In this 3 part series, join Janet Allen and Scott Rooker as they discuss what you need to look out for when you are buying or selling a home equipt with smart technology.
Title Insurance Rate Change Effective September 1, 2019 – Reminder
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:
- Estimated Closing Cost Calculator
- Texas Title Insurance Rate Card (effective beginning 9/1/19)
- Republic Title Locations
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.
After Closing Reminders For Sellers
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.
Updated Seller’s Disclosure Notice Effective September 1st
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.
Effective September 1, 2019: Texas Title Rate and Rule Revisions
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. Changes made in 2019 affect 2020 Texas title rates.
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:
- Estimated Closing Cost Calculator
- Texas Title Insurance Rate Card (effective beginning 9/1/19)
- Republic Title Locations
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.
What is Title Insurance?
Explaining title insurance to your buyer clients can be difficult and confusing to say the least. We hope this short video on what title insurance is will help you and your clients better understand the importance of protecting your home with title insurance coverage.
Two types of Title Insurance
There are two basic types of title insurance:
• Loan Title Policy
• Owner’s Protection
Most financial lenders require a Loan Title Policy as security for their investment in your property, just as they require homeowners or other types of coverage for their protection.
Owner’s title insurance lets the new home owner feel safe and confident there are no other claims as to the ownership of the insured property. Among other matters it insures access to the property, gives the homeowner the right to occupy the property, provides good and indefeasible title which shows there are no specific liens against the property. The policy is purchased at the closing and lasts as long as you have an interest in the insured property.
What does your Premium Cover?
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent on behalf of its underwriter to determine whether the property is insurable. We have a highly qualified team of abstractors and examiners that review your property to be sure you have clean and clear title to your new home. Some of the items they review are:
• They review prior owner’s wills and deeds to be sure the wording and names are correct.
• They look to make sure all outstanding mortgages and/or judgments are released or will be released at closing.
• They check on liens against the property because the seller has not paid his/her taxes.
• They search to be sure there are no lawsuits or legal action that would affect the property.
• They examine the records to be sure and make note of any easements and utility lines that will cause any issues.
Protecting your Investment
Title insurance is not as commonly understood as other types of insurance. However, it is just as important. When you purchase a home, in addition to purchasing the actual land or building structure, you are actually purchasing the title to that property as well as the rights to occupy and use the space. Having an Owner’s Title Policy insures and protects claims asserted by others on your property.
Other types of insurance that protect your home may focus on possible future events and charge an annual premium. Owner’s Title Insurance is a one-time purchase and following a careful examination and research of past ownership of your property, it protects you on claims or issues on your property before you were the owner.
Your home is probably your most important investment. Before closing on your home, inquire about your title insurance protection. Be sure to protect your asset with an Owner’s Title Policy.
The New Earnest Money Delivery Date Sample Timeline
FROM THE CONTRACT:
“IF THE LAST DAY TO DELIVER THE EARNEST MONEY FALLS ON A SATURDAY, SUNDAY, OR LEGAL HOLIDAY, THE TIME TO DELIVER THE EARNEST MONEY IS EXTENDED UNTIL THE END OF THE NEXT DAY THAT IS NOT A SATURDAY, SUNDAY, OR LEGAL HOLIDAY.”
IMPORTANT TIPS:
– EARNEST MONEY CANNOT BE DELIVERED ON A SATURDAY, SUNDAY OR LEGAL HOLIDAY. HOWEVER, YOU DO COUNT SATURDAY, SUNDAY AND LEGAL HOLIDAYS AS EFFECTIVE DAYS WHEN COUNTING THE THREE DAYS, BUT NOT AS THE DELIVERY DATE. THE DELIVERY DATE IS THE NEXT BUSINESS DAY.
– WHILE EARNEST MONEY IS NOT
REQUIRED TO BE DELIVERED UNTIL THE 3RD DAY, IT IS RECOMMENDED TO DELIVER THE CHECK DURING BUSINESS HOURS TO OBTAIN A RECEIPT OF EARNEST MONEY FOR THE DELIVERY.
Click here for printable version.
What Is Earnest Money
What is Earnest Money
Earnest money is a deposit made to a seller that represents a buyer’s good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal and inspections before closing. In most cases, earnest money is delivered when the sales contract or purchase agreement is signed, but it can also be attached to the offer. Once deposited, the funds are typically held in an escrow account until closing, at which time the deposit is applied to the buyer’s down payment and closing costs.
Earnest money is also known as an escrow deposit or good faith money.
