Understanding Your Real Estate Title Search Report

As part of your property purchase in Fort Myers or Cape Coral, a real estate title search was likely done on the property.  The report provides important information about the property and it’s allowed uses.  Understanding the report is essential for your enjoyment of the property.

Conducting A Title Search

More often than not, a real estate title company, like Title Junction, performs the title search.  Title Companies have extensive experience doing these searches, are familiar with the records that need to be searched and where those records are located.  It helps to have a local real estate title company perform the search for you since they are knowledgeable about local practices, laws and regulations.  In many cases, the property could be filed under different names.  It may be filed under the current owners name, the property tax ID number or the property address.  A local real estate title company will be familiar with these idiosyncrasies.

What’s Involved In A Title Search?

Real Estate title searches consist of detailed research into the history of a property.  The research will include an examination of past ownership and mortgages, surveys, maps, easements, taxation values, zoning, rights-of-way and flood zone status, to name a few.

The main objective of a title search is to determine if there are any not readily obvious restrictions on the property that would prevent the buyer’s full use of it.  Some of the more common restrictions are tax or contractor liens, which may negate the sale of the property until the liens are paid in full.  Other restrictions that a buyer might not be aware of ahead of time could include limitations on use put in place by a homeowners association or right-of-way or easement usage.

Title Searches Safeguard Your Purchase

The main objective of a title search is to make sure the property is legally available for sale by the seller.  A title search will reveal the current and past owners, reveal any outstanding liens against the property and identify anyone who may still have claim to the property.  Ensuring the property is available for sale safeguards your investment.  Most mortgage lenders will require a title search to safeguard their own investment in the property.

What To Expect From Your Report

Your title report will likely consist of the following, or similar, categories:

~ Deed information
Deed information will indicate who currently has ownership or interest in the property.  You should expect to see the name of the current owner in this section.

~ Tax Information
The tax information section will provide you with the most recent year’s property tax amounts and whether or not they’ve been paid. Along with and tax certificates that may have been issued. Taxes are paid to the county where the property is located; Lee County for Fort Myers and Cape Coral.

~ Liens or Judgements
Outstanding liens or judgments against the property will appear in the Judgments and Liens section.  Hopefully, nothing will appear in this section but if it does, take note.  These are the items that you will want taken care of before closing on the property.

~ Mortgage/Deed of Trust
Under the Mortgage/Deed of Trust section you can expect to see the outstanding mortgage amounts owed by the current owner.  Once the sale has been completed, these mortgages will cease to exist and your own mortgage amounts would appear if a new title search were conducted.

 Interpreting a real estate title report is a simple process, but it is a vital one.  You’ll want to make sure you understand what you are reading and ensure any discrepancies are rectified before you close on the property.

FIRPTA (Foreign Seller) “Cheat Sheet”

What is FIRPTA?

FIRPTA is the acronym for Foreign Investment in Real Property Tax Act of 1980 that deals with the disposition of a US real property interest by a foreign person or a foreign corporation.

 How do I deal with a FIRPTA transaction?

If the seller is a non-resident alien meaning no social security number or resident alien card (green card).  Proceed as follows:

Property sale price is over $300,000.

     1. Foreign Seller must have a tax ID number or ITIN (Individual Tax Identification Number).  If the seller does not have an ITIN they are to see an IRS approved acceptance agent to fill out a W7 form and bring the original to the title agent.  The original W7 form, a check in the amount of 10% of the sale price, Form 8288 signed by the buyer and a copy of the HUD-1 must be sent to the IRS within 20 days of closing.  If the seller does have an ITIN send a check in the amount of 10% of the sale price, Form 8288 signed by the buyer and a copy of the HUD-1 to the IRS within 20 days of closing.

2. Foreign buyer purchasing from a Foreign Seller- both parties must have an ITIN.  If the buyer does not have an ITIN they are to see an IRS approved acceptance agent to fill out the W7 form, and then bring the original to the title agent.  The original W7 form for the byer must be submitted to the IRS with the documents listed above.

Property sale price is $300,000 and under.

1. The 10% does not have to be withheld if the seller is a non-resident alien and the buyer signs an affidavit stating the purchase price is $300,000 or less, the property will be their personal residence, the buyer or buyer’s family member will occupy the property at least 50% of the number of days the property is in use during each of the first two 12 month periods following the date of purchase and the buyer is a U.S. citizen.

2. If the buyer refuses to sign the affidavit 10% must be withheld and sent to the IRS.  If this is the case follow the same steps for properties over $300,000.

FIRPTA withholding does not apply to anyone who is a US Citizen or a resident alien as they will have a Social Security Number.

 FIRPTA withholding is not a tax, it is just that, a withholding.

The 10% withholding is never taken from the buyer’s funds, it is a seller charge only.  We always suggest the foreign seller seek the advice of an accountant prior to closing.

Quick Tips To Ensure Your Home Is Ready To List

For many, being prepared to sell your home might seem quite the task, but following these simple steps will ensure an easier entrance to the market.

Make An Inspection Checklist

What You See:

     ~ If you have loud paint, dated lighting or overly eclectic décor, consider repainting walls a neutral color, updating old light fixtures and storing certain personal possessions while your home is on the market.

     ~ De-clutter and clean. While this sounds obvious, a messy home is a major turnoff to potential buyers.

     ~ Kitchens and bathrooms are a make or break factor in selling your home.  Small updates you should attend to in those areas might include fixtures, faucets, cabinet hardware, lighting, painting and even decorative staging.

What You Get:

     ~ Do you know which of your appliances you’d like to take with you or leave on the property? What about play sets or above ground pools? Buyers want to know what is staying when viewing a property.

     ~ Make sure you have a thorough knowledge of the condition of electrical components, plumbing system and roof wear and tear. These are essential details to have a grasp on because all of these factors will come up in a buyer’s inspection. Better yet, find and fix problems before potential buyers notice and demand them as part of the agreement. On the flip side, remember that you can exercise the right to exclude specific items or consider an ‘as is’ sell to protect yourself.

How Are You Planning To Sell Your Home?

For homeowners in Cape Coral and Fort Myers, for sale by owner (FSBO) transactions are becoming more and more popular. If you go this route, be sure to do your research and understand your legal responsibilities first.

If you choose to do a for sale by owner, a title company can assist with closing your home by ordaining the property’s legal owner, observing any mortgages, liens, judgments or unpaid taxes that must be fulfilled pre-dispatch as well as pinpoint existing leases, restrictions or easements connected to your home. The title company will complete all the pressing documents and will correct any problems. Upon completion, the parties will then trade off paperwork and close the deal.

If you choose to use a listing agent, you will sign a listing contract with your Realtor of choice. Your Realtor then researches the market value of your home to help you determine a selling price. Their next step is listing, marketing and showing your property. The listing agent relays any offers to you, handles the offer negotiations based on your input, and moves all the paperwork through the transaction. You pay for the listing agent’s services via a percentage commission (usually 4 to 6 percent) or a flat fee. The buyer’s agent is also paid out of that fee.

If you’ve weathered the market downturn and are finally ready to sell your home in today’s rebounding economy, follow these simple steps to get your home ready to list.