Where there’s a will, there’s a way… Or not! Probates & Real Estate Explained.

On May 3, 2011 / Blog, Title Insurance

Probates & Real Estate Mom just passed away, and the family wants to sell the home. This is a listing with a motivated seller. But who actually owns it?

Of course, the family home (if it isn’t in a trust) will automatically go to the surviving spouse without the need for a probate. But, what about a married person who owned the house as separate property, or Mom who was widowed? Washington law (RCW 11.04.0115) identifies heirs at law who inherit when there is no will, including (in this approximate order) the spouse, children and grandchildren, parents, siblings and children of siblings.

A formal probate allows for the protection and orderly distribution, after payment of debts, of the assets of the deceased to heirs and/or devisees or a sale to a third party by the personal representative. Nonetheless, even though Washington probates are not expensive or time consuming, they often are not done. But how else will the buyer know that all of the title interest is properly conveyed? What if there are valid liens (including estate taxes or state Medicaid reimbursements) against the estate that would otherwise be paid in probate? That is where the “lack of probate” concept comes into play.

Vesting

Title to property of a decedent immediately vests in either devisees (if there is a probated will) or the heirs (if there is no probated will), even if the identity of those parties are unknown at that time – with or without a will, and with or without a probate.

With or without a will

When someone dies, that person will be either testate (with a will) or intestate (without a will). Both can be probated – but it’s not required, even though RCW 11.20. 010 says a will must be filed with the county superior court.

In order for the title company identify who these people are, or whether there is an unprobated will (which could give an interest to a non-relative or charity), it uses an affidavit. The affidavit, usually signed by a relative, must identify all these interests – including the estranged prodigal son who’s been incommunicado for years. It says when and where the deceased lived and died, and identifies any unprobated will or foreign probate. Finally, it states whether Mom received Medicaid benefits, and identifies the value of the estate for estates tax purposes. Based on this information, and deeds from all potential claimants and releases of liens, the title company can usually assume the risk of future claims and insure clear title in the buyer.

Keep in mind that this can be used when the will is probated in another state. Since foreign courts don’t have jurisdiction in Washington, an ancillary court action can be opened in Washington Superior Court that essentially blesses what the foreign court orders. Again, however, that expense and bother can be avoided with the lack of probate approach.

The Realtor® can help the family gather this information and get it to the title company so that the closing can take place and everyone is happy.

A Policy by any Other Name – ALTA Homeowner’s Policy Demystified

On April 18, 2011 / Blog, Title Insurance

Homebuyers choose ALTA Homeowners Title Insurance Coverage

What are the differences between Title Insurance Policies?

What kind of title insurance policy should the real estate buyer get? Does it make a difference? Is there a cost difference?

There are different types of title insurance policies with different coverages. In the past, standard or extended policies were the norm, but the Homeowner’s Policy (“ALTA Homeowner’s Policy for One-to-Four Family Residence”) has become the new standard for residential transactions. This expanded coverage policy is the default policy called for in Paragraph “e” of the NWMLS Residential Purchase and Sale Agreement. It is the best choice in most residential transactions involving platted lots with an existing home. But it’s not available for all transactions, including waterfront homes, large acreage, or if the buyer is a corporation.

The Homeowner’s Policy Benefits

The Homeowner’s policy offers significant benefits in three respects: First, affirmative coverages are built right into to the policy for such things as off-record survey related matters, the existence or impact of easements, boundaries and encroachments. And it includes significant areas not previously covered by title insurance, such as certain zoning problems (including relating to building permits) and platting irregularities. Second, the policy is written in “plain language.” It has never been easier to interpret the title policy’s “fine print”. And finally, for the first time some limited coverages are available for future events historically excluded from policies – including, for example, you discover the former owner didn’t get a building permit for the out building that the County has now red tagged.

Deductibles

There may be a trade-off though because some covered matters have deductibles – either a stated percentage or a dollar amount, whichever is less. It is important for the Realtor® to remember that the benefit would be valuable only if (1) a defect was not subject to a deductible, or (2) if the cost of taking care of it exceeded the deductible. In other words, if the loss is lower than the deductible, no payment would be made under the policy even if the claim would otherwise be covered. If it exceeds the dollar limit only the amount between the deductible and that limit would be covered.

