Video Summary

What is title insurance and why is it necessary? Title insurance is an insurance policy that ensures that you have marketable title to the property. Like any good insurance policy, it shows the amount of coverage that you have, so if you have a complete title failure or partial title failure, it’ll pay up to the dollar amount that’s shown on schedule A of your title insurance policy.

It also tells you the title to the property and has the legal description of the property on schedule A. There is a schedule B that says that there are certain matters that they don’t insure against which are called exceptions. Some of these exceptions reference such as easements, restrictive covenants, and conditions, those are just a few examples, which are usually acceptable to a buyer. What you need to be concerned about on your Schedule B of your title policy, is if there is a judgement or some sort of lien that’s shown in that, which you’re not insuring against.

That’s what title insurance does. It insures that you have marketable title, and if you’re notified that there is a lien against your property or another problem with the title, that you have someone to look at. The big reason why title insurance is necessary is more for preventative measure than it is a remedial measure. That then, you have someone who has examined the title to check to see if there’s any particular liens against the property, and so they are confident or have examined the title, and therefore will insure it, so that they, as they say, put their money where their mouth is, or the insurance policy itself.

Whenever you make a substantial investment, of hundreds of thousands of dollars, or one of the largest investments that you make, you’re usually not talking about a few hundred dollars, you’re talking about thousands of dollars. It would only be appropriate that you make sure that you know what you’re getting, and have the title searched, and have a title policy. This, in the Tampa Bay area, whenever you purchase real estate, the seller is usually the one that is responsible for paying the title insurance, that’s primary practice, and that’s shown in the real estate contracts, as to who is to pay for the title insurance.

If you go down to Miami and Broward county, and those counties, there the borrower is the one that’s responsible for paying the title insurance. It varies throughout the state as who’s responsible, and is controlled by contract. There’s also an aspect of it is that if you have … if the seller is paying for owner’s policy, and the buyer is getting a mortgage, the buyer can obtain what they call a simultaneous issue rate, to ensure your lender that the lender’s getting a first lien on the title, and that there’s no junior liens. The title insurance is important to the lending community, to make sure that they have first liens, and not just rely on an attorney’s opinion or an ownership and encumbered search, an attorney’s opinion, because, let’s say that the lawyer missed something or the title company or whoever issues the ownership and encumbered search missed something. Who they going to hold responsible? Go back to the lawyer, does the lawyer have the ability to pay the money, is he still in business, has he died or whatever. Therefore, we have the advent of title insurance, which has been around for longer than I’ve been … I’m not sure just how long, but it’s been here a long time, 50, 60, 70 years.

You have any number of major title insurance underwriters. It’s primarily preventative, because you do thousands of transactions and the property sells and resells and there’s no title problems, but you’re checking on them, such as code enforcement liens, should show up on a title search, and that way you take care of it before you take title. Otherwise, if you just take a deed to the property and trust the seller that he says, “Oh, no, I don’t have any liens against it.” Later on, you find out, what are you going to do about it? That’s the reason why you want to have title insurance and hopefully give you some idea of what title insurance does.

If you have any questions, or more importantly, if you like for me to write some title insurance or write a contract and write the title insurance policy, I’ll be happy to do so, give me a call at 727-847-2288.

Video Summary

Can a buyer sue a seller for a undisclosed roof leak?

The answer is: yes, they can. This dates back to a Florida Supreme Court case called Johnson vs. Davis. That decision is probably 20 years old or older wherein they held that any residential transaction that the seller has the duty to disclose to the buyer any matters that are not reasonably observable to the buyer that may have some impact on the value of the property.

So, as a result of that, the standard real estate contract that is used by realtors that’s been approved by the Florida Realtors and the Florida Bar Association has a clause in it that says that the seller has disclosed any matters that may material affect the value of the property that are not readily observable.

Further, if you use a realtor they have a seller disclosure form wherein they go through a series of about four or five pages asking the seller to initial one way or the other whether there’s been any problems.

So, if you didn’t have that in the contract and you simply used a contract that did not have a disclosure or an as is contract, the seller still has the duty to disclose any matters that are not readily observable that may have some impact on the value of the property.

If a buyer’s going to sue the seller then they must review the disclosures to see if the seller did in fact disclose the roof leak or any other leak.

