As the Spring market approaches, many of you may be considering purchasing or selling real estate. That process usually begins with the negotiation of an Agreement of Sale. Typically, in residential transactions, it is a standard form produced by the Pennsylvania Association of Realtors that is used. If it is a commercial transaction, often the Agreement of Sale may be more unique and tailored to the specific transaction. Regardless of whether it is a residential or commercial deal, there are certain terms that you should pay close attention to with regard to any Agreement of Sale. Some of those terms are discussed below. …
I do not know why, but we have seen, and experienced, an unusual uptick in the use of Powers of Attorney by people buying and selling real estate. I do not know if it is a coincidental increase in the frequency and will pass as an anomaly, or whether the public is expecting that real estate transactions will be held remotely, through a Power of Attorney, as opposed to the “old model” of everyone showing up at the settlement table. Powers of Attorney are, of course, appropriate when either the Seller (most likely) or the Buyer (less likely) are incapable of attending closing by reason of living out of state/out of the country, traveling or incapacitated by a medical condition. Unfortunately, we are seeing more and more instances of Powers of Attorney being used by people who just plain do not want to be bothered with attending closing. This creates a problem.
Commercial real estate leases are a typical business expense, and many are quite complicated. Often leases are recycled by landlords, but are the basic terms of the lease correctly stated? Is there a letter of intent or term sheet? If so, the lease, as drafted, should conform.
As the real estate settlement industry hustles, and struggles, to catch up with the pace of technological advances (i.e. quicker closings, remote settlements where neither the Buyer nor the Seller attends the settlement table, etc.), one of the biggest changes is the transition from the old standard of allowing realtors to bring their business checks for the deposits, and Buyers to bring certified checks or cashier’s checks for the funds that they need to close, to requiring all parties wire their funds to the title insurance agency before closing.
FEATURE ARTICLE – “Tax Assessment Appeals: Are your Real Estate Taxes Too High Because of an Inaccurate Assessment of Your Property?” by Michael B. Murray, Jr., Esquire.
STAFF SPOTLIGHT – Meet Erica R. Weiherer, Paralegal
OWM FIRM NEWS & UPCOMING EVENTS – Kathleen M. Martin, Esq., CELA and David A. Megay, Esq. have upcoming information sessions.
Over the last decade there have been severe economic impacts to the value of real estate in Pennsylvania as well as the rest of the United States, causing inaccurate assessments of commercial and residential real estate. When an assessment of real estate is not accurate, it is not based on the true fair market value of the property and the result is quite often that you are paying significantly more in real estate taxes than you should be paying. …
FEATURE ARTICLE – David A. Megay, Esquire discusses the different ways realtors assist property owners with real estate transactions, including transactions where property owners are selling property by themselves.
STAFF SPOTLIGHT – Meet Tori L. Walker, Legal/Administrative Assistant
OWM FIRM NEWS & UPCOMING EVENTS – Melissa A. Iacobucci, Esquire, Kathleen M. Martin, Esquire, CELA, Rebecca A. Hobbs, Esquire, CELA, and David A. Megay, Esquire have upcoming speaking engagements.
Some of my closest friends, business associates, and new client referral sources, are realtors. Realtors do a wonderful job of assessing fair market value, marketing properties, finding Buyers and vetting their financial ability, negotiating real estate transactions and closing same, etc. However, some Sellers are able to find a Buyer, and sell real estate, without the use of a realtor. We work closely with Sellers, with or without realtors, in the handling and processing of a real estate transaction.
How to Know if you Need Title Insurance in PA
As a lawyer handling real estate transactions, as well as a title insurance agent for Fidelity National Title Insurance Company, buyers often ask me if I really “need” to buy title insurance. The answer, like most legal issues, is not as clear…in essence, it depends!
Quite simply, the answer to the question “Do I need title insurance?” is dictated by your lender if you are financing the purchase price of the property. Quite simply, a “conventional lender” is almost always going to require title insurance as a condition of obtaining the loan necessary to either purchase the subject real estate or to refinance any or all of the indebtedness (i.e. loans, judgements, etc.) associated with the subject real estate. The conventional lender is going to require that the borrower purchase title insurance with coverage at least equaling the amount of the loan, as the lender is going to want insurance that their loan is secured by a mortgage against the proper real estate parcel, the mortgage is recorded against the proper real estate parcel, and the lien position of the mortgage is in, usually, first position. For example, you may be buying a $200,000 property and financing $150,000 of that purchase. As a result, the conventional lender will require that you buy title insurance with a coverage for the lender in at least the amount of the mortgage (i.e. $150,000). The borrower/ buyer does not have to purchase $200,000 worth of title insurance; just enough title insurance coverage to insure the $150,000 mortgage. However, the cost of buying the additional $50,000 worth of title insurance, for a total of $200,000, is nominal and the $200,000 title insurance policy will cover both the owner and the lender.
There is always a chance that the lender will not require title insurance; however, almost all “conventional lenders” (i.e. banks, mortgage companies, etc.) will require title insurance. A “private lender” (i.e. investor, family member, friend, etc.) may not bother requiring title insurance. When we represent private lenders, we always recommend that they require that the borrower, as a condition of the loan, purchase title insurance as we want to make sure that our client’s loan is a secured mortgage that is in first position and is properly recorded against the correct real estate parcel. However, that private lender certainly has the option of not requiring title insurance.
What If I Pay with Cash?
Finally, someone buying real estate with “cash” (i.e. not requiring any kind of financing) does not “need” title insurance. That “cash buyer” has the option of buying title insurance. However, we almost always recommend that the buyer purchase title insurance as it is a relatively nominal expense in the overall context. This is one of the biggest purchases you will make in your lifetime and the title insurance company will handle the entire transaction, the settlement agent will conduct closing, etc. The only time that it makes sense to not buy title insurance is when you are getting ownership of a piece of property as a gift from a family member (i.e. grandma gifts her home to you, your parents transfer ownership of their investment property to you, etc.).
Do I “need” title insurance? Hopefully, the above makes it clear that you only “need” title insurance when you are dealing with a conventional lender; when not, you should still purchase title insurance with few exceptions (i.e. a gift from a family member).
Do you have additional questions regarding title insurance in PA? Contact OWM Law today.
Buying your first home, or any home for that matter, is usually a very exciting experience. It is even more exciting when you are purchasing new residential construction. However, it is important that you work closely with a realtor and your real estate attorney, to avoid a couple of common pitfalls when purchasing new residential construction. …