How to Find Open Permits
on the Property You Want to Buy

As a potential Buyer, you may have have no reason to suspect that an outstanding permit exists on a home you intend to purchase. After all, repair or remodel work may not be obvious during a visual inspection of the property and standard purchase contracts often do not include a contingency clause for verification of open permits.

Buyers rarely request that the seller disclose work that was performed years ago. The outstanding-permit issue may lay dormant until the new owner tries to modify an electric meter, remodel a room or repair a heating system, only to find that previous work has not been officially inspected and approved.

Since open permits or building code violations will not be listed in the preliminary title report nor be covered by the title insurance policy, it is important to clear up unpermitted work early on and avoid a possible delay in the closing.

Daniel and Janet were in the final stages of selling their house, when they awoke in the middle of the night to the sound of a loud alarm. Daniel called 911, the fire brigade arrived to discover that the home’s previous owner had put in an alarm system that was hidden from view and incorrectly installed. A permit for the work had never been closed out. Daniel and Janet were obligated to either have the system removed or correct the faulty installation before their sale of their home could go through.

Work done without a permit can also cause problems for a new owner. The residential alteration may have been completed according to the local building code, but if no permit was filed, the new owner may be liable for a fine. And if the work is found to not be up to code, the new owner will be required to fix the problem, bring the alteration up to standard and get a final inspection.

There are several reasons why previous homeowners did not obtain a permit. The owners may have used a local handyman to install a washing machine inside a small closet — a job that required new plumbing and electrical work but that would not be visible when the closet door was closed. The owners may have felt that a permit was not needed because — in their opinion — the job was relatively insignificant and took only a few days to complete.

In another scenario, the owners may have added a fence to their back yard and not have been aware that an ordinance required a permit for fences over a certain height.

Sometimes owners may avoid securing a permit either to get around paying the fees or because they are afraid that their property taxes might rise if the authorities become aware of their remodeling work. Or owners who did the work themselves may have been confident the job was done correctly and didn’t see the need to apply for a permit or submit to an inspection.

Before taking a listing, many real estate agents will ask Sellers if they are aware of any open permits that exist on the property. And then they will inquire if any upgrades or changes have been made that would have required a building permit.

Agents may also ask the local title company to run a courtesy permit history search, which should reveal all permits — whether pending or closed — on a property. In some parts of the country — such as Florida, where weather-related natural disasters have caused large-scale emergency repair work to be done on short notice — a permit search is common practice whenever a property sells.

Buyers can take the initiative and look up the permit history of a property by contacting the local regulatory building department for their area. A municipal search can also reveal unpermitted work.

When you hire a licensed contractor, he or she will be responsible for obtaining a permit for the work to be performed and closing out the permit after the job is completed. If you are doing remodeling work, large or small, remember to ask your contractor to give you a copy of the

closed permit for your files.

Use Contingencies To Protect Your Right To Cancel a Sale

Kristen and Ben had been looking for the right property to buy for over six months. They finally found a home that seemed to be about perfect, so they put down a deposit and signed a Purchase and Sales Agreement.They were excited to have their property search over with, but they still wondered if they had made the right choice. The house would be the biggest purchase they had ever made, a lot of money was involved, and they wanted to have an option available if for some reason they changed their mind.

“Contingencies” written into a Purchase Contract are one of the best ways to insure that you will have way to cancel the sale during the contingency period when inspections are made and the issues are either removed or resolved between the Buyer and Seller.

Contingencies will contain a time limit in which to fulfill the task. For example, an inspection contingency may give you 10 days in which to obtain and approve a pest or termite control report, a building inspection unless the property is purchased in “as is” condition. A contingency clause may allow 5 to 10 days for you to obtain a written loan commitment. The seller is generally given a certain number of days in which to deliver “marketable title” or a title report to the buyer. You then can review the exceptions listed in this report, and dispute any items which are in question. One common example of a title exception may be an easement. For example. If you plan to add a swimming pool in an area where an easement exists, you will want to be sure this will be possible.