For example, assume the owner has to spend $2000 to remove and rebuild a wall and fence because they encroach onto the neighbor’s land. While it’s covered by the policy there is a $2500 deductible. So, none of the cost is reimbursable. Now, if the cost was $5000, then reimbursement would be available for $2500 – the first $2500 is the owner’s responsibility because of the deductible, and the coverage caps out at $5000.

In the example above, the extended coverage policy would have been an appropriate option – it costs more initially, but there are no deductibles in the event of a covered claim. Ultimately, a buyer who has questions about the different types of policies can contact a Ticor Title representative or if they are concerned about which policy would be best suited to a transaction should seek legal advice.

The Home Buyer Has A Choice

Even though the Homeowner’s policy is an excellent choice the Realtor® should always make sure that the buyer and seller understand that there are options to choose from. If another form is desired by the buyer it must be addressed in the purchase and sale agreement, and then it must be confirmed that the title commitment actually reflects the correct policy.

Do you have questions or comments about the ALTA Homeowner’s policy?

Please share by commenting below!

Deeds Indeed

On March 11, 2011 / Blog, Title Insurance

Deeds Indeed

Consider this… A bank is selling REO property, but will convey by “special” warranty deed, rather than the statutory warranty deed we usually see. Isn’t it still a warranty deed? Will the purchaser accept this? And, isn’t a statutory warranty deed required?

Types of Property Deeds

There are several types of deeds. A “warranty” deed warrants title for all matters, no matter what they are or when they were created prior to the date of sale. It binds the seller for the benefit of the buyer and all heirs and assigns of both. Express warranties aren’t shown in the deed because Washington’s statutes say what they are – hence a “statutory” warranty deed includes them without recitals in the deed. (The warranties are set out in RCW 64.04.030.)

A “quitclaim” deed means that no covenants of warranty are included at all. The buyer gets only whatever interest the seller has, good, bad or ugly (and may even be nothing). It is often used to clear a cloud on the title. (These deeds are provided for by RCW 64.04.050.)

A “bargain and sale” deed falls somewhere in the middle. It also has statutory definitions, and means the seller is limiting covenants of good title to only matters created during the time that the seller was in title or as specified in the deed. (The specifics are in RCW 64.04.040.)

The ability to further limit warranties gives rise to the “special” warranty deed. It’s not a statutory form, but simply means the grantor is expressly stating in the deed what the limited warranties, if any, are.

Warranties may be unacceptable to a seller who shouldn’t have to assume that type of liability. Thus, a special warranty deed is used in fiduciary situations, including (in addition to the sale of REO property) a personal representative in a probate, a deed of trust trustee, and a trustee of a trust – all parties who aren’t responsible for matters arising before coming into title or who don’t have any active ownership of the land.

Warranties are valuable to a buyer because if there are problems or defects in the title, it is important to be able to sue the seller, even when the buyer has title insurance. That’s also why title companies like a warranty deed, because they have subrogation rights under the policy, meaning it can step into the shoes of the insured and sue the seller under the deed warranties. The buyer’s title policy still provides the same coverage no matter which type of deed is used.

Only the parties’ respective attorneys can offer advice in this area. The seller and purchaser need to agree on the form of deed. They each have valid legal reasons for their requirements. While it is unlikely that any REO seller will be willing to offer a statutory warranty deed, the form of deed ultimately comes from negotiation.

Do you have a question or comment about deeds? Please leave a comment below!

How do I remove someone from the title to my property?

On February 8, 2011 / Blog, Title Insurance

How do i remove someone from property title

How Do I Remove Someone From Title?

Situations can arise where the ownership interest in your property changes from the way it was originally acquired. Whether it is due to death, divorce, a parting of ways or the requirements of a new lender it sometimes becomes necessary to remove someone’s name from the title to a property. This is usually accomplished by the party exiting title executing a deed of conveyance in favor of the party or parties that will remain in title. Clearing the interest of deceased parties is an entirely different matter altogether and will not be addressed here.

