What is an Independent Title Insurance Company?

A real estate transaction can overwhelm many buyers, particularly first-time homebuyers who have not been through the process before. There are many people, a ton of paperwork and, of course, significant money involved. With so many people pushing towards the closing, it can be tempting to step back and let the wheels turn on their own.

If a particular real estate transaction represents your single biggest expense, you can’t afford to blink during the homebuying process and you must be as big an advocate for yourself possible.

Title insurance represents one of those areas where you can advocate for yourself. Many national real estate brokerages provide their own title service in house and many agents push buyers into using their services. This makes complete sense for several reasons:

  1. They are familiar with the process and want a transaction process to be as predictable as possible
  2. They make more money for their brokerage
  3. The title service is invested in the success of the brokerage and the agent
  4. It’s simply easier for them

There is nothing wrong or unsavory with any of the above listed reasons for going with an in-house agency. That being said, homebuyers have the freedom to shop for and engage with an independent title insurance provider.

Independent Title Insurance Providers Are Impartial

Choosing an independent title insurance provider brings in a completely impartial entity to the closing. Their goal is a successful real estate transaction for both parties without the burdens of quotas, corporate mandates, etc.

Often, independent title insurance agents provide their services at a lower cost to the homebuyer, potentially saving hundreds of dollars that becomes even more costly once rolled into the total cost of your mortgage.

Principle Abstract and Settlement Services prides itself on providing robust, professional, and courteous title and settlement services to every real estate transaction. We work to ensure that each transaction runs smoothly and for the benefit of all involved, not just the brokerage.

Interested in learning more about our services and how we can help with your next real estate transaction? Give us a call today and a member of our team will be happy to speak to you.

Title Insurance Considerations with Inhereting Property

Title insurance protects property owners, whether they purchase the property or inherit it. In the case of inherited properties, some folks may let their guard down believing that there is no risk involved.

Unfortunately, this is not always the case. When it comes to inherited properties, complex issues can bubble to the surface. In this blog, we review the more common situations that can arise with inherited properties.

Title Issues can Exist

A home that was owned by a loved one for 30 or 50 years can still have title issues – old claims against the property, issues with the deed, such as a misprint on the address, forgery, or perhaps a survey issue can all rear their heads.

Inheritances Can be Tricky

Not all people get along- even families. When someone passes and wills begin to surface, tension and drama can hit a fever pitch. Once a home passes down, it’s not uncommon for aunts, uncles, siblings and cousins to stake a claim to the value of a property. Other non-traditional relationships such as adopted children, second and third marriages and stepfamily can add to the complexity and the number of claims that can exist.

If you’ve inherited a property, title insurance protects you from claims against it, regardless of the outcome.

Those Who Trespass May Claim Ownership

An estate that takes years to settle can make way for yet even more complexity. By the time one takes official possession of a home, a family member, renter or even a squatter may have been occupying that property and might want to lay claim to it.

Known as adverse possession, these situations can be tricky. Having an official title insurance policy in place can help navigate the process of repossessing and/or establishing legal ownership of the property.

Identity Theft Abounds

Thousands of people become the victim of identity theft daily. Unfortunately, older folks are more at risk than most as they are specifically targeted by scammers and fraudsters. Posing as the owner of a property, these con artists can open up lines of credit or other types of loans using the property as collateral. This can go unnoticed for years, until the family member passes and issues begin to pop up during the estate settlement. A thorough title search can help uncover these types of situations that, unfortunately, are becoming more commonplace.

Principle Abstract and Settlement Services has years of experience working exclusively for the benefit of their clients. Whether you are purchasing a property or inheriting one, a thorough title insurance search performed by Principle Abstract offers peace of mind during an already difficult time. Have a property you are in the process of inheriting? Give our office a call today.

How to Avoid a Delayed Closing

The purchase of a home becomes much more real after an offer has been accepted. It’s at this point where a lot of the gears involved in a real estate transaction begins to turn. From appraisals and home inspections to title searches and financial considerations, there is a lot to get done in short order. It also means that things can go awry and a delayed closing becomes a possibility.