Once a contingency has been approved, both the you and the Seller sign a document removing that contingency from the purchase contract. This agreement should be given to your closing agent and real estate representative. If the deadline for a contingency arrives, and both parties do not sign off on that contingency, this failure to act serves as acceptance of the contingency. For this reason, it is important to keep a calendar of the dates for removal of each contingency.

Contingencies help prevent problems at closing by eliminating last minute disputes covering inspections, the buyer’s inability to obtain financing, or repair work not being done according to contingency specifications.

Almost no contract automatically includes a clause that determines what will happen in case of death, since buyers assume your heirs (or the executor) will step up to close the deal. And, if the agreement is “silent” on what happens in case of illness or death, the contract continues to be enforceable, says real estate attorney Sam Tamkin, of Lawproblems.com.

A default clause describes what happens when a Buyer or Seller defaults under the contract. If the case goes to trial, a judge will decide what remedies are available. Some contracts provide that in case of default, the parties will go to arbitration. Your attorney should review the agreement to see whether everything was done properly. If not, then you may be able to cancel the agreement.

Common Contingencies

A financing contingency allows a specified amount of time for the Buyer to obtain a loan commitment and acceptable financing terms. These can be as specific as a designated interest rate or loan term. If not approved exactly as stated, the buyer has the option to cancel.

An inspection contingency, depending on your state law, can be written to include property inspections that cover possible structural problems or material defects. It can specify who will pay for necessary repairs, and to what extent each party is willing to pay for those repairs. This can also include termite damage; the presence of radon, lead or asbestos; and whether the property is in a flood or an earthquake zone.

Attorney approval means the contract is subject to passing legal scrutiny. That can include an attorney review, title report or any other legal paperwork (such as condominium documents) that relate to the purchase.

The sale can subject to the approval of a condominium or co-op board.

If you suspect recent remodeling or additions were done on the property, the purchase contract may be reliant on proof that the necessary building permits were obtained and building codes were enforced.

Recently, buyers from out of state made an offer to buy a newly built home. It was ideal, with amenities such as a swimming pool and location on a golf course. The buyers were envisaging decorating and furnishing this beautiful house. Several weeks into the sale process, the buyers realized the home was in a high-crime area, and bulgaries were common in the community. They also found that the morning traffic to go to their places of work would be a nightmare. The closing date was set. Their mortgage had been approved. The couple agonized how they could get out of the purchase without loosing their downpayment money. It seemed impossible

The day before the closing, the buyers noticed a clause in the purchase agreement that stated new palm trees must be planted in the driveway leading up to the

home. In their final inspection, there were no trees planted. They telephoned the seller’s closing agent and said that the deal was off. The builder had failed to live up to the contingency that the trees would be planted before the closing date, no exceptions allowed.

The buyers were refunded their full downpayment. They went on to find a home in a safer area, with a good commute, and although not a new home, with minor cosmetic work, the house would be perfect.

Confused About How to Hold Title to Your Property? Here Are Your Options

One of the most important decisions that needs to be made at closing is how you choose to hold title. It determines how you will be insured, but it can also have significant legal and tax consequences.

For example, there is an option available to married couples that provides protection from creditors in the event of the death of one of the spouses. There is also an option that affords a “right of survivorship” between unrelated owners. If not set up correctly, how you hold title can create unanticipated complications when you decide to sell or transfer the title to someone else.

Several years ago a married couple decided to take title to their house as “Joint Tenants” or joint owners. The husband had children from a previous marriage and intended to will his share of the property to his children. He was not aware that when one Joint Tenant dies, his or her interest automatically passes to the surviving owner and by law cannot be willed to anyone else. Fortunately, the couple discovered this stipulation before closing, and took title instead as “Tenants in Common.”

There are six common ways to hold title, and the first three are reserved exclusively for married couples.

Tenancy by the Entirety

This is a special type of joint tenancy with rights of survivorship that is recognized between married couples including same-sex marriages in Alaska, Arkansas, Delaware, Florida, Hawaii,Illinois, Indiana, Kentucky. Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina,Oklahoma, Oregon,Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, Tennessee and Wyoming. In order to form a Tenancy by the Entirety, a couple must acquire the property at the same time and the title to the property must be granted by the same instrument. Additionally, both partners must share the same interest in the property and must hold equal rights to possession of the property.

