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.

Title Insurance Agencies And The Foreign Investor

With the myriad rules and regulations governing United States real estate transactions, it is no wonder that a foreign investor or seller has questions.  Sometimes the regulations make sense to investors and are similar to the laws in their home country.  Other times, the laws are unique to the U.S. and leave the foreign investor with more questions than answers.

One way to navigate these regulations and make sure your real estate transaction goes smoothly is to work with a professional real estate title insurance agency.  Title insurance agencies are separate from the real estate company and the mortgage lender.  In fact, the primary role of the title agency is to remain impartial to all parties involved in the transaction.  Their primary role is to make sure the closing happens and that everyone involved meets all obligations.  If you are looking for impartial assistance with your real estate investment, you can’t go wrong consulting a title agent.

Foreign Seller Services

Our Fort Myers and Cape Coral title insurance agency handlforeignworldpicturees many real estate transactions involving foreign sellers and investors each year.  Being located in Florida, we have many clients who enjoy vacation homes in the state, which keeps us current on foreign seller real estate regulations like FIRPTA.

The Foreign Investment in Real Property Tax Act of 1980, as FIRPTA is properly known, requires the foreign seller of any property (other rules apply) to withhold 10% of the purchase price and remit it to the IRS for tax purposes.

A title agency can help with this in several ways.  To begin with, the seller must be identified as a foreign seller for FIRPTA to have an impact on the sale.  Title Junction can verify identities and can be counted on to verify if the sellers involved in the transaction indeed qualify as a foreign seller.

Many title agencies also act as the escrow agent in the real estate transaction, which would allow the agency to withhold the 10% tax and remit it to the IRS on behalf of the seller.

All-In-One Convenience

Our foreign seller clients often appreciate the convenience of having all real estate title and title insurance needs under one roof.  Closing, title insurance, escrow and notary services in one location help make the transaction go smoothly.  A title agency can also:  help a foreign seller or foreign investor navigate real estate and closing terminology, assist with communication between buyers and sellers, their agents and their lenders and ensure both parties meet the legal requirements of FIRPTA.

Finding A Qualified Agency

When buying or selling a property, it is important to have both a title agency you can trust and one with the experience you need.  This is especially true if you are a foreign seller in the United States.  You can find qualified agencies through referrals from your realtor, mortgage lender and friends and family, the Better Business Bureau and the local Chamber of Commerce.  Finally, be sure your agency is professionally recognized and up-to-date with all current rules and regulations governing the real estate industry.

Top 4 Real Estate Closing Documents you should read through

When you are selling or buying a home you can almost always expect a mountain of paperwork to sign throughout the process and at the closing table.  And if you are like most, you don’t read every document before signing it.  However, there are a few documents you are going to sign throughout the process that you should definitely read fully and understand before signing.

1.  Purchase Agreement – This is your “contract” or “agreement of sale”.  This is definitely one of the most important documents in the transaction.  This spells out all the important details such as a financing contingency, inspection contingency, appraisal contingency, sales price, and also what each party, the buyers and the sellers, are paying in regards to closing cost.

2.  Title Commitment – The title commitment makes sure the property you are buying is free and clear of all liens and legal encumbrances. A title search is completed to prepare the commitment to insure. This will allow all parties to see what needs to be completed before you get to the closing table and clearly sets out any title issues.

3.  Promissory Note – It is just as is sounds.  It states that you promise to pay back the loan on your property or the bank is coming to get it. It details all of your loan terms, from the amount to the date to pay.

4.  Property Deed – This document lists on it the owner of the property whom is giving their interest to the new buyer or borrower, along with a legal description of the property.  The deed also gets recorded at the county courthouse to become public record to let everyone know who owns the property.

It is very important that you are aware of these documents and what they mean. Your realtor and your title company should be able to review these with you.

How Does Title Insurance Protect Me?

Title insurance is an important investment in your property.  The indemnity policies are designed to protect you from losses due to defects in the title, which occurred before you took ownership of the property.  Although claims against a property are rare, you might find yourself involved in one and should know what to do if that happens.

Determine Your Losses and Exclusions

It is very important to determine whether or not you’ve suffered a loss as a result of the claim against the property.  Without a proven loss, the policy is unenforceable.  Losses typically take the form of loss of use or financial loss.  Also important, check your policy to see if the claim being made against the property was listed as an exclusion.  It’s possible the defect was found during your title search, but you’ve forgotten about it.  If it was discovered during the title search, the defect would have been corrected or added to the policy as an exclusion. If it is an exclusion, it will not be covered by the title insurance policy.

If you’ve determined that you have suffered a loss and the claim is not listed as an exclusion, you should contact your title insurance agency as soon as you discover the loss.

Let The Title Insurance Agency Take Over

The agent will probably ask you to provide written documentation and proof of loss before the claim is investigated.  Specific details about how to file a claim with your particular title insurance agency can be found in your title insurance policy, which you were given a copy of when you closed on the property.

At Title Junction, our Fort Myers title insurance agents are well-versed in how to handle claims against a property.  Your situation will be investigated; the policy and its exclusions examined and the agency will determine whether or not the loss will be covered by the policy.  You will receive written notice explaining why or why not your claim will be covered.

Fortunately, the same policy that protects you from defects in the title also commits the insurance company to defend you from claims made against the property.  Even if the agency ultimately determines that no loss has occurred, they are still required to defend you against the claim.  This may mean litigation or it may be resolved without going to court.  Either way, you can rest assured that someone familiar with the intricacies of title insurance and property law will be representing you.

Choose The Right Agency

Throughout Florida and in Fort Myers, escrow and title insurance agencies can be chosen by the seller or buyer, although many simply choose to go with the agency recommended by their realtor or lender.  Representing you throughout a claim is just one reason you should do your research and choose a title insurance agency that you feel comfortable with and one that has the expertise you want.  There may come a time when you will appreciate a company that prides itself on customer service and satisfaction.