Contracts for Deed

Contracts for Deed, which are also called Executory Contracts, involve a person contracting for the right to receive title to property upon the completion of payments to the owner of the property.  Executory Contracts are specifically covered by statute (Texas Property Code 5.061 et seq) and there are a number of rules that must be followed when a real property transaction is handled by Executory Contract.  Because Executory Contracts do not involve the actual conveyance of title, title insurance is not available at the time an Executory Contract is executed.  Title insurance is available at the time the conveyance of title is finalized, such as when the final payment requirements under the Executory Contract are completed.

What is a Living Trust?

A Living Trust is a type of trust that is used to hold the personal assets of an individual during their life and then distribute those assets after their death without the necessity of a probate proceeding.  In a Living Trust, the assets of the person creating the trust, known as the Settlor, are placed into the Trust to be managed by a Trustee for the benefit of the Settlor.  The Settlor may name themselves as the initial Trustee and someone else as a Successor Trustee to manage the assets following the death or incapacity of the initial Trustee.  In order to retain the homestead exemption for tax purposed, language must be included in the Trust that the Settlor retains the right to occupy the property as their principal residence.

 

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

 

HCAD and Real Property Accounts

We often get calls about why the Harris County Appraisal District (HCAD) shows someone other than the actual owner of the property as the owner in HCAD’s system.  HCAD is an agency created by Texas statute that has the responsibility of determining the value of property for taxation purposes, as well as any tax exemptions that may apply to the owner or the property.  HCAD does not determine the ownership of property.  By law, documents affecting title to real property must be filed in with the County Clerk in the county in which the property is located.

HCAD updates their records based on “Request To Correct Name Or Address On A Real Property Account” forms that are submitted to HCAD or by conducting a separate search of the real property records.  In instances where no form is submitted, any change in HCAD’s records is dependent on the frequency with which HCAD searches the real property records and the accuracy of the person transcribing the information.  Based on the potential delay and/or transcription inaccuracy, purchasers of real property are encouraged to provide HCAD with a completed form in order to have HCAD update its records with correct information.  The form should be completed and submitted to HCAD shortly after the change in ownership to allow the new owner to receive any notifications sent by HCAD or applicable taxing jurisdictions.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

What is a MUD?

A Municipal Utility District (MUD) is an entity authorized by statute or the Texas Commission of Environmental Quality (TCEQ).  The primary function of a MUD is to provide water, sewer, and stormwater drainage services in areas where municipal services are not available, as well as trash collection, recycling and emergency services within the MUD boundaries. MUDs are typically financed through the sale of bonds which, in turn, are serviced by the taxes levied and collected by the MUD.  MUDs also have authority to condemn property through eminent domain and establish easements to install, inspect, repair, and maintain distribution and collection lines.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

Is there a title policy discount for refinancing?

Is there a title policy discount for refinancing?

The Texas Department of Insurance (TDI) sets the premiums for title insurance policies issued for property in the State of Texas.  TDI does allow discounted rates for refinances of existing mortgages that were previously insured.  The amount of the discount is based on the length of time between the mortgage being refinanced and the new mortgage, as well as the payoff balance on the mortgage being refinanced.

The discount is calculated by multiplying the base policy premium for the principal balance of the payoff loan by a percentage to come up with the credit, and then subtracting that credit from the base policy premium for the amount of the new loan.  For refinances within the first two years of the existing mortgage, the percentage for calculating the credit is 40%.  The percentage decreases by 5 for each subsequent year to year 7 (at 15%).   After year 7 the discount does not apply.

If you are thinking of refinancing and would like additional information about this discount, please contact us.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800

Entity Closings

When closing a transaction where the buyer or seller is an entity, such as a corporation, LLC or partnership, the title company will require documentation to that the entity is authorized to conduct business in Texas and to establish that the person signing on behalf of the entity has authority to do so.  This documentation should be kept in the normal course of business for entities.  The names of the forms may vary by entity type.

The title company will require a copy of the Certificate of Formation (regardless of the type of entity) and a copy of the By-Laws (corporation), Operating Agreement (LLC) or Partnership Agreement (partnership).   The Certificate of Formation sets out the name and relevant parties who are affiliated with the entity.  By-Laws, Operating Agreements and Partnership Agreements set forth the details of how the entity will operate.  The Certificate of Formation must have been filed with the Texas Secretary of State and the entity must be in good standing with the Texas Comptroller’s Office.  In addition, the title company will require a resolution from the corporation or LLC which indicates that the transaction has been approved by the party or parties authorized to approve such transactions in the By-Laws or Operating Agreement and which further designates the person or persons who are authorized to execute the documents to complete the transaction.