Property held under Tenancy by the Entirety cannot be sold, mortgaged, or used as collateral by one spouse without the consent of the other spouse. It allows spouses to own property as a single legal entity, offering protection to a surviving spouse from creditors of the deceased spouse. Tenancy by the Entirety cannot be used in Community Property states.

Community Property

Community property is a legal distinction that determines ownership of a married couple’s assets and is available in Arizona, California, Idaho, Louisiana,Nevada, New Mexico, Texas, Washington and Wisconsin. Property held in this manner does not have to pass through probate when one spouse dies, and the title passes directly to the other spouse. It is similar to holding title in Joint Tenancy, but it is limited to married couples or registered domestic partners. Although Alaska, Florida, Kentucky, South Dakota and Tennessee are not a community property states, they have an opt-in community property law. Spouses can designate their property by community property standards by way of a property agreement to by establishing a community property trust.

Community Property With Right of Survivorship

In Community Property ownership all assets obtained during the marriage are owned 50/50 but any assets acquired by a spouse prior to the marriage still belongs to that spouse alone. If the asset-owing spouse dies, the asset (a house) would not be inherited by their surviving spouse unless specifically stated in a will. To avoid probate or other problems, coupes can instead take title as Community Property with the Right of Survivorship. This is a fairly new designation of ownership and it ensures that when one spouse dies, their half of a shared community property goes directly to the other spouse—and to no one else. Survivorship with Community Property is only available to married couples or registered domestic partners in these sates: Alaska, Arizona, California, Idaho, Nevada, and Wisconsin. To turn property into Right of Survivorship community property you simply put the words on the title deed. Spouses are free to change their minds and remove the survivorship provision later, but it must be done in writing in a new deed.

Sole and Separate property

Sole and separate property means that no one else has any interest in the property. If you are married and want to take title this way, you should record a quitclaim deed from your spouse to yourself so that no “community interest” could be claimed at a later date. This applies only in community property states.

Joint Tenancy

The distinguishing characteristic of Joint Tenancy is the right of survivorship. If one of the joint tenants dies, his or her interest automatically passes to the surviving party or parties instead of being tied up in lengthy probate proceedings. Joint tenants own an undivided equal interest in the property and have the same rights to the use it. For example, neither co-tenant can distinguish which portion of the property he or she owns. Once a joint tenancy has been created, no joint tenant can sell his or her interest without terminating the joint tenancy. If either sells his or her interest, the buyer comes in as a tenant in common rather than as a joint tenant.

Tenancy in Common

When two or more people buy property together, whether their shares are equal or unequal, they can hold the property as Tenants in Common.Tenancy in Common is so standard as a form of ownership for unrelated buyers that it is generally presumed to be the way they hold title if nothing else appears to the contrary. The shares are also presumed to be equal, unless they are listed otherwise on the deed, and each of the tenants has equal rights of possession. Each co-tenant owns an undivided interest, but unlike a Joint Tenancy, these interests need not be equal, may arise from different conveyances, and do so at different times.

At some point, you may decide that you want to change the way you hold title to, for example, place the property in trust for a child or to

gift property to adult children. It can be a relatively simple matter to change the form of ownership. Single people can use a Quitclaim Deed to transfer the property from themselves to themselves in the new category in which they wish to hold title. Married couples would follow the same procedure using an inter-spousal deed.

Alternate Ways to Hold Title

Other ways to hold title (often used for estate planning purposes) are revocable trusts or living trusts where of one of the spouses has part ownership of the home among two trusts, or variations of these types of ownership. Limited Liability Partnerships (LLC) can be an option in other circumstances.

Depending on your area’s regulations, you may need to use particular wording in your deed, so it is a good idea to get the advice of a professional or lawyer first. You will need to get the deed acknowledged before a notary public, and then have it recorded at the clerk’s land records office.