In Case of Divorce

In cases of divorce, the best way to clearly show which party was awarded the property would be for the party not awarded it to execute a quit claim deed in favor of the party that it was awarded to. Many times the terms of the decree of dissolution and/or settlement agreement in the divorce case don’t properly identify real estate holdings and it can be difficult to determine “who got what”.

Download a printable version of this article

Click here to download “How to Remove Someone From Title to Property”

Tenants-In-Common

If title is held by two or more parties as tenants–in-common and one of them decides to sell or otherwise relinquish their interest they would execute a deed of conveyance (typically a statutory warranty deed or in some cases a quit claim deed) to the recipient(s) of their interest.

When a Party in Title Doesn’t Qualify For a Loan

Sometimes a party in title does not qualify for a loan and if the lender agrees to make the loan to the other title holder(s) a deed of conveyance (typically a quit claim deed) will be executed by the non-borrower to the borrowing party in title to the property.

Seek Legal Council

You should always consult with an attorney before signing any legal documents. You should also consult with Excise Tax Dept. personnel at the local county recorder’s office to help you determine if excise (i.e. conveyance or transfer) tax will be due when the deed is presented for recording.

Beware of 16 Red Flags that could delay your escrow closing

On January 11, 2011 / Blog, Title Insurance

Avoid red flags that could delay escrow closing

Terms such as “Notice of Trustee’s Sale” are what we would refer to as a Red Flag. And sometimes they can slow down an otherwise smooth transaction. Some attention may need to be paid to these.

For today’s home-buyer it’s plain to see the immense value that a thorough real estate title examination brings. The greater economic challenges of the last few years has trickled into the real estate transactions of today by way of what we call “clouds on title”. And lately the clouds have been plentiful. Not to worry, however! Identifying potential “red flags” on a title report early in the process can save time in the long run and help set proper expectations for everyone involved in the real estate transaction.

A familiar story…

Our friend Rick the Realtor was happy to find his buyers the perfect home. Their offer had been accepted, and next, he expected to review the sellers Title Report. Everything looked great until Rick saw a recorded Notice of Trustee’s Sale.

Terms such as “Notice of Trustee’s Sale” are what we would refer to as a Red Flag. And sometimes they can slow down an otherwise smooth transaction. Some attention may need to be paid to these.

Thanks to being aware of Red Flags, Rick the Realtor knew that some fact finding would help settle whether or not the Notice of Trustee’s Sale that he saw was really an issue.

At Ticor, we’re always glad to help you understand what these terms mean. And, most importantly, we’ll work closely with you, to help address and resolve these matters early in the course of the transaction.

16 Examples of Red Flags to be aware of:

State Warrants
Federal tax liens
Mechanics’ liens
Encroachments
Seller not vested in title
Property in estate or probate
Property over-encumbered
Judgments against seller or buyer

State tax or Support liens
Pending law suits
Paid, unreleased loans from individuals
Real estate contracts
Access questions
Housing code violations
Statement of Identity / I.D. Affidavit
Short Sales

*This is a partial list of what we may consider to be red flags. For more information please contact your Ticor Representative.

What is an Easement and Why Should I Care?

On November 23, 2010 / Blog, Title Insurance

You’re out shopping for property and may have just found your dream home when your Realtor® informs you that “the driveway easement to the street runs over the neighbor’s property over there.” Great! Huh? Is that a problem or what? In this case it’s not a problem at all. The copy of the title report that the listing agent provided confirms that the easement is included in the legal description and is therefore “ok”.

In our scenario the dream home property benefits from the easement over the abutting neighbor’s property. That same easement burdens the neighbor’s property.

So, what exactly is an easement? One definition that I like a lot is: “the right to use someone else’s property for a specific purpose.”

Appurtenant:
adj. pertaining to something that attaches. In real property law this describes any right or restriction which goes with that property, such as an easement to gain access across the neighbor's parcel, or a covenant (agreement) against blocking the neighbor's view. Thus, there are references to appurtenant easement or appurtenant covenant.

The dream home property has an appurtenant easement over the neighbor’s property. Its owners and/or guests have the benefit of coming and going over the driveway area without needing permission from the neighbor to cross over their land. On the other hand the neighbor that is burdened by the easement must not impair or restrict the use of the easement area on their property.

