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.

4.5 Things You Need for a Virtual Closing

The pandemic has unquestionably changed the way we work, travel and shop. It has also changed the way we purchase homes. Over these many months, the real estate industry has also had to adapt to a new way of working. As pandemic restrictions subside, many of these adaptations remain, largely for the better. This includes virtual closings.

Traditionally, closings were in person at a mutually agreed upon location and all documentation prepared for the closing would be reviewed and signed by the present parties, whether it be a property transaction or a refinance.

Virtual closings have now become more normal, allowing the necessary parties to log in from virtually anywhere to navigate the closing process both quickly and securely.

If you are a homeowner and will be conducting a closing virtually, or you’re a real estate agent assisting a buyer with a virtual closing, these tips will come in handy as the day approaches.

Devices

You should choose a device that will allow you to view documents clearly, and also has a working camera and microphone. Most folks will leverage an iPad or other form of laptop for their closing as well as a desktop if they have the camera and microphone set up.

Smartphones may be suitable, but the screen size can make things hard to read and cumbersome. Try and avoid reliance on your smartphone on closing day.

Additionally, ensure that the audio and video functions are working and/or enabled and ready to go for closing day. Most devices have privacy settings that you can enable leading up to the time of your closing to help move things along. Last minute tech issues can add unnecessary frustration and anxiety that can be easily avoided.

Wi-Fi

Closings have a lot of steps and unreliably internet, lagging, and spotty audio can really slow things down and create opportunities to miss information.

Ensure you are at a location with a reliably strong and fast internet connection. The programs used to stream closings, as well as screen sharing and video, can take up quite a bit of bandwidth. Try and avoid public wi-fi which is often inconsistent and not as fast as a home connection. Also try and disconnect any other devices that use up internet bandwidth.

Paperwork

Always ensure you have identification on hand in the event that it is required. You should also have any documentation you have that has been generated in the lead up to your meeting available or already open on your device for quick reference. This will help speed things along and allow for a smooth transaction.

Atmosphere

Come settlement day, ensure that you have access to quiet space to ensure there are no distractions or issues hearing the proceedings. If you have pets or children, do your best (believe us, we understand both can be loud and unpredictable!) but try and control what you can, such as outside noise, music/tv in the background, etc.

You will also need to be prepared to be on camera. With this in mind, consider attire and background for your closing that meet your own expectations. In other words, don’t be caught off guard and suddenly feel compelled to change and/or tidy up at the beginning of the meeting. Simply come prepared and comfortable with your appearance/surroundings.

Celebrate

Be prepared to celebrate! In most cases, a real estate transaction is a big milestone. Just because you are not physically out signing your paperwork doesn’t mean you can’t toast your accomplishment. Many folks opt to head out for a round of drinks and/or dinner after a home purchase or race over to their new property with a bottle of champagne. And you certainly can! Whatever you decide to do to celebrate, don’t let a virtual closing take that away from you.

Principle Abstract has been conducting virtual closings along with in person closings throughout the pandemic and see them as part of the norm going forward.

If you have any questions about virtual closings or wish to get started on a real estate transaction or refinance, contact our office today and a member of our staff will be able to assist you.

Phishing Scams in Real Estate Transactions: A Paramount Concern

This day and age, virtually everything is digital – from the way we shop and socialize to the way we get the news and binge watch shows. As a result of the pandemic, even more of our lives have become digital. This includes things like concerts and business meetings but also tasks like banking and home closings.

The last two are particularly important because it was only until recent when tasks like mobile check deposits or signing legally binding documents have been broadly accepted and ‘normalized.’

Thankfully, companies have largely stepped up and ensured that our online experience, especially ones involving the transfer of money and sensitive documentation has been largely secure and seamless. Our company is one of them.

Despite all this, the bad guys continue to lurk. With every step forward into the digitization of our lives comes new opportunities to scammers and hackers to exploit any potential vulnerability.

No industry is immune – even real estate.

Over the course of a typical real estate transaction, there are multiple parties, people and procedural/transactional steps that take place. Many of these include wire transfers (most for fairly high dollar amounts,) and the transfer of sensitive documentation such as bank statements, tax documents, investments, addresses, telephone numbers, etc.

It’s easy to see how a real estate transaction is an attractive and potentially lucrative target for scammers participating in phishing attacks.

Phishing attempts happen to be the most common. This is when a hacker finds their way into the accounts of a lender, bank or real estate agent and pretends to be a representative of that company. They will try and convince folks to send along bank information, credit cards, passwords, etc as a way to gain access into other people’s information.

 If any user gets a wire request or any request for information that is outside of the typical way of requesting information, pause and reach out to your lender or agent. Additionally, never email any passwords, credit card information, social security numbers or anything that can be leveraged be a scammer.

Should you get any email from anyone involved in your transaction asking for any information or wire money, question that emails legitimacy. It’s always worth asking if the request is legitimate. Even if it does happen to be a legitimate request from that sender, refuse and find a more secure way to pass that information along, either through mail, fax, or a 3rd party encrypted file sharing platform.

The team at Principle Abstract considers our client’s security as a top priority, now more than ever. As a company that operates in this industry, we have a moral and business obligation to ensure that all information is secure from phishing attacks and that the reputation of our industry at large remains intact.