Some minor issues can cause little to no delays. Other issues can stop the process entirely and cause weeks or perhaps even indefinite delays. For example, if a buyer has already sold their existing home, a delayed closing can essentially put them in a state of homelessness. With new jobs, school, moving trucks and furniture/appliance deliveries all lined up, a delayed closing can be both emotionally and financially taxing.

We’ve identified several issues any buyer should keep an eye on which can cause delays. The sooner they are spotted and handled, the faster a closing can get back on course.

Financial Issues          

Most homebuyers require financing to buy a house. It is up to the buyer to ensure that little to nothing changes with their financial picture between a pre-approval and the date of closing. Income sources should remain intact, and large purchases where additional financing is required, such as a car, should wait. These types of changes can throw off the calculations that lenders use to determine your ability to pay them back, and a bank can pull their offer to extend a loan as a result.

Be up front with your loan officer and ensure that your proverbial house is in order. Ensure there are no back taxes, past due child support payments, etc. which might trigger a lien on your income. If something changes with your job status or overall financial picture, ensure you reach out immediately to explain the situation to avoid a delayed closing.

Appraisals

A significant step in any real estate transaction is the appraisal, which determines the value of the property at hand. Issues can sometimes arise when an appraisal comes in lower than the agreed upon purchase price. This is because lenders work with the appraised value, not the purchase price. Any number beyond the appraised value needs to be negotiated between the buyer and seller, which can add complexity to a closing.

Inspections

Inspections are performed for the benefit of the homebuyer to ensure that the home is in livable condition and does not have any health or safety concerns, such as structural damage, electrical/mechanical issues, mold, etc.

Inspections can reveal significant issues which need to be negotiated between the buyer and seller. In extreme cases, issues like mold, structural issues or roofing repairs can take weeks, if not months, to sort out.

Title Issues

Any real estate transaction should have a comprehensive title search performed. This process will ensure that there is a clear title on the home and that there are no liens, tax issues or claims against a property which might delay the transaction from taking place.

Along with a survey, the title search can also reveal any easements or other issues which might cause a delayed closing

Home sale contingency

A common contingency in a residential real estate transaction is an escape clause for the buyer should the sale of their current home fall through for any reason. These are often used as the buyer needs the proceeds from the sale of their house to close on the new home, or they simply cannot cover the cost of two mortgages.

The buyer’s ability to navigate their home sale is critical in these transactions – any delay can put the new home purchase on hold. As an aside, for properties with multiple offers, a seller can look for offers with these types of agreements and choose to avoid them. Any ability to remove this requirement from your offer will help to avoid delays and make your offer more attractive to sellers.

Final Walk Through

A final walkthrough is performed by the real estate agent and the buyer, typically the day prior to or the day of closing. The purpose is to confirm that agreed upon repairs have been performed and that the home is as expected.

This also creates an opportunity for delays. For instance, the seller may have agreed to certain repairs based on the home inspection and didn’t do them. Or, they may have specified that all kitchen appliances would stay in the home but they are now gone.

If you experience a delay in a home purchase, don’t be too alarmed. Indeed, about 25% of all real estate transactions experience some sort of delay. The best thing any buyer can do is to stay involved in the process, communicate often, do their part to smooth out any potentially bumps in the road and to be mentally prepared for delays.

Principle Abstract works tirelessly for homebuyers to ensure that their purchase is in order and that any threats to a timely transaction and is properly communicated and handled. Trusted by dozens of area agents and lenders, Principle Abstract prides itself on our attention to detail and ability to navigate any title issue at hand.

For more information or to get started on a real estate transaction, contact us today.

What are Deed Restrictions?

Title searches can often unearth deed restrictions that are placed on a property. Also known as restrictive covenants, deed restrictions are one of the more interesting topics when it comes to real estate. They’re pre-adopted rules baked into the deed that the owner of the property must follow and adhere to. These restrictions are legally binding and can include:

  1. The payment of dues, homeowners’ association fees or the like.
  2. What color the dwelling can be.
  3. How the property can be landscaped.
  4. How the property can be used (for example, where visitors can park, fencing, decoration, garden beds, etc.)
  5. What types and size pets the owner can have.