How to Use Seller Financing to Your Advantage

Seller financing can be a useful tool to not only the Buyer but also to the seller. With unpredictable loan rates and difficult qualifying criteria, seller financing can bridge the gap for a short-term (3-10 year) period of time.

Two significant advantages to the Seller who offers a convenient and flexible financing package to prospective Buyers is that it makes the property more marketable and defers the Seller’s tax liability on the profits. Not only does the Seller avoid the entire profit tax due in the year of the sale, but the seller earns interest on the portion of the note principal that represents the tax not yet due and payable.

Closing can be faster in Seller-financed properties due to the conventional rule that Borrowers must be given a Closing Disclosure form three days before closing. If the loan would need to be modified, the three-day waiting rule would start over and and cause further delay.

The mountain of legal disclaimers and paperwork involved in a conventional mortgage can slow the process down, and conventional lenders can — and often do— change their terms days before closing.

Buyers save on the typical lender costs such as loan origination fees, discount points, mortgage insurance premiums, processing fees, and other added expenses. When the Seller acts as the lender a lower downpayment is possible and is negotiable between the Buyer and Seller— where as most conventional mortgages require a 20% downpayment. Sellers can dictate the qualifying process for the potential Buyer and shorten the typical closing time significantly.

If a seller-financed sale seems appropriate for your circumstances, have a title company check for any outstanding liens or other title issues, and hire a lawyer to prepare the paperwork, including the note, deed of trust, or mortgage documents. Consult with your CPA or tax attorney for the best way to structure the loan to be tailor-made for the your individual financial situation and tax responsibilities.

How to Find Unrecorded Liens And Open Permits on a Property

With all the many tasks necessary to ensure a smooth closing, there is one area of concern that gets little attention but that can cause unnecessary delays and headache. Open and expired permits and unrecorded liabilities can not only postpone a property closing but can even cause a transaction to fall through entirely.

When you order a title search on a property, you do so feeling confident that the title company will uncover any outstanding mortgages, divorce decrees, easements, or judgments that are of record. This search is done to be certain that there can be no claims made by any other person to the property. You want to be assured by the title company that they can convey “clear title” to you as the new owner. A title insurance policy will back up that claim of title, however be aware that it will list certain exceptions to that coverage.

The title search will not uncover are unresolved code violations, building permits that have not been closed properly, or unpermitted structures. Code violations can include such seemingly harmless acts as fencing that is too high, a small structure that provides shade in the garden, a new water heater whose permit was not closed out, or an electrical outlet that is not up to code. Unpaid utility bills can also be an issue and will be the responsibility of the new owner.

Municipal Lien Search

Ask that a Municipal Lien search be performed on the property you are buying.

This type of search will disclose details that exist about the property’s unrecorded liabilities—that if left unresolved, can transfer over to you as the new owner.

What Is Included in a Municipal Lien Search

Building Violations
Code Enforcement Violations
Open and Expired Permits
Real Estate Property Taxes
Sweet utility Balances
Special Assessments
Storm utility Balances
Unrecorded Municipal and County Debts

Utility bills are usually not documented in the public record, so prospective homeowners have to look into the provider directly to get the details. These can include electricity, gas, water, and sewage.

Code violation is another type of unrecorded municipal lien. Most property owners don’t stay current with current codes in keeping up with the regulations; therefore, they violate them. When a prospective buyer purchases the property, the fines already imposed on the property are transferred to the new buyer even though such codes might have been rectified. The penalties could be for violations involving overgrown weeds, negligence I maintain trash, even pets.

Special Assessments are the taxes against a property to pay for services that will benefit the community — such as public infrastructures like roads and street lights., or underground utility poles. The assessments are paid under the real estate taxes. Unpaid special assessments are usually not documented in the public record. It is easy for a property owner to default and escape paying, and when the property is sold will be transferred to the new owner.

Building violations arise when an “open permit” given to property owners and contractors the right to construct or reconstruct a property, but that have not had a “final inspection” to close out the permit. The local government agency is in charge of issuing these permits. These ensuing certifications and inspection fees for construction are a type of unrecorded lien that threatens a potential buyer. Projects that were completed without a final inspection can require significant costs to bring up to the current standard.

