Linda Ferrara

September 25, 2009

Real Estate Term: Title Insurance Policy - Part Two

Types of policies:

Standardized forms of title insurance exist for owners and lenders. The lender's policies include a form specifically for construction loans, though this is rarely used today.

Owner's policy:

The owner's policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those which are listed as exceptions in the policy or are excluded from the scope of the policy's coverage. It also covers losses and damages suffered if the title is unmarketable. The policy also provides coverage for loss if there is no right of access to the land. Although these are the basic coverages, expanded forms of residential owner's policy exist that cover additional items of loss.

The liability limit of the owner's policy is typically the purchase price paid for the property. As with other types of insurance, coverages can also be added or deleted with an endorsement. There are many forms of standard endorsements to cover a variety of common issues. The premium for the policy may be paid by the seller or buyer as the parties agree; usually there is a custom in a particular state or county on this matter which is reflected in most local real estate contracts. Consumers should inquire about the cost of title insurance before signing a real estate contract which provide that they pay for title charges. A real estate attorney, broker, escrow officer (in the western states), or loan officer can provide detailed information to the consumer as to the price of title search and insurance before the real estate contract is signed. Title insurance coverage lasts as long as the insured retains an interest in the land insured and typically no additional premium is paid after the policy is issued.

Lender's policy:

This is sometimes called a loan policy and it is issued only to mortgage lenders. Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold. For this reason, these policies greatly facilitate the sale of mortgages into the secondary market. That market is made up of high volume purchasers such as Fannie Mae and the Federal Home Loan Mortgage Corporation as well as private institutions.

The American Land Title Association ("ALTA") forms are almost universally used in the country though they have been modified in some states. In general, the basic elements of insurance they provide to the lender cover losses from the following matters:

1. The title to the property on which the mortgage is being made is either
   • Not in the mortgage loan borrower,
   • Subject to defects, liens or encumbrances, or
   • Unmarketable.
2. There is no right of access to the land.
3. The lien created by the mortgage:
   • is invalid or unenforceable,
   • is not prior to any other lien existing on the property on the date the policy is written, or
   • is subject to mechanic's liens under certain circumstances.

As with all of the ALTA forms, the policy also covers the cost of defending insured matters against attack.

Elements 1 and 2 are important to the lender because they cover its expectations of the title it will receive if it must foreclose its mortgage. Element 3 covers matters that will interfere with its foreclosure.

Of course, all of the policies except or exclude certain matters and are subject to various conditions.

There are also ALTA mortgage policies covering single or one-to-four family housing mortgages. These cover the elements of loss listed above plus others. Examples of the other coverages are loss from forged releases of the mortgage and loss resulting from encroachments of improvements on adjoining land onto the mortgaged property when the improvements are constructed after the loan is made.

Today's Saying: If you can't be content with what you have received, be thankful for what you have escaped.

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Real Estate Term: Title Insurance Policy - Part One

Definition: A statement as to the condition of the title of real property ownership and insuring it against claims by the payment of a one-time-only premium which protects the named insured and their heirs against title defects, liens and encumbrances existing as of the date of the policy and which have not been specifically excluded from it to provide a legal defense for the policyholder and pay any covered losses incurred.

Discussion:

Title insurance in the United States is indemnity insurance against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is principally a product developed and sold in the United States as a result of the comparative deficiency of the US land records laws. It is meant to protect an owner's or a lender's financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. The first title insurance company, the Law Property Assurance and Trust Society, was formed in Pennsylvania in 1853.^[1] The vast majority of title insurance policies are written on land within the U.S.

Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate. Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance.

Title insurance is available in many other countries, such as Canada, Australia, United Kingdom, Northern Ireland, Mexico, New Zealand, China, Korea and throughout Europe. However, while a substantial number of properties located in these countries are insured by US title insurers, they do not constitute a significant share of the real estate transactions in those countries. They also do not constitute a large share of US title insurers' revenues. In many cases these are properties to be used for commercial purposes by US companies doing business abroad, or properties financed by US lenders. The US companies involved buy title insurance to obtain the security of a US insurer backing up the evidence of title that they receive from the other country's land registration system, and payment of legal defense costs if the title is challenged.

Today's Saying: "Failure is not falling down but refusing to get up."

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September 23, 2009

I just got back from a trip to this great country's southwest. I thought you might enjoy a few pictures of what I saw. Enjoy!

This is a photo of the Aldo Leopald Wildneress in the western part of New Mexico.

This is called Monument Valley in Southwest Utah. Pictures never do these scenes justice. It's just FANTASTIC!

This was the sunset view from our campsite in Canyonlands National Park in Southern Utah. Folks, you gotta see this stuff!

September 4, 2009

Real Estate Term: Tax Lien

Definition: A claim against property which may be sold by the taxing authority arising out of nonpayment of taxes.

Discussion:

Tax liens in connection with property taxes

Unlike personal debts, tax liens on real estate "run with the land"; that is, a property owner becomes responsible for payment even if the tax obligation was incurred by a prior owner. Depending on the law of the state or jurisdiction, the owner of the property may also be personally liable for payment of the taxes.