For example, unknowing homeowners may assume that certain maintenance, such as street lighting, is handled through property taxes. They might also assume that they can adopt a large breed dog. They may also make considerable investments to the home, such as painting, only to be forced to revert to an original color or to a color from a pre-approved palette. If the homeowner requires a space to park a project car or an RV, for instance, these restrictions can be devastating. These owners may soon be surprised with a bill for dues a fine and/or a cease-and-desist order for not abiding by the deed restrictions placed on their property.

The same can be true for buyers looking to buy an empty plot. In this case, deed restrictions can include how big of a home can be built, how many garages or outbuildings can be erected (and their size,) or the ability to install a pool.

Of course, many deed restrictions are obvious, especially if the property at hand is in a planned community, such as an adult living development or community that might maintain a clubhouse, tennis courts and/or pools. They may also handle upkeep like landscaping and snow removal. These types of communities almost always have an HOA and their associated dues and are often seen (and positioned as) a benefit to living there. Indeed, deed restrictions are intended to increase and maintain property values in the area.

The issue comes when they are unexpected and prevent a buyer from using the property as they intended.

That is where a thorough title search comes in. Any deed restrictions will come to light during a title search, whether they are in place and enforced by an HOA, a municipality, etc. This will protect a buyer from purchasing a home that they won’t be able to use as intended or be responsible for costs they were unaware of.

Principle Abstract has years of experience performing comprehensive title searches for homebuyers. If there are deed restrictions attached to a property they will be uncovered and disclosed, ensuring our clients aren’t blindsided after their purchase.

Interested in purchasing a home? Give our office a call and a member of our team can assist you.

The Title Insurance Term Cheat Sheet

The process of buying a home is complex, with many facets to consider, analyze and track. Any given week can involve conversations with agents, lenders, attorneys, escrow agents, home inspectors, contractors, etc. It can be enough to make your head spin, especially if you don’t have a seasoned, experienced real estate agent and/or lender to help walk you through the process. Then there is the property itself: paint, furnishings, layouts, landscaping – the list goes on and on.

It’s easy to lose sight of some of the details that go into a closing. When that day approaches, it’s common for buyers (particularly first-time homebuyers) to get confused with some of the terms being thrown around.

Title insurance, an important component to all real estate transactions, contributes to some of the complexity due to its legal and administrative nature.

We’ve decided to put together a cheat sheet of terms any buyer (both new and old) would benefit from reviewing in the lead up to a home purchase. It is our hope that it will help demystify some title insurance terms you may encounter during your buying experience.

Title Insurance

Title insurance is a required component of a real estate transaction that protects a buyer from a title defect. A title search is almost always performed prior to the issuance of the policy and checks to ensure there are no issues with the property at hand.

Title insurance is one of the few components of a real estate transaction that a buyer can shop for.

Adverse Possession

Adverse possession is when someone is living in a property without consent. Commonly known as ‘squatters,’ a transaction involving adverse possession are more complex and can involve legal ramifications. For instance, an individual who has been living in a dwelling for a certain length of time may be allowed to stay in that dwelling and may even be granted ownership.

Clear Title

“Clear” title is a primary goal in any real estate transaction. The term means that no defects have been found. There is no question as to who owns the property at hand in the real estate transaction, which can now proceed.

Closing

The closing is when the real estate transaction is formally executed and possession transfers from the seller to the buyer. By this time, all steps have been satisfactorily completed, including title search, final inspections, attorney review, etc. There is nothing left but to sign the documents and grab the keys!

Deed Restrictions

Deed restrictions is a term that include any restrictions a property owner might face. This can include certain setbacks, town zoning rules and/or your ability to parcel or subdivide land. They can also restrict your ability to run a business out of your home, erect any signage, etc.

Defect

Defect is a term that we’ve already used which refers to any factor that might prevent the property from transferring from the seller to the buyer. This can include a lien or mortgage against the property, or a judgement of some sort that involves the property at hand.

A defect can also refer to an issue with the property, including structural issues like roofing, foundation, etc. that may severely impact the value of a home.