How to Compete Against an “All-Cash” Buyer

Let’s assume that you are in the category of buyers who need to find a property now and who must also get a mortgage to finance the deal. What can you do to improve your chances that will set you above competing buyers? The first step will be to get financing in place before you make your purchase oﬀer. There are three ways to do this: ask your lender for a “pre-approval” for a loan up to a certain amount; apply to get “pre-qualified”or (and the best option) is to be get a “TBD” approval.

Pre-approval: You will turn in an oﬃcial mortgage application and will provide the lender with your financial documentation – including having your credit pulled. The lender will examine the documents to confirm that the information in the application matches the actual documents collected. The bank will determine the program types and maximum payment you will be approved for. A pre-approval is not a guaranty for a mortgage as you still need to have an underwriter sign oﬀ on all items for final approval. It does not include and appraisal or title work.
Pre-qualification: This is the easiest and quickest method to get an idea of what you can aﬀord for a property purchase. Keep in mind, however, that this approval carries the least amount of weight for your oﬀer. It does not include a credit check and it is not a firm loan commitment by the lender.
TBD Approval: To-Be-Determined (TBD) approvals are the strongest and best method to use for your pre-approval loan process. Your loan file will be underwritten to the furthest extent possible and you do not have to identify a specific property. The lender will ask for a complete loan application—including income, assets and liabilities. If your financial picture meets the lender’s criteria, you will be given a “hard approval” for the maximum monthly mortgage payment allowed. The process may take a few days but allows you to guarantee a quick closing to the seller and set you above other potential buyers with lesser approval letters.

Income

Documents Needed for a TBD Approval Letter

Tax returns: Copies of your two most-recent federal and state tax returns

W-2 wage earners: Copies of your two most recent payroll stubs.

Self-employed, freelancers and independent contractors: Up to-date profit and Loss statement and two years of records, including Form 1099s

Real estate income: Rental income, address, lease and current market value

Assets

Bank statements: Two months of statements

Retirement and brokerage accounts: Two months of statements

Personal Property: Include your car, furniture, jewelry, or valuable collections such as art work, antique cars, cameras, and so forth.

Debt

Monthly debt payments: Lenders use this total amount to calculate you debt-to- income ratio. Include any recurring monthly payments such as health insurance, car payments, minimum payments on credit cards, utility bills, car insurance, etc.

Divorce: Your lender may ask for a copy of your court divorce decree and any child support or alimony payments if applicable.

Bankruptcy and foreclosure: Ask your lender what documents they may need and how long you need to wait after bankruptcy or foreclosure to be eligible to apply for the loan.

Down payment gift letters: Lenders will want to see the sources of the money you plan to use for the downpayment. If that includes gifts, get a letter from your donors to show they don’t expect to be paid back.

State-by-State COVID-19 Addendum

Most real estate associations have prepared COVID-19 addenda similar to those found in the California addendum, though the wording and scope may vary among them. Click your state below to find the pertinent information.

Alabama	Kansas	New Mexico	Utah
Arizona	Kentucky	New York	Vermont
Colorado	Louisiana	North Carolina	Virginia
Connecticut	Maine	North Dakota	Washington
Delaware	Maryland	Ohio	West Virginia
District of Columbia	Massachusetts	Oklahoma	Wisconsin
Florida	Missouri	Oregon	Wyoming
Georgia	Montana	Pennsylvania
Hawaii	Nebraska	South Carolina
Idaho	Nevada	South Dakota
Illinois	New Hampshire	Tennessee
Iowa	New Jersey	Texas

What Should The Purchase Agreement Include?

The Purchase Agreement (or Residential Purchase or Sales Agreement and Deposit Receipt) is the overriding document that will dictate the terms of your purchase or sale. It is a legal, contractual document, and the provisions are binding. Whether you have a real estate agent, a lawyer, or you draft the document yourself, it should contain all the provisions that have been agreed between the buyer and seller. The agreement must state clearly the terms of the sale and what must occur before the property can change hands.

