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.

Multiple Owners

When property is owned by multiple persons or entities, all those with an ownership interest must join in the sale of the property in order to convey clear title to the purchaser.  The most common scenario with multiple persons in title is property owned by spouses.  Both spouses must sign the deed to transfer the property.

Another scenario that is not uncommon is property that has been inherited by the heirs of the record title owner.  All devises under the Will, or if the deceased owner had no Will, all heirs at law, must execute the deed to transfer clear title to the property.  If one or more persons is unable to cooperate, or refuses to do so, the sale cannot move forward unless a lawsuit is filed to force the sale of the property.  A lawsuit to force the sale of property when not all parties are in agreement is called a Partition.

In a suit for Partition, the Court is asked to first determine if the property is able to be divided among the heirs.  For properties that are large, division of the property into smaller pieces may be possible.  For residential properties, the Court will typically decide that the property is not a candidate for division and order that the property as a whole be sold and the proceeds split among the heirs.  The court will appoint an appraiser to determine the value of the property and a receiver to handle the sale of the property.  The costs associated with both the appraiser and receiver will be deducted from the sale proceeds before the proceeds are distributed to the heirs.

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.

 

What is a Subordination Agreement?

            Liens against property (such as mortgage liens, tax liens, judgment liens, etc.) in Texas are given priority either by statute or by filing date.  The general rule of priority is “first in time, first in line.”  Statutory provisions may give some liens, such as tax liens or purchase money liens, special priority.  Occasionally, a lien holder who is in a better position may agree to take a position behind a new lien holder.   This agreement is called a Subordination Agreement.  The Subordination Agreement sets out each of the liens involved in the agreement, as well as a description of the property that is collateral for both liens and the consideration that the subordinating lender accepted in order to complete the agreement. 

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

 

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.

 

Why do I need a Deed?

When a property is being conveyed that was awarded to the owner by court order, such as in a divorce, title companies typically request that the person who was divested of title execute a deed to the person who was awarded title.  This seems a little counter-intuitive, as a court order alone is sufficient to vest and divest title.  There is, however, some method to the madness.

Many court orders that award title to one party contain a requirement that the divested party execute a deed transferring title.  Even if the court order does not contain such a requirement, the execution of the deed is affirmation by the divested party that the court order divesting the property is final and not subject to appeal.  Additionally, the same court order which divests someone of title may also award a monetary sum to the same person and create a lien against the property to secure payment of the awarded amount.  A deed executed by the divested party can, and should, contain reference to the lien so that anyone reviewing title to the property would know that money was owed to the divested party.

Beyond establishing the finality of the court order, another reason title companies request a deed from the divested party is to establish a clear chain of title in the real property records.  Court orders are public record, but they are typically filed only in the records of the court itself, so someone researching only in the real property records would not be locate the court order.  The alternative to recording a deed is to record the court order in the real property records.  This option may not be appealing to the parties as the entire divorce decree or other agreement containing the court order must be recorded.  That means that the recording costs can be quite expensive due to the number of pages in the document, and a great deal of information that is not relevant to the chain of title is now readily available in the real property records.

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