Muniment of Title

When an individual passes away without a Will, the law determines the heirs of that person and all property of the decedent passes to those heirs in percentages that are prescribed by law.  A Will is a wonderful way for the individual to designate to whom property should pass, eliminating the statutory heirs.    If the individual dies with a Will, but the estate contains only real property that needs to be passed under the terms of the Will, probating the Will as a Muniment of Title may be a more cost effective way of passing title to the property.

Probating a Will as a Muniment of Title is simply presenting the Will to the Probate Court and asking the Probate Court to legally recognize the transfer of title to the property as indicated in the Will.  Unlike the normal probate process, no Executor is appointed, no Inventory is required, and the process is much less time consuming – thus saving money.  Unlike executing Affidavits of Heirship for the deceased individual, probating a Will as a Muniment of Title eliminates title passing to any heirs that were not named as recipients of the property in the Will.

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

Tax Sale Property

Properties purchased at tax sales carry particular concern for title companies.  The Texas Tax Code governs the sale of properties pursuant to a court ordered tax sale.  Under the Tax Code, the deed from a tax sale vests good and perfect title in the purchaser to the interest owned by the defendant in the property subject to the foreclosure, including the defendant’s right to the use and possession of the property, subject only to the defendant’s right of redemption, the terms of a recorded restrictive covenant running with the land that was recorded before January 1 of the year in which the tax lien on the property arose, a recorded lien that arose under that restrictive covenant that was not extinguished in the judgment foreclosing the tax lien, and each valid easement of record as of the date of the sale that was recorded before January 1 of the year the tax lien arose. The deed may be impeached only for fraud.

The redemption period for a residential homestead or property designated as agricultural is two years from the date the tax sale deed is recorded.  For other properties, the redemption period is six months from the date the tax sale deed is recorded.  In addition to the statutory redemption periods, there are also statutes governing the time available for the defendants in the tax suit to appeal the underlying judgment or challenge the sufficiency of notice.  The statutory redemption periods, challenges available to defendants in the underlying suit and ability of the deed to be impeached for fraud create a minefield of potential issues for title companies.  Many title company underwriters refuse to be the first to insure following a tax sale, while others require a minimum of four years to pass following the date the deed is recorded before they will insure.  Closing prior to four years following recordation of the deed can be accomplished, but only with underwriting approval.

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.

 

Tax Prorations

Each year the County Appraisal District (CAD) assigns each property an appraised value for real property tax purposes.  This appraised value is typically issued in March or April, and the property owner is given a period of time in which to protest the appraised value.  Each jurisdiction (County, City, School District, MUD, etc.) that has taxing authority over a property determines the tax rate for that jurisdiction.  The tax owed for each property is calculated by multiplying the tax rates by the appraised value, subject to any applicable exemptions that may apply to the property or owner.  Tax bills in Texas are issued at the end of the tax year, so the 2017 tax bill will be issued after October 1, 2017 and be due by January 31, 2018.

Taxing jurisdictions will not accept payment of taxes if a bill has not yet been issued.  When a property is sold mid-year, in order to minimize any post-closing issues in the proper division of the annual tax bill, your title company will prorate the taxes as of the closing date and credit the party who will actually, or has already, paid the bill while debiting the other party.  If no tax bill has been issued for the current year, the proration done at closing is an estimate.  Most contracts provide that either party may require the other to correct the prorations based on the actual bill when received.

In situations where there is new construction on a property, or renovation of existing improvements, and the CAD has not yet proposed an appraised value for the current year, calculation of the tax amount can be particularly difficult.  The appraised value issued by the CAD is supposed to reflect the appraised value as of January 1 of the current year.  For properties under construction, the state of the improvements as of January 1 may be difficult to determine.  This often requires the that the title company rely on the parties to provide an estimate of the value as of January 1, with the understanding that the parties will adjust the prorations based on the actual bill when received.  Buyers in this situations should also be aware that the tax appraisal, and bill, for the subsequent year may increase dramatically.

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.

Payment of Personal Debts at Closing

At your closing, the Escrow Officer is responsible for clearing matters designated by the title insurance underwriter in order to issue a title policy and for complying with the terms of the contract and any lender closing instructions.  The purpose of the contract is to transfer title to the purchaser, and both the underwriter and lender are primarily concerned with making sure the transfer is done in such a way that there will be no claim and that the lender’s position will be properly secured.   Payments made as part of the closing process will include the payoff of any liens that are attached to the property and all costs associated with the closing of the transaction, such as lender fees, title policy fees, the cost of the survey, etc.

Payment of personal debts of the parties that are not secured by liens against the property and not closing costs is typically prohibited.  Lender’s instructions to the Escrow Officer typically contain language that prohibits the disbursement of loan proceeds if payments are being made for matters that do not affect title and are not a part of customary closing costs.  In addition to this prohibition, title insurance companies do not want to take on liability beyond what is required by underwriting guidelines, so Escrow Officers are prohibited from making payments for non-secured debts of the parties.

 

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 information does Schedule C of the title commitment contain?

Schedule C of the title commitment contains matters that the title company closer, with the assistance of the parties, must satisfy prior to or at closing in order for those items not to appear as exceptions to the title policy, as well as the disclosure of additional information relevant to the chain of title to the property and the rights of the parties to establish an interest-bearing account for funds being escrowed by the title company.  The language in items 1 through 4 of Schedule C is promulgated by the Texas Department of Insurance, so it is standard in any title commitment.

Beginning with item 5 on Schedule C, specific matters affecting the transaction will be listed.  These items may include the payoff and/or release of liens affecting the property, the payoff and/or release of any judgments affecting the buyer or seller, requirements regarding the documents establishing any entity (Trust, Partnership, LLC or Corporation) involved in the transaction, compliance with court orders affecting the property or parties, etc.  The title company closer will have experience in addressing these matters, but much of the information is in the possession of the parties, so the cooperation of the parties is essential in getting the file ready to close in a timely manner.

 

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

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