If you have any questions on how Principle Abstract keeps your information secure during real estate transactions, give our office a call.

Why Your Closing Date Makes a Big Difference

There are countless steps in a home purchase or a refinance that folks need to navigate. By the time the topic of a closing date comes up, it’s easy to succumb to fatigue or anxiety and just confirm the first available date to get it over with.

Yet your closing date is quite important and can impact the entire closing experience both financially and administratively.

Should I Close on a Friday?

Fridays are typically the most sought-after date for a close. Work tends to be lighter that day, and many opt to take the day off to celebrate, spend time in their new home (if they are purchasing,) and to give themselves a 3-day weekend.

Yet Friday can come with significant delays. For the reasons stated above, there are typically more Friday closings than on any other day of the week, which means that title companies and lenders alike are busy with paperwork, closing the books on all the transactions at hand, etc. If there are any delays, it’s likely your closing will get pushed through the weekend and into the following week.

This is likely not ideal if you have prepared for an on time closing by requested time off from work, move, made plans to meet with contractors, etc. It’s worth trying to make a mid-week close work and allow some buffer time between your closing and your first big weekend with your property.

If you do need to close on a Friday, voice your desire to close early in the day. If any issues arise with walk-throughs, etc., there is still time in the day to get the closing accomplished. Additionally, giving the balance of the day for title agents and lenders to carry out wire transfers and the like will additionally speed things up.

Avoid the Last Few Days of the Month

For several strategic reasons, it’s smart to close well before the end of the month. For one, a purchaser pays interest in advance for the balance of the month, so the cash to close figure remains lower in the earlier days of the month.

Another reason to eye a closing earlier in the month is that buyers typically skip that first month’s payment. This can come as a relief to many who can take a breath after a large transaction, allow the dust to settle, and recover some cash that would otherwise go towards your mortgage payment.

It also takes some time for lenders to send out information/welcome packets, instructions on how to pay that first payment, etc. This allows for a more relaxed transition with plenty of time to get acquainted with your new lender.

Principle Abstract and Settlement Services works with each of our clients to ensure a smooth transaction, but also a well informed one. If you have questions or goals concerning your closing date, feel free to ask and we can work towards it. At the end of the day, all parties involved want a smooth, on-time transaction. We will do everything we can to ensure that happens but also let you know of any issues that come along which may impact that goal.

Interested in learning more or have a home purchase or refinance you are working on? Contact us today and a member of our team will be happy to speak with you.

Safety and Privacy Concerns During Real Estate Transactions

Real estate transactions, whether you are buying, selling or refinancing, requires a lot of access to your personal life. This takes the form of physical access during open houses, home showings, etc. It also takes the form of digital access due to the types of paperwork required to close a transaction. These can include bank statements, forms of Identification, paperwork containing social security numbers, etc. No real estate transaction should come at the risk of any breach in privacy.

In this month’s blog, we discuss the steps you can take to ensure that your data and privacy can be better protected.

Physical Documents

Physical documents are often printed out and stored in various locations within someone’s home. Hopefully, that includes a safe or locked filing cabinet at a minimum. Yet during an active transaction, such as a home sale, it’s easy to lose track of or leave out paperwork that is being generated. Coupled with regular home showings and open houses, it’s easy to leave your privacy in a vulnerable state.

Steps to Consider:

  • Ensure you are consolidating all your paperwork in a single location. Try not to leave paperwork on a printer tray, for instance.
  • When not reviewing the paperwork, set it aside somewhere out of site – or better, locked away in a safe or in a locked filing cabinet or desk drawer.
  • Once you’ve digitally scanned and/or no longer have use for a particular document, destroy it in a shredder.
  • Don’t leave documentation in a car overnight. It’s easy to leave a briefcase in the back seat of your car – it’s worth the chore of running back to the car and grabbing it to keep your overall risk down.

Digital Documentation

While the internet has made storing and sharing documents a lot easier, your digital environment is vulnerable to hacking and other forms of cybercrime and proper care should be taken to ensure that your documents are well protected.

Steps to consider:

  • Password protect sensitive materials if at all possible (keeping your password in a safe place.)
  • Properly name and file your documents so that they are not lost within your computer and forgotten.
  • Do not leave documents that are no longer needed in your recycle bin.
  • Create backups of your documents via a physical memory source like a USB hard drive or cloud storage solution.
  • Do not leave sensitive information in an email client.
  • Be extremely cautious when sending information over email.

Work with Reputable Professionals

Working with reputable and well-established professionals will make all the difference. Real estate agents should be quick to coach you on many of these topics and will have security protocols in place to ensure that documents are being properly stored and protected between all parties involved. The same goes for lenders and title insurance professionals, most of whom should have secure file sharing services that allow their clients to safely upload and organize all the required documents, collect all signatures, etc. It’s in all our best interest to ensure and maintain a high level of trust.

Any of the professionals involved with your transaction should be able to clearly and thoroughly answer questions about their data and privacy mitigation procedures and consider it a paramount priority.

Principle Abstract and Settlement Services only works with the area’s most highly reputable agents and lenders, and works tirelessly to ensure that our information is properly stored and maintained. If you would like to learn more or would like to get started on a real estate transaction, contact us today.

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