Whether you use a pre-printed form (such as an approved Association of Realtors agreement) or a tailor-made document, the contract should provide the following “contingencies” or safeguards to protect the interest of each party in the transaction:

The deposit received from the buyer and what will happen to it if the agreement is canceled

Personal property to be included in the sale, spelled out very specifically. (Take the time to list all the movable items that are to be included with the real property transfer to avoid numerous problems later.)

The date for the close of escrow and what will happen if the closing is delayed.

The date of occupancy — it may be the day of closing or a later date to be agreed.

Division of shared expenses between buyer and seller, called “prorations,’ and the date to be used for computing them. (Taxes, rents, etc.).

Default provisions or what will happen if either party doesn’t live up to the agreement.

Termite inspection, including who pays for the inspection and who pays for remedying any deficiencies disclosed in the inspections, as well as who pays for the recommended preventive measures listed in the report.

Other property inspections (which might include a roofing inspection or a general building inspection). The buyer is typically given 10-14 days to inspect the property or have a professional inspection made of the house, its systems and structure. There may be inspections for lead and radon levels.

Financing arrangements. A clause should be written in the purchase agreement that allows ample time for the buyer to apply for and be approved for a loan. Time to make an application is typically 10-14 days and time for loan approval is usually 30 days.
Occupancy date when the buyer may move in. (Will the seller remain in the residence after the close of escrow? If so, what will his rent be?)

Stipulation for payment of real estate commissions, closing costs and title fees. The buyer should be given ample time to review the preliminary title report. Usually the buyer is given 10 days from receipt of the report to give approval.

Covenants, conditions, and restrictions (CC & R’s). (These are limitations placed upon the use of land by its owner, the governing operation of a condominium, cooperative, or common interest development). A provision for the approval of the condominium documents, bylaws, budget, or other conditions should be included. Usually the buyer is given 10-14 days from receipt for this approval.

Contingency for the sale of the buyer or seller’s current home. Either party may need to add a contingency for the sale of their current home. The time limit on this condition is usually 30-60 days.

You may want to write a contingency into the agreement that allows for cancellation in the event the buyer is not able to obtain homeowner’s insurance.

A contingency will be written into the agreement that provides for the buyer to approve the seller’s disclosures as to such items as earthquake hazards, flood hazard, lead in the home (if built prior to 1978) or other material facts or defects as required in your state. The time limit for these disclosures is typically 10 days.

Attorney review. You may want to provide for the review of the agreement by your attorney. The time limit is generally set at between five and 10 days of signing the initial agreement.

Although these contingencies may be inclued in the pre-printed agreement form, you may need to add an addendum to provide for any special concerns that you have. The contingency time periods are negotiable and can vary according to the special circumstances of your purchase or sale. When a contingency cannot be satisfied, the purchase agreement may be canceled and your deposit returned. Each contingency should be approved and signed by all parties in the contract, nothing their agreement.

Typically, on the West Coast, lawyers do not become involved in drafting purchase, sale, or exchange agreements unless circumstances, such as a pending probate, a lawsuit, or a divorce complicate the matter. On the East Coast, however, lawyers play a large part in real estate transactions. In some areas, they draw up the agreement, examine the title, and prepare the necessary legal documents, such as the deed, mortgage (or Deed of Trust) promissory notes, and any other necessary legal documents.

How Should I Go About Shopping for a Loan?

Consider banks, savings and loan offices and loan brokers: Find out what types of loans are available and ask about interest rates and loan fees. Find out how quickly the lender can make an appraisal of the property. Prepare a form that makes a side-by-side comparison of the terms being offered to you by the various lenders, and think carefully about which loan would be the best for your circumstances.

What information will I need to give the lender when I make an application for a loan?

When you visit your lender, you will be asked to fill out a Uniform Residential Loan Application form. This is a four page document that asks you about your employment, your assets, your liabilities, and your income. It is important to be as truthful and complete as possible on this loan application form. All the information will be verified. Your employer will be called and your bank accounts will be checked. Upon receipt of your completed application, the lender will give you a copy of a government publication called “Settlement Costs: A HUD Guide”. This small pamphlet will explain the closing process and describe the various closings costs which you may incur with your loan. The lender is allowed three business days after receiving your loan application to provide you with this brochure.

