for what would be business expenses for a Realtor or any other producer of title insurance business, such as printing sales materials or providing meeting or office space. Additional examples include reducing other fees in the transaction such as an escrow fee on an ad hoc or conditional basis. These are just some examples and there are many others – this is not intended to be an exhaustive list. Again, the best course of action if you are unsure is to consult legal counsel to ensure you are in compliance.


What should I do if I have information about a P-53 violation?
First, consider contacting the management at the companies involved, and alert them that they are engaged in activity that concerns you. If the suspected violation of P-53 does not stop, you can submit a formal complaint to the Texas Department of Insurance. Once you file a complaint, TDI will keep you informed of the progress and final resolution of the complaint.

The complaint you submit will be publicly available (i.e., this is not an anonymous process).

Source: TLTA

Sold Home For Sale Real Estate Sign in Front of Beautiful New House Republic Title

Helpful Terms for Buying/Selling Your Home

by Real Estate ArticlesTitle Information

Buying or selling a home is one of the most important undertakings of a lifetime. When buying or selling a home, there are many real estate terms that may be unfamiliar to you. Check out this list of commonly used terms that you may find helpful during the process.

AIR:  Adjustable Interest Rate

AMORTIZATION SCHEDULE: A schedule showing the principal and interest payments throughout the life of the loan.

APPRAISED VALUE: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.

CD/CLOSING DISCLOSURE: This form is a statement of final loan terms and closing costs. Sometimes referred to as ICD or Integrated Closing Disclosure.

COMMITMENT:  The document by which a title insurer discloses to all parties connected with  a particular real estate transaction all the liens, defects, and burdens and obligations that affect the subject property.

CREDIT REPORT: A report on the past ability of a loan applicant to pay installment payments.

DOCUMENT PREPARATION FEE: A charge by an attorney for preparing legal documents for transaction.

ESCROW FEE: A fee charged by the title company to service the transaction, to escrow monies, and cover documents. Usually split between buyer and seller.

ESCROW ACCOUNT: Funds held by the lender for payment of taxes and insurance when due. Usually does not include maintenance fees.

HOA ASSESSMENT FEES: Charged by the homeowner’s association as set out in subdivision restrictions.

HOMEOWNER’S INSURANCE:  Protects the property and contents in case of loss; must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.

INSPECTIONS: An examination of property for various reasons such as termite inspections; to see if required repairs need to be made before funds are received, etc.

INTEREST: Money paid regularly at a particular rate for the use of money lent.

LOAN TITLE POLICY: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.

ORIGINATION FEE:  A fee the buyer pays the lender to originate a new loan.

OWNER’S TITLE POLICY: Insures that the buyer has title to the property, that there are no other claims as to ownership. Among other matters, it also insures access to the property, the right to occupy the property, good and indefeasible title, and that there are not other types of specific liens against the property. 

POINT:  1% of the loan amount.

PREPAIDS: Items to be paid by the buyer in advance of the first scheduled payment of the loan (Homeowner’s Insurance Premium, Mortgage Insurance Premium, Prepaid Interest, Property Taxes and a maximum of three additional items).

PREPAYMENT PENALTY:  Charged by the lender for premature payment of a loan balance.

PRIVATE MORTGAGE INSURANCE: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).

REALTOR FEES:  An amount paid to the REALTOR® as compensation for their services. RECORDING FEES: Charged by the County Clerk to record documents in the public records. RESPA:  Real Estate Settlement Procedures Act.

RESTRICTIONS: Certain limitations or conditions related to the future use of the property put on the property by a prior owner. These restrictions stay with the property until they expire or are amended as per certain procedures set forth in the restrictions.

SURVEY:  Confirms lot size and any encroachments or restriction violations.

TAX CERTIFICATES: Certificates issued by taxing authorities showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected at closing.

TAX PRORATION: Means that the payment of the taxes for the year of sale are divided between the Buyer and Seller, usually based on the amount of time the Seller owned the property during that year. Prorations, and how they are calculated, are typically addressed in the Contract of Sale.

TIL:  Truth in Lending.

TIP: Total Interest Percentage; the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount.

TOTAL OF PAYMENTS: Total amount paid after all payments of principal, interest, mortgage insurance and loan costs are scheduled. 

To download our Helpful Terms for Buying/Selling Your Home flyer,  visit Helpful Terms for Buying and Selling Your Home.