Secondly, the buyer must prove that the seller knew of the roof leak because you’d have to show that it occurred or was a roof leak prior to the purchase rather than occurring later. There have been some cases whenever people weren’t aware of a particular defect – of course it’s a little harder as far a roof leak’s concerned, but as far as any defect is concerned that they’re aware of it.

Many times if you buy bank owned property the bank will put on there that they have no responsibility because they’ve never been in possession of the property and therefore are unaware of any defects and so you could not sue a seller that is not aware of these problems.

A roof leak usually is manifest by showing something on the interior where the ceiling has been discolored and you can show where the seller has painted over it or has had roofers or somebody else over there trying to fix it and so that you could show that they were aware that the roof was leaking and they failed to disclose it.

If they fill out the form that the realtor gives them and says that they haven’t had any prior roof leaks or any other problems with the property, that’s an affirmative fraud and that is another cause of action so that you can sue the seller on two different theories as far as failure to disclose a hidden defect that’s called a latent defect – either sue under the contract if it’s provided for in the standard bar contract or the realtor bar contract or as a in toward or liability.

It’s a form of fraud by not disclosing this matter and so the other aspect of this before you get ready to sue the seller, you need to see who the seller is. If you happened to have bought this property from an investor or an LLC, well you may be able to sue them, but you have to show they knew about it, covered it up and didn’t disclose it and also, can you get any money back out of it?

So, you have two remedies. One is to ask to rescind the transaction, meaning you give them back the property and you get your money back if you were would not have bought it if you were aware of it. The other one is to sue for damages to determine or you show how much it cost to fix the defect.

So, an answer to your question is: yes, you can sue – a buyer can sue a seller for a roof leak if they can show the seller was aware of it and the roof leak occurred prior to them purchasing the property.

If you have any questions about this, well give me a call at 727-847-2288.

Am I required to have an escrow account for my taxes and insurance with my mortgage payment?

That is a decision or a requirement that your lender will make whenever you apply for the loan. The usual case is if you’re getting a conventional loan and the loan – the value – meaning you’re only borrowing 80 percent or less of the value of the appraised value of the property, the lender may agree to let you pay your own taxes and insurance separately.

If however you’re getting an FHA loan or a VA loan or a high percentage loan meaning that you’re borrowing more than 80 percent of the appraised value, the lender is going to require you to escrow for taxes and insurance as well as possibly pay mortgage insurance each month, but that is something that you need to discuss with the lender when you make application for a mortgage as to whether or not the lender will allow you to pay your own taxes and insurance.

There’s another caveat to that is if you have that agreement with the loan originator, if they sell the loan to another servicer or another bank to accept your payments, the mortgage does provide that the successor lender can require you to pay or escrow for taxes and insurance which certainly wouldn’t make you very happy, but you do need to be aware that it is in the mortgage documents that it’s up to the lender to decide whether or not you have to escrow for taxes and insurance.

So, the answer to the question is: it’s up to your lender as whether or not you’ve got to have escrow for taxes and insurance with your mortgage payment.

If you have any questions, well give me a call at 727-847-2288.

Video Summary

Is it legal for realtors to represent both the buyer and the seller in a real estate transaction?

The answer to that question is: yes, it is. That’s called a transactional broker and whenever you list the property, if you’re the seller, you will sign something where they’ll disclose that they will be acting as a transactional broker rather than a seller’s broker or a buyer’s broker and from my experience that a very, very high percentage – as much as 99 percent of the residential realtors serve as transactional brokers.

So, they take the listing and they advertise it and if a buyer happens to call someone else or the listing agent – the same realtor – well, they can then show it to the buyer and enter into a contract. They are really not representing either party.

The seller pays the real estate commission and they have a duty to deal in good faith or deal in good faith with both the seller and the buyer and there’s certain things that they should or should not do as far as in that capacity.

A transactional broker is different than a buyer’s agent. A buyer’s agent has only loyalty to the buyer and the buyer may be obligated to pay his own agent and the transaction and that should be disclosed as far as whenever the agent goes forward with the transaction.

And also you have exclusive seller’s agents from time to time and in commercial transactions it’s not unusual to have a agent who is the buyer’s agent and who’s the seller’s agent, but residential transactions, it’s almost the rule rather than it’s the exception to the rule where you don’t have the real estate broker serving as a transactual broker and dealing with both the buyer and the seller and really representing neither other than dealing in good faith with both.

If you have any questions about it or need to review your listing agreement, give me a call at 727-847-2288.