If a piece of property does not abut or “touch” a public road it will be necessary to establish an easement over the parcel(s) of land that lie(s) between the nearest public road and the property. Without a valid easement a property owner may not have the legal right to go over their neighbor’s property and that could cause big problems down the road (pardon the pun). Without legal access a property is said to be landlocked or having lack of access.

Not to worry! Once you purchase your dream home you can rest assured that your Ticor Title policy insures that you the owner have access rights.

If you have an active transaction with Ticor Title and would like to review the preliminary title commitment with us, please contact your Ticor Representative or call our headquarters at 425-255-7575.

Why do I need Title Insurance? The Tale of the old Utility Agreement…

On October 6, 2010 / Blog, Title Insurance

Water and Sewage pipes of a Jerusalem ~1930 bu...

Image via Wikipedia

Why do we need title insurance? Let us count the ways… Below is a scenario that came about in an older, well established neighborhood with a rich history of utility technologies (i.e. a variety of plumbing and utility technologies from the last 80 or so years). Needless to say, in this case a title issue arose when plumbing and utility upgrades became necessary.

The Old Utility Agreement Rears its Head

The Old Agreement
In 1975 an agreement was recorded between Bill Home Owner and the local utility company. This agreement allowed a sub-standard temporary hook-up to utilities (a water line). The agreement stated that the owner would pay a fee at a later time to connect to the water system when the utility company installs / upgrades their system.

Fast forward decades…
The property had been bought and sold several times since the agreement was established. But, when the utility company completed their upgrade, this triggered the need for the homeowner to upgrade their connection to the utility per the 1975 agreement. The cost of this upgrade in today’s dollars is approximately $5,000, a substantial amount that the current home owner did not anticipate when purchasing the home.

The Resolution
Jake and Susan, the present home owners, tendered a claim to Ticor Title with whom they are insured. And in this particular case, it was determined that the matter was covered under their title insurance policy. Ticor coordinated with Jake and Susan and the utility company to pay the outstanding amount owed to the utility company per the agreement. Ticor also received a release of the 1975 agreement from the utility company and recorded the release in order to remove the cloud on title.

Ticor Title is backed by the nation’s largest title insurance claims reserves, giving us a strong financial position and unsurpassed ability to pay claims for our insured. If you are unsure of your current title insurance company’s solvency or ability to pay claims, or have questions about your coverage, please contact us.

Best Regards,
Ticor Title
425-255-7575
facebook.com/myticor
@myticor

This story was provided by Gregg Colbo, Senior Underwriter, Ticor Title. This story is based on real life circumstances. However, the names of the people in this story are ficticious and were chosen randomly. The intent of this article is to illustrate the value of title insurance.

The Anatomy of a Non-Judicial Foreclosure in Washington State

On August 13, 2010 / Blog, Escrow, Title Insurance

Real estate loans (usually in the form of deeds of trusts) can be foreclosed through court proceedings (a judicial foreclosure) or outside of the court’s involvement (a non-judicial foreclosure) in the State of Washington. If a deed of trust contains a clause which provides “power of sale” to the trustee (a designated party listed on the deed of trust) and a statement which confirms that the property is not being used principally for agricultural purposes it may be foreclosed non-judicially. Otherwise it must be foreclosed judicially.

Here’s what happens in a non-judicial foreclosure:

Loan payments are not made and a default occurs.
Once a default has occurred the lender (or the trustee) sends a written notice of default to the borrower by first class mail and either registered or certified mail. The lender must also post a copy of the notice in a conspicuous place on the premises or personally serve a copy to the borrower.
If the borrower does not pay the outstanding amounts (i.e. cure the default) within 30 days of the issuance of the notice of default the lender may authorize the trustee to issue a notice of sale. The sale may not take place less than 120 days from the issuance of the notice of default.
If the borrower does not cure the default the trustee sends a written notice of sale to the borrower by first class mail and either registered or certified mail. The notice is also sent to parties with recorded/filed monetary encumbrances (i.e. deeds of trust, mechanics liens, judgments, etc…) and the plaintiff(s) in any filed court action and any party who has recorded a request for notice as specified by law. The trustee must also post a copy of the notice in a conspicuous place on the premises or personally serve a copy to any occupant. The notice is also recorded with the county auditor and must be recorded at least 90 days prior to the sale date.
The sale (i.e. trustee sale) may be halted up to 11 days before the sale date if the default is cured or the loan is fully paid. After that time the lender does not have to agree to accept payment.
If the sale is not postponed (by the borrower filing bankruptcy) the trustee will “cry” (i.e. conduct) the foreclosure sale in the public place at the time and location specified in the notice of sale. The sale is usually held on the front steps of the county courthouse but it could be held in any location. The sale must be held on a Friday between the hours of 9 a.m. and 4 p.m. If the Friday is a legal holiday the sale will take place on the following Monday.
Once the sale takes place the deed of trust is foreclosed. A Trustee’s Deed is recorded soon afterwards and the successful bidder becomes the owner.