Easement

An easement on a property allows people to use land or its property in a particular way. This can include a pass through to another piece of property, or an easement for utilities to access the property. For example, if a water main is buried under your property, the entity responsible for maintaining that pipe is almost always within its right to access your property for routine inspections, upgrades, and repairs. Egress is another term for easement and may be used interchangeably.

Foreclosure

Foreclosure occurs when a property owner breaks the terms of their agreement with their lender, most likely for failure of payment. The lender is within its right to repossess the property and the owner may be removed from the property.

Real estate transactions involving a foreclosed property are slightly different than a traditional sale as there may be one or more entities attempting to recoup debts, including the mortgage lender, other banks where loans have been taken out using the home as collateral, local townships where taxes may be owed, and so on.

Lis Pendens

This latin term refers to any pending or active lawsuits involving the property at hand. Lis pendens can stop a real estate transaction in its tracks, deeming the property non-transferrable until the lawsuit is settled and processed administratively.

Principle Abstract Title and Settlement Services has years of experience successfully guiding buyers through hundreds of real estate transaction and protecting their interests through robust title searches. We act as a resource for buyers and seek ensure they are both comfortable and confident each step of the way.

Interested in buying property? Contact our office today and a member of our team will be happy to speak with you.

Title Insurance for the Cannabis Industry in Pennsylvania

The Cannabis industry is rapidly growing and there is significant interest from both the private and public sectors to move things forward. For the former, it’s a business opportunity to take advantage of growing demand for cannabis-based products. For the latter, the potential tax revenue that can be collected by those private enterprises is attractive.

Since there is no federal law providing blanket legal standards, we are left with individual state laws and regulations on how cannabis can be grown, sold, etc. Some states are further along than others in working through the proverbial ‘red tape.’ Others, like Pennsylvania, are one of those states that are still figuring things out.

Title insurance has certainly been caught in the fray.

As a Schedule I drug under the Controlled Substances Act, it is a federal crime to possess, use, sell, or distribute marijuana. Therefore, handling funds or settling financial transactions for cannabis-related businesses could be considered assisting in unlawful activity. This also presents numerous risks of insuring and transferring real property that is associated with unlawful activity, including, for example, the potential to implicate anti-money laundering rules as well as forfeiture laws.

For these reasons, title insurance has been difficult if not impossible to get in states like Pennsylvania, which means that buyers would need to perform their own due diligence on a property and assemble a specialized team of consultants and legal experts to navigate the transaction.

In Pennsylvania, a major change has now made it easier and Principle Abstract has taken a position of leadership when it comes to cannabis related real estate transactions.

Getting Title Insurance for Cannabis Related Businesses in PA is Possible

Until recently, buyers have typically not been able to obtain owner’s policies as most title companies have not been willing to provide coverage options. Principle Abstract has developed relationships with several organizations that now make this possible.

Furthermore, lenders were typically unable to obtain loan policies. However, our office has now been able to successfully offer and close transactions for cannabis companies.

We’ve also been able to develop a solution that allows us to act as escrow agents in a cannabis related real estate transactions in Pennsylvania.

By combining these unique solutions, Principle Abstract is uniquely positioned to assist in most if not all cannabis related transactions throughout the state of Pennsylvania and are now offering consultations to anyone seeking title and escrow support on a transaction.

Additionally, we are members of The Pennsylvania Cannabis Coalition (PCC), a 501(c)6 trade organization comprised of Pennsylvania medical marijuana permit holders. Through our membership with PCC, we can help to advance the progress of the cannabis industry within the state of PA.

More on the Coalition:

Our purpose is to protect and preserve Pennsylvania’s emerging marijuana market.  We help devise policy that regulates the sensible cultivation, distribution, and use of cannabis. We represent the current medical cannabis industry here in Pennsylvania. We advocate for a robust yet economically sensible regulatory framework. We continue to educate elected officials, regulators, and the general public about of the need and benefits of cannabis-derived therapies. Our team includes both industry and public affairs specialists with rich, domain-specific experience at the local, state, and federal level.

Are you currently involved in a commercial real estate transaction for an entity operating within the cannabis industry? Give Principle Abstract a call today and a member of our team will be happy to offer a consultation.