There are a number of companies that offer to help individuals incorporate by completing and filing the Certificate of Formation with the Secretary of State.  The Secretary of State also allows for filing through its website.  The Secretary of State does not – and companies offering filing services may not – provide By-Laws or Operating Agreements, so consultation with an attorney whenever you form an entity is always advisable.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

Appraisal Districts

Under the Texas Constitution and statute, each County Clerk is responsible for recording documents affecting title to real property within their county.  In other words, the County Clerk is the official place where deeds and liens affecting title are recorded.  When you purchase a piece of property, the title company sends the deed and any deed of trust to the County Clerk for recording.   Documents filed with the County Clerk are public records, but not always accessible online.

People often confuse the Appraisal District as the official source of property ownership.  Appraisal Districts are set up by statute for the purpose of assigning a value to property for taxation purposes.  Information regarding who owns property is obtained by the Appraisal District by either searching the records of the County Clerk or being notified of a change in ownership by the new owner or their representative.  Most Appraisal Districts have a specific form that must be completed and submitted to indicate the transfer in ownership.

Your title company may provide you with the Appraisal District’s form to indicate a transfer in ownership, but the title company cannot simply submit the information for you.  If the information regarding the transfer of ownership is not submitted to the Appraisal District by the new owner, then the Appraisal District’s records will not be updated until the Appraisal District locates the deed into the new owner during a search of the County Clerk’s records, which may be several months after the closing.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

 

Wire fraud is on the rise!!

                     Did you know that wire fraud is on the rise?

Wire fraud If you receive an email that appears to come from the title company and it contains wiring instructions, or if you’re an agent and your CLIENTS receive an email containing wiring instructions that appears to come from you or the title company, call our office at 713-529-8800 to verify that the wiring instructions are legitimate.

           Let’s work together to combat wire fraud and protect everyone from potential financial loss.

Statement of Information form

Title companies often ask the parties to transactions to complete a Statement of Information form.  The form requests the full name of the party, as well as identifying information such as date of birth, driver’s license number and social security number.  The form will also request information on whether the party is married or has previously been married.  The form typically may also request employment and address information for the past ten years, as well as the information for any mortgage that the party currently has on the property.  We often get comments that the form is asking for too much information.

There are a number of laws that affect title to real property.  Texas is a Community Property State, so the marital status of the party is significant in determining whether a spouse or former spouse has a legal interest in the property that must be resolved at or before closing.  Texas statutes also allow involuntary liens, such as judgments, to attach to non-homestead property.  There are also statutory liens that attach to both homestead and non-homestead property.  Involuntary and statutory liens may or may not contain full identification information on the judgment debtor.  In order to determine if a judgement filed against a person with the same or a similar name to the one of the parties is applicable, having identifying information such as driver’s license, date of birth, social security, residence and employment information can assist the title examiner in quickly eliminating judgments that contain conflicting information.

In short, the Statement of Information provides your title company with information that is pertinent to the examination of title to the property and which allows the title company to efficiently deal with issues that may arise during the examination process.  Completion of the form by the parties early in the transaction typically means a smoother transaction with less chance of a delay due to a title issue.

If you would like to use a knowledgeable title company conveniently located in the Heights, please give us a call.

Fidelity National Title, 1512 Heights Blvd., Houston, TX 77008 (713) 529-8800.

What if the Seller will not sign the Release of Earnest Money

It is not unusual for contracts to purchase real estate to fall apart for any number of reasons. The buyer may terminate under an option contained in the contract, financing may not be available under agreed upon terms, the buyer’s circumstances may change or the seller may refuse to cure some title defect. When contracts do fall apart, disposition of the Earnest Money may be disputed. Even in contracts which contain an unrestricted right for the purchaser to terminate the contract, title companies or escrow agents may require the parties to execute a Release of Earnest Money directing to whom the Earnest Money should be released.

Why?  Contracts to purchase real estate are like any other contract and whether the parties complied with the terms of the contract can be disputed. In Texas, disputes involving real property are within the jurisdiction of the District Courts in the county where the property is located – not the title company/escrow agent. Even when there is a termination option, there have been instances where the seller disputed the timely receipt of the option fee. Even when the option fee receipt on the contract is signed by the seller, there have been instances when the option fee check was returned unpaid. If such a dispute arises, the title company/escrow agent does not want to be involved in the dispute and the safe way to avoid involvement is to require a Release of Earnest Money signed by the parties.

The standard Texas Real Estate Commission contract does contain a provision allowing for a party to demand release of earnest money from the title company/escrow agent. The standard TREC contract further provides for the title company/escrow agent to notify the other party of the demand. If, within the time period established by the contract, the other party does not object, earnest money can be released to the demanding party.