Best Regards,
Gregg Colbo
Sr. Underwriter
Ticor Title

Why Do I Need Title Insurance? The Tale of the Lingering Line of Credit…

On July 22, 2010 / Blog, Title Insurance

Why do I need Title Insurance? Good question. And there are many good answers. Title insurance is one of those things that property owners may not appreciate until it comes time to make a claim. And when a claim is covered, that property owner thanks their lucky stars (and their Title insurer) because claims can be very costly.

Here is one scenario that illustrates why having title insurance with a company that has a large claims reserve is a good thing:

Johnny Home Owner took out a line of credit loan which was secured by his property in the form of a Deed of Trust. Some time later, Johnny Home Owner sold the property to Sally Home Buyer. The sale closed in a seemingly normal fashion and Sally Moved in and proceeded to make her house payments on time.

The Hitch:
A step in the closing process was inadvertently missed, allowing Johnny to continue to draw thousands of dollars of funds from the Line of Credit which was still secured by the property that is now owned by Sally. “What?,” you ask. How is this possible?

The step that was overlooked:
Specifically with a Line of Credit, the borrower (Johnny) needed to send a written statement to the lender in order to close the line of credit. Unlike a regular loan attached to a deed of trust, a Line of Credit cannot be closed without a written statement from the borrower (Johnny). The lender will not release the property now owned by the buyer, without that written notification.

Sally Home Buyer went into foreclosure:
Months after moving into her new home, Sally received a foreclosure notice against her new property from a lender that she didn’t recognize. Alarmed, she investigated and discovered that Johnny’s Line of Credit is attached to the property and in default.

Never fear, Sally Home Buyer has Ticor Title Insurance…
Sally, alerted Ticor Title of the foreclosure against her property due to the previous owner’s outstanding Line of Credit. Ticor evaluated the situation and in this case took steps to stop the foreclosure, eliminate the Line of Credit, and remove the cloud on title.

The moral of the story:
Choosing a title company with a hefty claims reserve will make all the difference in the world when it comes time to cover a claim. Ticor Title as a member of the FNF family of companies, has the nations deepest claims reserves at $2.6 Billion dollars. The choice is yours!

If you have questions about title insurance, you can call or text us at 253-318-1909.

The Two Ways to Order Title and Escrow Online

On June 25, 2010 / Blog, Escrow, Title Insurance

Two are better than one… (even when it comes to ordering title and escrow online)

We offer two ways to order title and escrow online.

Ordering title and escrow online is not a new thing for real estate professionals in Seattle, Tacoma, and the surrounding communities. But for us at Ticor, allowing our clients to place a title and escrow order online without logging in to myticor.com is a new thing.

In the past, we have required our clients to create an account on our site that stores basic information like what real estate brokerage they are affiliated with, their phone number, email address, and who their representative is at Ticor, etc. In reality, this is the most efficient way for users to use our website. When logged in, placing a title and escrow order is quicker because the order forms will already be populated with the Real Estate agent’s or Loan Officer’s contact information. This saves a bunch of time keying in basic info when it’s time to order title and escrow.

But, we realize that not everyone wants to register on our website and remember a username and password. So we have created a title and escrow order form that is available for users that are not logged in to Ticor’s website. There are a few required fields that are necessary for us to identify who is placing the order of course. But the rest of the form has the same familiar fields that our loyal clients are accustomed to.

Thanks for the orders!
Matt Sweet
Marketing / Technology Integration
Ticor Title

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