Bucks County Introduces Free Fraud Alert System

Unfortunately, fraud is rampant these days. Scammers always seem to be one step ahead of the ‘good guys’ when it comes to data privacy and the more tools available to consumers to help thwart these attacks, the better.

Thankfully, Bucks County has introduced a free fraud alert system that any Bucks County resident can take advantage of. In their own words:

“If you sign up, you will receive an email from our recording vendor, LANDEX, alerting you anytime a document has been recorded in our office against your name. Businesses are also welcome to sign up for this service.”

The risk this program intends to offset is people fraudulently using your name, social security number, etc. in an attempt to open up a line of credit using your information, or many other forms of white collar crime that fall into the category of mortgage fraud.

As mentioned above, the vital piece of identifying and rooting out this type of fraudulent activity is monitoring documents as they are being recorded. Once signed up for this service, you will be alerted any time a document is recorded against your name. At this point, you can get in contact with the county and begin the process of reporting and stopping the fraudulent activity.

We urge our neighbors and friends who both reside and conduct business in Bucks County to sign up for this free and valuable service.

For more information and to sign up, visit: https://www.landex.com/recordalert/?county=bucks

Different Types of Liens and What They Mean

One of the most important objectives in any title search is to check to see that there are no liens on the property at hand in a real estate transaction. Liens are a legal right to property (more specifically, it’s value) by a 3rd party attempting to collect on a debt that is owed. They can derail real estate transactions and cause misery to unprotected buyers who find out after the fact that there was a lien on the newly acquired property.

Simply, liens do not go away if an owner sells the property. These 3rd party collectors have a legal right to the property, and they can and certainly will exercise that right.

In this blog, we discuss the common types of liens title insurance agencies will come across.

Mortgage Liens

Mortgage liens occur when a property owner uses their property as collateral for another loan. Should the owner of the property default on that loan, the lending bank is within its right to reposes the home and put it in foreclosure in an attempt to recover funds.

In this instance, there may not be just one lien. There can be personal loans, second mortgages, home equity lines of credit, etc., meaning that multiple parties will want to vie for the equity that is locked in that property.

Tax Liens

Tax liens can be placed on a property due to a failure to pay taxes. This can include property tax and/or income and business tax. Tax liens are not always easy to find on a property and can be particularly tricky to settle. Unsuspecting owners can fid themselves in a complex web of issues if they inherit a property with a tax lien on it.

Child support and Alimony

Property owners who owe a substantial sum in court ordered child support or alimony can find themselves with a lien. Furthermore, issues can arise if the property is being sold without the consent of an estranged spouse. That spouse can put a lien on the house in an attempt to recover funds.

Mechanic’s Lien

A mechanic’s lien comes up when a property owner fails to pay for work performed on the property at hand, usually for non-payment of material and/or labor. Even sub-contractors hired by the general contractor (GC) have a legal right to place a lien on the property. For example, if a GC hires a plumber to install all new plumbing in a home and the GC fails to pay the plumber, the plumber is within his rights to put a lien the property.

Title insurance exist largely to protect clients from liens and other issues that might spring up over the course of a real estate transaction. For this reason, title insurance is essential to anyone buying property. Without it, any claim against that property can mean having your property pulled right out from under you.

Principle Abstract has an exceptional track record of ensuring that a property has been removed of potential threats against ownership. Ready to get started? Contact us today to get started.

The Who’s Who at the Closing Table

A closing is the culmination of a whole lot of work involving multiple parties over the course of several months in most instances. Between the real estate professionals, title agencies, lawyers, etc., people often ask who actually shows up at the closing table for a real estate transaction. There are some folks who one can bet will be there for nearly every transaction. Others involved in the transaction may be there but are not required.

In our latest blog, we list the people who have a seat at the closing table when a closing takes place.

Buyers

It’s no surprise that buyers will be at the closing. After all, they are the ones signing all the paperwork and taking possession of the property at hand. Their identities are always confirmed at the time of the closing to ensure they are indeed the appropriate party signing the documentation. That said, proxies can be assigned during real estate transactions, and that is handled well before the day of the closing.

The Buyers Agent

The buyer’s agent is almost always at a closing. They represented the buyers throughout the process and it’s their job to ensure that the buyer’s best interests are met at the time of the closing. Once the transaction is finalized at the closing, their job is done.

