Survey Exception

Survey Exception

An owner’s title policy is written the same way as most insurance policies, it provides you coverage limited by certain exceptions and exclusions.  Among these exceptions is one that states; “We do not cover loss, costs, attorneys’ fees and expenses resulting from any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”   In other words, the policy does not insure against boundary issues or that the improvements on your land, or your neighbors, do not cross the property line or any building set-back or easements.  The Texas Department of Insurance does allow this exception to be modified to provide additional coverage to the buyer after the title company reviews an accurate survey of the property.  If the buyer elects to amend the standard exception, the title company will review the survey and may make specific exceptions based on what is shown on the survey.  Beyond those specific exceptions, the normal exception will be changed to read: “We do not cover loss, costs, attorneys’ fees and expenses resulting from shortages in area .”  Shortages in area is a reference to the mathematical term area, or the actual size of the property.  Other issues, such as boundary lines, encroachments or protrusions that are not specifically excepted to, will then be covered by the owner title policy.

In residential transactions, the cost for the additional coverage is 5% of the base policy premium for the owner title policy.  In commercial transactions, the cost is 10% of the base policy premium for the owner title policy.  I typically advise residential buyers that they should purchase the additional coverage.  The cost is nominal, a couple of hundred dollars or less on most transactions, and you never know what issues you may have with your new neighbors.  On commercial transactions, it really depends on the scenario because the cost can run into the thousands of dollars.

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 FIRPTA and how does it affect the Buyer in a Real Estate Transaction

FIRPTA is an acronym for the Foreign Investments in Real Property Tax Act.  FIRPTA is a U.S. tax statute that imposes tax on foreign persons, defined as nonresident non-citizen individuals and corporations, disposing of real property in the United States.  In order to ensure collection, the statute places the burden of verifying the applicability of FIRPTA on the buyers, as well as withholding and remitting the required funds, and creates a lien against the real property to secure the payment of any amount due. Real property transactions with a value of $300,000.00 or less which will be the principal residence of the purchaser are exempt from FIRPTA withholding.

Because the statute secures the payment of any requited withholding as a lien against the property being purchased, buyers should verify whether the transaction is exempt from FIRPTA and, if not, whether the seller is a foreign person under the statute.  The escrow agent or title company handling the transaction may request verification from the seller as part of their processing of the transaction, or as a courtesy to the parties, but the ultimate responsibility is on the purchaser.  Typically the title company will assist in the event withholding is required by deducting the funds from the seller’s proceeds and remitting them to the IRS.

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Do I Really Need a New Survey?

 

Do I Really Need a New Survey?

When someone buys a home, the question always comes up as to whether they would like to have a new survey of the property or use an existing one provided by the Seller.  To make an informed decision, the potential buyer should understand that a survey is drawing that shows the boundaries of a property, as well as any improvements, easements, building set back lines and other features relevant to the owner’s use of the property.  With that understanding, and assuming that the seller does in fact have an existing survey, there are several questions that the potential buyer should ask.

  1. Does the seller’s existing survey accurately depict the property? The potential buyer has been to the property and should be able to look at an existing survey and determine if the drawing looks the same as the property looked in person.  Google maps can also be a good way to compare an aerial view of the property to the survey.  If there is a variance what is shown on the existing survey and what is actually on the property, a new survey should be ordered.
  2. How old is the existing survey? As long as there have been no changes to the improvements, easements or building set back lines, title companies will typically accept surveys that are less than 10 years old (and even older if you ask nicely).  However, there have been huge advances in the technology used by surveyors, such as GPS, which allow for much more accurate measurements.  It is not unusual for us to see a platted 50’ X 100’ lot actually be slightly smaller or larger using modern technology.
  3. Is the surveyor who performed the existing survey still in business? Surveyors are licensed by the State and carry Errors and Omissions Insurance to cover them in the event of a mistake.  Most surveys contain language that they are only certified to the purchaser and title company shown on the face of the survey, but the knowledge that the surveyor is still in business or at least available in the event of an issue can be important.