What are the other documents that my lender is required to give me when I apply for a loan?

The lender is required to provide you with a “Truth In Lending ” statement which will tell you the APR, or Annual Percentage rate of the loan for which you are applying. The APR will be the percentage rate quoted to you by the lender, PLUS other closings costs, such as any points and other finance charges over the term of the loan. This form must also be given to you within three business days of your loan application. You will also receive a disclosure about Adjustable Rate Mortgages, a Good Faith Estimate of itemized closing costs, various authorization forms giving the lender permission to research your credit, contact your employer, request rental or part mortgage history, and verify all your bank deposits.

Once I have completed my loan application, what else should I take in with me to speed up the loan process?

Together with your loan application, you should take in your last two years tax returns, the last 2 or 3 month’s bank statements, current W-2 forms, any trust agreement or securities account information, and letters of explanation of any credit problems you may have had. The more information you provide the lender at the time of your application, the faster your loan will get processed.

Related Information

Escrow Impound Accounts

6 Tips to Ensure a Smooth House Closing

Real estate closings can be fraught with complications and setbacks, but they can go smoothly and quickly — if planned for carefully.

You may think that an “all cash” deal would go through closing faster than a sale that involves a mortgage — but that is not always the case. Unresolved title issues, such as an unknown mechanics lien from a former building contractor or boundary or unsettled disputes from the past can show up.

Also, serious structural problems with the property may be revealed in an inspection report, and they can cause weeks or even months of delay. The buyer’s cash to close might not arrive to the closing agent in time, or the wrong amount may be received. In order to prevent these potential problems — and others — there are several things you can do.

One common issue that often delays a closing is repair disputes. If you are the seller, it’s a good idea to have a general building inspection before you list your house for sale. You may find problems that you were previously unaware existed, and you can then either correct them, or consider selling your property in an “as is” condition.

Keep in mind, however, that you may be required by law to disclose any “known” structural defects to the new buyer. You may not necessarily have to repair the problem, but you would need to be sure that you make an exclusion for that needed repair in your agreement with the buyer. Prior to closing, be sure that the property is in the condition promised — all required repairs completed and the house and yard cleared of any personal items, including old cars, tools, trash.

Ask a real estate agent, local title company or closing agent to perform a “preliminary title report” for your review — especially if you suspect there is or might be a possibility of a prior lien, estate or divorce problem that could affect your title to the property. If you review this report early on — even before you offer your house for sale — and clear up any existing issues, you will avert a possibly long delay due to title defects.

If you are a buyer who will be getting a mortgage to finance the property, there are several things you can do to speed up the loan process and be sure the deal closes on time:

Get conditional approval before making the offer. Getting pre-approved for a loan will help you determine how much you can afford and give you a realistic expectation of the price range for your new house. Buyers who have been pre-approved by a lender are generally those who are able to finalize their loan application faster and more efficiently than ones who have not been pre-qualified.
Have your documents together. Assemble your bank statements, pay stubs, tax returns and other documents as soon as possible — even before you begin looking for a house to buy. Often, getting these documents together takes time and the better you prepare, the faster your loan will be approved — and processed. If you are unsure of which documents you need, ask your local bank for a “mortgage loan checklist.” Most lenders post these checklists online, and they will readily give you a guideline regarding what you will need to provide.
Work with an experienced mortgage lender. Whether you use a mortgage broker, or work directly with a lender, ask what the average time is for processing a loan application and, specifically, how quickly they will be able to complete your mortgage. Try to anticipate potential setbacks, like any credit or employment-related problems you know exist and ask what you need to do to clear those up.
Make sure that you have the money for closing costs. The lender will require proof that you have sufficient funds for the down payment and closings costs prior to closing. Be sure those funds are readily available, and be prepared to wire or present a cashier’s check on the day before closing.
Create a timeline for any repairs the seller is obligated to make. Make sure any repairs the seller has agreed to make are completed on time — ideally, at least several days before your scheduled closing. Do the final walk-through inspection the day before closing, or sooner, if the seller agrees.
Contact your lender on the day before and on the day of closing. Lenders notoriously ask for information at the last minute — a copy of a canceled check, proof of insurance, or a recent bank statement. A day or two before closing, contact your lender and ask if everything will be ready for the closing date. On the day of closing, verify with your closing agent that the loan documents have been received. If not, ask what is causing the delay and if there is anything you can do to help speed things up. Often, it is a case of just one missing document or one final verification.