The Listing Agent

The listing agent who helped the sellers with their real estate sale will be at the closing. The listing agent ensures that their client’s best interests are met and that the transaction settles smoothly and as expected. At this point in time, they are paid their commission for their part in selling the property.

Escrow Officer

The escrow officer is an employee/representative of the title agency involved in the real estate transaction. They have helped to manage all the paperwork leading up the closing and are responsible for a smooth transaction. This includes ensuring that all parties are aware of each step of the process, what each party is signing, and ensuring that each document is properly executed and recorded.

Those Less Likely to Attend

The Sellers

The Sellers may be present at a closing, although their interests are already being represented by their agent, as mentioned above. Often, a seller may not be in the area to make a closing, having already moved out of the property they are selling. Alternatively, they might live far away but are representing an estate that they are tasked with settling, An example would be an individual selling their parent’s home after they’ve passed away.

Mortgage Broker

A mortgage broker is not often present at the closing, although there are a few reasons why they may want to show. This can include a settlement which was particularly difficult to negotiate, or to simply meet/see the parties at the closing. Ultimately, however, they have no specific role at the time of the closing and most questions or issues involving the transaction at hand would have been handled before the closing was confirmed.

Legal Representative

A representative from a law firm involved in the transaction may be present under specific circumstances. Their likelihood of being at the closing table increase if the transaction at hand includes a trust, if a probate court is involved in any way, etc. Otherwise, don’t anticipate the presence of any legal professional involved in the transaction.

In all, a closing should be a fairly smooth process. By the time the closing is scheduled and paperwork ready, all issues and questions would have been thoroughly uncovered and addressed. Other than the essential parties listed above, the others have satisfactorily completed their job so that the transaction can proceed without their presence at the closing table.

Principle Abstract is committed to representing the needs of the buyer. If you are interested in buying a home or refinancing, visit our website or give our office a call and a member of our team will be happy to answer any questions you have.

How to Maintain Privacy on Public Land Records

Sales involving property become part of public record. The deed that is recorded with a town and/or county becomes information that sits within public domain. In other words, virtually anyone can quite easily search for your property, either online or in a hall of records where such documents are kept and find your name, eliminating privacy.

Some situations arise where homebuyers require that their names are kept off record. The reasons can be quite varied and while not common, it is something that becomes a necessity during a real estate transactions.

There are several routes that a real estate buyer can take to ensure privacy is maintained on a purchase. In this blog, we explore some of them.

Revocable Trust

According to Investopedia, a revocable trust is a ‘part of estate planning that manages and protects the assets of the grantor as the owner ages.’

By vesting a title within a revocable trust, homeowners can achieve privacy in a pragmatic way. Most homeowners need financing, and revocable trusts can obtain financing from a lender. The result is a home sale where the trust is listed as the buyer rather than the names of the parties that the trust pertains to.

Limited Liability Company

It is possible to purchase property through a limited liability company (LLC.) to preserve privacy. This is not very common, however, since it is harder to secure a loan as an LLC and most home buyers require financing. The caveat here is if the transaction is being handled in cash where financing has been removed from the equation or if the property at hand is commercial property.

Realty Trust

Realty trusts are another tool that buyers can use as a way to purchase real estate privately. They are quite similar to LLCs in that they are mainly used as part of a cash transaction or by commercial property buyers (including buyers interested in rental units.) Like LLCs, realty trusts can also have difficulty securing financing. If a buyer is solely interested in privacy, it is unlikely this will be the preferred route to maintain privacy.

No matter your reason for privacy and how you decide to proceed, it is essential to seek the advice of an accountant and seek legal counsel. No decision should be taken without deep consideration and consultation with professionals to ensure you are proceeding in a way that preserves your best interests. Not doing so may result in serious legal, financial and/or tax consequences.

Principle Abstract is one of the area’s most trusted title insurance providers and conduct each transaction with the interests of the buyer in mind. If privacy is a priority to you on an upcoming real estate transaction, give our office a call and a member of our team will be happy to assist you.

Ready to get started? Give our office a call today.

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