Reasons to Pay Earnest Money
When a buyer decides to purchase a home from a seller, both parties enter into a contract. The contract doesn’t obligate the buyer to purchase the home, because reports from the home appraisal and inspection may later reveal problems with the house. The contract does, however, ensure the seller takes the house off the market while it’s inspected and appraised. To prove the buyer’s offer to purchase the property is made in good faith, the buyer makes an earnest money deposit (EMD).
When Earnest Money Is Refundable
The buyer may be able to reclaim the earnest money deposit if something that was specified ahead of time in the contract goes wrong. For instance, the earnest money would be returned if the house doesn’t appraise for the sales price or the inspection reveals a serious defect – provided these contingencies are listed in the contract.
Of course, earnest money isn’t always refundable. For example, the seller gets to keep the earnest money if the buyer decides not to go through with the home purchase for contingencies not listed in the contract, or if the buyer fails to meet the timeline outlined in the contract. And, not surprisingly, the buyer will forfeit the earnest money deposit if he or she simply has a change of heart and decides not to buy.
Earnest money is always returned to the buyer if the seller terminates the deal.
How Much You Pay in Earnest Money
While the buyer and seller can negotiate the earnest money deposit, it often ranges between 1% and 2% of the home’s purchase price, depending on the market. If a home costs $250,000, a 1% earnest money deposit would be $2,500; at 2%, the deposit would be $5,000.
In addition to the local market rates, the size of the earnest money deposit depends on the level of interest other buyers have expressed, how hot the housing market is and how quickly a prospective buyer can close on his or her offering price. In hot housing markets, the earnest money deposit might range between 5% and 10% of a property’s sale price.
While the earnest money deposit is often a percentage of the sales price, some sellers prefer a fixed amount, such as $5,000 or $10,000. Of course, the higher the earnest money, the more serious the seller is likely to consider the buyer. Therefore, a buyer should offer a high enough earnest deposit to be accepted, but not so high as to put extra money at risk since there’s still a chance that the deal might not go through and the deposit not refunded.
Earnest money is usually paid by certified check, personal check or a wire transfer into a trust or escrow account that is held by a real estate brokerage, legal firm or title company. The funds are held in the account until closing, when they are applied toward the buyer’s down payment and closing costs. It’s important to note that escrow accounts, like any other bank account, can earn interest. Therefore, if the earnest funds in the escrow account earn interest of more than $5,000, the buyer must fill out tax form W-9 with the IRS to receive the interest.
Protecting Your Earnest Money Deposit
Prospective buyers can do several things to protect their earnest money deposits.
- Make sure contingencies for financing and inspections are included in the contract. Without these, the deposit could be forfeited if the buyer can’t get financing or a serious defect is found during the inspection.
- Read, understand and abide by the terms of the contract. For example, if the contract states the home inspection must be completed by a certain date, the buyer must meet that deadline, or risk losing the deposit – and the house.
- Make sure the deposit is handled appropriately. The deposit should be payable to a reputable third party, such as a well-known real estate brokerage, escrow company, title company or legal firm (never give the deposit directly to the seller). Buyers should verify the funds will be held in an escrow account and always obtain a receipt.
Source: https://www.investopedia.com/terms/e/earnest-money.asp
Survey Deletion Coverage Q&A
What is Survey Deletion Coverage?
Survey Deletion Coverage is often also referred to as “Survey Deletion”, “Survey Amendment”, and “Survey Coverage.” When survey deletion coverage is given in the title policy it offers Buyers protection for errors or omissions that may have been made by the surveyor and accepted by the title company by changing the language in the “standard exception” of the title policy to read “Shortages in Area” only. The “standard survey exception” in a title commitment or policy (before being amended) reads:
“Any discrepancies, conflicts, or shortage in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”
Upon receipt of an acceptable survey, the title company may amend this exception to read “Shortages in area” only. Things that a title company will look at to determine if a survey will be acceptable include, but are not limited to, the following: that items noted on the survey are listed in the title commitment, verify the legal description, check platted building lines and platted easements, and other matters such as the seal and signature of the engineer, date of the survey, and north directional arrow.
Survey Deletion is addressed in paragraph 6. A. (8) of the TREC One to Four Family Residential Contract, where the parties select between the options of amending or not amending the standard exception in the title policy and who will be responsible for the payment of the premium.
There are other issues that may show up in the review of a survey, such as a building or driveway or fence over a building line, or into a platted easement. When this happens, the title company may still accept the survey and amend the standard exception to read “Shortages in Area” only, but will generally add a special exception on Schedule B of the title commitment and owner’s title policy for any of these issues that were shown on the survey.
The cost of survey deletion coverage on residential transactions is 5% of the Owners Title Policy Premium, and is 15% of the Owner Title Policy Premium in a commercial transaction.
For more information on Survey Deletion Coverage, download our Survey Deletion Coverage Q&A flyer