Title Insurance Rate Change Effective September 1, 2019 – Reminder

by ResourcesTitle Information

Please note that beginning September 1, 2019, there will be a change to the basic premium rate for title insurance including an overall adjustment of -4.9 percent.

The Texas Commissioner of Insurance has issued an order adjusting the basic premium rate for title insurance and amending R-5, R-8 and R-20.

Summary of Changes

Basic Premium Rate – Includes an overall rate adjustment of -4.9 percent, a starting base rate of $25,000 and three new rate tiers for policies with face values over $25, $50 and $100 million.

Refinance Rate Amendment – Amends Rate Rule R-8 to provide for a 50 percent credit within the first four years and a 25 percent credit between four and eight years.

Simultaneous Issue Discount Expansion in R-5 – Allows a simultaneous issue rate credit for 90 days on transactions $5 million and above. The premium is $100 for each loan policy under these circumstances.

Construction Credit Expansion in R-20 – An extension of the credit for developers of large construction projects from one year to two years with a simultaneous issue rate for the loan policy.

These new rates will go into effect on all transactions that close (the date the papers are signed) starting on September 1, 2019.

Read the Order and View the Amendments

These changes are outlined in TDI’s adoption order. The revised rate chart and amended rules can be found in the following exhibits:

  • Exhibit A – Basic Premium Rates; Calculation for Policies in Excess of $100,000 with Examples
  • Exhibit B – (R-5) Simultaneous Issuance of Owner’s and Loan Policies
  • Exhibit C – (R-8) Loan Policy on a Loan to Take Up, Renew, Extend, or Satisfy an Existing Lien(s)
  • Exhibit D – (R-20) Owner’s Policy After Construction Period

Republic Title Online Resources

Please visit our website for additional online resources including:

As always, please feel free to contact your escrow officer if you have any questions about the new rates.  If you would like printed rate cards or need help using our online calculator, please contact one of business development representatives.

Sold Home For Sale Real Estate Sign in Front of Beautiful New House.

After Closing Reminders For Sellers

by Real Estate ArticlesResourcesTitle Information

Your house has sold and the deal is closed.  Now what do you do?

Here are some reminders for you as the seller:

  • Cancel your homeowners insurance with your insurance agent once the transaction has closed, funded and your personal items have been removed from the home. There may be a prorated refund of your homeowner’s policy, based on the latest renewal date, owed to you. If you are remaining at the property after closing, you should notify your insurance agent of this change.
  • Cancel your auto deduction for your house payment with your current lender if applicable.
  • Your lender will refund all monies left in your escrow account approximately 15 to 30 business days after receipt of the payoff funds. The lender will mail a package containing your original Promissory Note marked “PAID” and the other loan file documents. Retain these for future reference. When you receive this confirmation, you may also receive a “Release of Lien” or “Reconveyance of Lien” from your lender. If the release does not appear to have been recorded with the County Clerk’s office, please forward it to your closer at the title company. We have collected for the recording of the document at closing and will send it to the County to be filed, thereby releasing the lien of record.
  • Depending on what time of the year you sold your property, the Taxing Appraisal District may not have updated the account to show a change in ownership. If you receive a Tax Bill for the property that you sold, refer to your closing statement and send the bill to the new owners.
  • You will receive a Substitute Form 1099-S from Republic Title within 30 days of closing. In addition, retain your closing statement, it serves as a Substitute Form 1099-S for tax purposes.

We hope these tips have been helpful to you in answering any post closing questions you may have had. As always, please do not hesitate to contact your closer should you have any questions. Thank you for allowing us to be a part of this transaction.

Click here for printable version.

Home For Sale Real Estate Sign in Front of Beautiful New House.

Updated Seller’s Disclosure Notice Effective September 1st

by Real Estate ArticlesResourcesTitle Information

The Texas Real Estate Commission has released an updated Seller’s Disclosure Notice for mandatory use Sept. 1.

It’s available for voluntary use immediately.

As of Sept. 1, 2019, the new Seller’s Disclosure Notice has questions in paragraphs 6, 7 and 8 relative to floodplains, and includes definitions of the various categories according to FEMA.  In addition, questions about previous claims for flood damage or assistance from FEMA or SBA are also included.

The notice must also disclose a seller’s knowledge of water damage not due to a flood event and requires a seller to disclose whether a prior flood-related insurance claim was filed with an insurance provider or the seller received aid from FEMA.

Click here for the red-lined seller’s disclosure notice and click here for the blank seller’s disclosure notice.