 

Assuming the existing survey is accurate and acceptable to the title company, Realtors that we deal with are split on whether they advise their clients to have a new survey performed.  The primary reason to use an existing survey is to save money.  The price range for residential surveys is currently between $350.00 and $550.00.  While this may appear to be a substantial amount, when one considers that the purchase of a home is probably the largest investment they will make during their lifetime, the cost is actually minimal.  Potential buyers should also keep in mind that a new survey will be certified by the RPLS for that buyer, giving the buyer additional protection in the event of a boundary dispute.

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 an Easement?

 

An easement is a non-possessory right to use property owned by another person for a specific purpose.  An easement does not allow the holder of the easement to exclude the owner or others from the property that is subject to the easement, but does give the right to access and use the property that is subject to the easement whenever necessary to accomplish the purpose of the easement.  Typically, easements will be limited in size to reflect the actual property that is necessary to accomplish the specific purpose.  Buildings should never be constructed within an easement, as the holder of the easement can require that structures that interfere with the easement be removed at the property owner’s expense.  Easements are said to “run with the land,” meaning that the sale of the property does not affect the validity of the easement.  Easements may also be transferred by the easement holder.

Easements can be for a variety of purposes, including pipelines, access, driveways and utilities.  Most residential properties are subject to easements benefitting the City and/or utility companies that provide service to the property.  These Easements are typically limited to a strip of land somewhere between three feet (3’) and ten feet (10’) in width along the rear or side of the residential lot and may be underground, surface or aerial in nature.  The holder of these utility easements may access the easement property to install, repair and maintain utility and sewer lines located within the easement property, which can mean damage to landscaping, patios or other improvements located within the easement property.

Based on the recent trend in zero lot line building, the City of Houston has started requiring builders who are building within three feet (3’) of a lot line to obtain an easement from the neighboring property for the purpose of maintenance to the new building.  The same principals apply to these maintenance easements.

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.

The Importance of Having a Will

My standard answer when someone asks if they need a will is – “If you have kids, you need a will.”  What makes having kids a determining factor?

First, if you have minor children you want to have some say in who will take care of them in the unlikely event both you and your spouse pass away. Beyond that, you probably also want to designate who will be responsible for controlling the funds that will be used for their health, education and welfare until they are old enough to manage their own finances.  Without a valid will, both of these decisions will be left to the probate court.

Second, if you die without a will, the law designates how your property is distributed – and the probate court may need to be involved in the process. If you have no children, the law distributes your property to your spouse if you are married, or to your parents and their heirs if you are unmarried and childless.  If you are married and have children that are not also your current spouse’s children, all children and your current spouse inherit your property.

As an attorney who handles the closing of real estate transactions, I see files where someone died without a will on a weekly basis. I have seen scenarios in which an estranged child from a prior marriage has an interest in a property that was purchased with a new spouse, or one child refuses to cooperate when all others chip in for maintenance and taxes on property or want to sell property.  I have even seen several children agree to ignore the existence of another child when they provide an affidavit as to their siblings.

When a valid will is probated the cost is generally reasonable – in the neighborhood of a few thousand dollars if you hire an attorney to handle the probate for you.  When there is no will and the probate courts are involved in the guardianship of children or the distribution of property, the costs can be much higher because the court, not having the benefit of your intentions, will hire attorneys, appraisers, psychologists and others to determine what is in the best interest of your children and how best to dispose of your property.  These people are all paid out of your estate, and not necessarily interested in making sure that your property brings in top dollar.  The cost to your estate of not having a will often far exceed the cost of having one prepared.

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.

 

 

Mobile Closing Options

The signing of documents for a real estate closing typically occurs at the office of the title company for several reasons.  First, it lessens the possibility of fraud or a later claim of fraud or incapacity in the execution of the documents because an employee of the title company actually witnesses the signing and notarizes any documents requiring notarization.  Second, many lenders, and state law in some circumstances, require that the documents be executed at the title company office.  Third, it is often more convenient for the parties (and expedites the funding of the transaction) because it eliminates the need to print or receive the documents, locate a notary to notarize any required documents and return the signed documents to the title company.  Title Companies do understand, however, that there will be situations where individuals cannot make it to the title company office and other arrangements need to be made.

One option that is available is an outside notary.  Because not all notaries are familiar with real estate documents, title companies typically require that any outside notary be approved by the title company.  The title company will vet the notary or notary service for their experience in handling real estate documents, as well as their errors.

 

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.