Payment of a tax lien may occur through various methods:

• Payment may be made directly by the property owner or, in many cases, indirectly by the mortgage holder using an escrow account. Notice is given both to the property owner and mortgage holder when a property tax is delinquent; thus, even if the property owner does not have an escrow account on the mortgage, the mortgage company will receive notice of the delinquency and most often will pay the tax then demand repayment from the owner/borrower and/or create an escrow account to recoup the proceeds (as a tax lien is superior to the mortgage and the mortgage company might lose some of the value of its mortgage lien if the property were foreclosed by the taxing agency to satisfy unpaid taxes).
• If a property is sold by the owner prior to tax foreclosure by the government body, the tax lien (which is generally discovered as part of a title search) is usually paid as part of closing costs from the sale proceeds.
• Procedures vary from state to state. Generally, in the event a tax lien on personal property is not paid within a specified time (and after several notices are generally given), the property may be seized and sold at foreclosure sale. On real property, one of two methods may be used: either the property may be seized and sold (a tax deed sale), or in some States the tax lien may be offered to investors (in the form of a tax lien certificate) with an accompanying right for the investor, after a specified period of time, to institute foreclosure proceedings (a tax lien sale).

Today's Saying: I would maintain that thanks are the highest form of thought, and that gratitude is happiness doubled by wonder.

Here's September Calendar of Events for Silver City, NM:

Saturday, Sept. 5:

17th Annual Labors of Love Art Show - Through Sept. 6. San Vicente Artists. Silco Theater. 534-4269, silvercityartists.org

26th Annual Gem and Mineral Show - Through Sept. 7. Saturday and Sunday, 10 a.m.-5 p.m., Monday 10 a.m.-4 p.m. Grant County Rolling Stones Gem and Mineral Society. Silver City Recreation Center, 11th and Gold. 538-3216, show09@stockmanfamily.net, rollingstonesgms.blogspot.com

Friday, Sept. 11:

Pickamania - Through Sept. 13. Free. Bluegrass, folk, Americana, roots and singer/songwriter festival. Food vendors and artisans. Headliners: Pine Leaf Boys, Mollie O'Brien. Gough Park and other venues. Friday: 6-9:30 p.m. Street Dance with Bayou Seco, The Silver City String Beans and The Dusty Buskers featuring a "Basic Cajun Two-step and Waltz" workshop with the Happy Trails Cajun Dance teachers. Corner of 12th & Pope Streets (Pope Street to be closed). Mimbres Region Arts Council, 538-2505, www.mimbresarts.org

Saturday, September 12:

Pickamania - Through Sept. 13. Free. Saturday: 10 a.m. "Singing in Harmony from the Heart" workshop with Anne and Pete Sibley, inside Wells Fargo Bank, 1201 Pope St. Noon-12:45 p.m. The Dusty Buskers, Americana/Irish. 1-2 p.m. Boris McCutcheon & the Salt Licks, Americana. 2:15-3:15 p.m. Band Scramble (local participants must sign up at the MRAC booth by 1 p.m.) 3:30-4:45 p.m. Anne & Pete Sibley, bluegrass, folk. 5-6:30 p.m. Pine Leaf Boys, Cajun, Creole and Zydeco. 6:30-10 p.m. Pickin' in the Park, all pickers welcome. Gough Park. Mimbres Region Arts Council, 538-2505, www.mimbresarts.org

Red Hot Children's Fiesta - Free. 10 a.m. Games, crafts and good times for families. Community Built Park. 388-1198 ext. 10.

Thursday, September 17:

5th Annual Gila River Festival - Through Sept. 20. Wide variety of workshops, presentations, kids' activities, birding trips, hikes and outdoor adventures at various locations to celebrate the centennial of Aldo Leopold's legacy in the Southwest. Tim Evans as Aldo Leopold. Living history performance. 7 p.m. Silco Theater. 538-8078. info@gilaconservation.org www.gilaconservation.org/5thannualgrf.shtml

Saturday, September 19:

Fort Bayard Days - 9 a.m. Flag ceremony. Breakfast available for sale by Copper Creek Ranch. 9:15 a.m. Tours of Fort Bayard National Historic Landmark: Meet and greet its heroes and heroines. 12 p.m. Lunch available for sale by Copper Creek Ranch. 12:30 p.m. Walking tour of Commanding Officer's Home. Lecture Series in the New Deal Theater: 10 a.m. Visit with an 1866 Army Surgeon: Dr. Mallin from Albuquerque; 10:30 a.m. "Apache Scouts" by author Toby Giese, Kansas City; 11 a.m. " Military Letters from Fort Bayard" by Dale Giese; 1 p.m. "Tuberculosis Sanitariums in Southwest New Mexico" by Nancy Owen Lewis of the School for Advanced Research in Santa Fe; 2 p.m. The Future of Fort Bayard National Historic Landmark moderated by the Fort Bayard Steering Committee; 3 p.m. A Time for Healing and Sharing: "Chihene NDE Warm Springs Chiricahua Apache, the Buffalo Soldiers and their Officers." 7-10 p.m. Buckles and Bustles: Military Ball, $5 couple, $2.50 single; all ages and period costumes welcome. Fort Bayard. 956-3294.

Have a great month!

Today's Saying: "The only real failure in life is the failure to try."