Once the repairs have been made, the title issues resolved, the loan approved, and all the documents prepared for signature, both the buyer and seller can further assure the closing goes smoothly by reviewing all of the documents at least 24 hours before all the concerned parties meet. (If you close after Aug. 1, you will be able to review documents three days before settlement.) This is your chance to ask any final questions you may have or point out any errors you notice.

Stay in control of your closing, and try to be as involved in the process as possible.

What To Do When the Seller is a Realtor Who Gives You False Information About the House You Bought

I purchased a home that was advertised in the multiple-listing service to have off-street parking, and a photograph in a flyer showed a driveway alongside the house. The seller who is a Realtor and developer flipped the house.

My agent was provided a plat/survey from the seller so I declined to request a new survey to be done. I only found out after the sale that the driveway that connects to the street was not included in the deed. Was it my responsibility to pick that up? What options do buyers have when they suspect false advertising or are given incorrect information from a Realtor? — M. M.

When the seller is also a real estate professional, buyers often rely on advertised claims without giving them the customary scrutiny that they may give to an otherwise “non-real estate related” owner. It is easy to be enticed by advertising that promises a home that has been “completely remodeled,” “stripped down to the bare wall,” or “priced below comparable homes in the area.”

Overzealous sellers can exaggerate or make misleading claims about a property’s amenities in an effort to make a quick sale. Daren Blomquist, senior vice president of Realty Trac, a provider of housing data and analysis based in Irvine, Calif., said most flippers “want to turn a property in three to six months.” RealtyTrac considers any repeat home sale that takes place within a year as a flip.

Eye-catching claims like “safe neighborhood,” “growing area” or “easy commute to work” can be easily verified by city or state statistics. But other statements, such as “ample parking in the back of the property” may be more difficult to confirm — and a visual inspection of the property may not be enough.

Under normal circumstances — where the seller is not a real estate professional — the buyer may want to contact a real estate attorney to intervene and help to either initiate a claim or take the necessary steps to obtain title to the portion of the property that was not included in the deed.

However, when the seller is also a Realtor, buyers may want to try an alternative approach before they resort to legal action.

A good place to start is to schedule a meeting with the seller’s/Realtor’s broker. Ask if the broker would be willing to step in to either help solve the problem or offer mediation assistance. According to Maggie Knauss, a claims supervisor with Rice Insurance Services Company in Louisville, the largest provider for states that require errors and omission insurance for Realtors, “Negligence is the most frequent claim made against real estate licensees. Often, when the agent is also the seller, the agent relies on information provided by the previous owner or a professional [who was] involved when the agent purchased the property, such as a home inspector or appraiser, without thoroughly verifying the accuracy of the data. When the agent/seller passes along incorrect information, it may not be intentional [and therefore not a basis for fraud], but rather considered a “negligent act” and may be insured under the E & O insurance policy.”

Knauss added that many E & O insurance policies “have exclusions that preclude coverage if the agent has a personal interest in the property. Others may provide coverage in the event certain conditions are met.”

If the agent’s broker cannot provide answers, buyers can contact the local, state or national Realtor associations — such as the Greater Capital Area Association of Realtors (GCAAR), or the National Association of Realtors (NAR) — and ask if they offer dispute resolution or other less costly solutions.

Licensed real estate professionals — who are members of the NAR or a local or state association — pledge to abide by a standard of behavior or code of ethics somewhat similar to other client-based professions — such as in the legal or medical field. According to the GCAAR, an “avoidance of misrepresentation and concealment of pertinent facts to clients and fellow brokers” and an admonition to “portray a true picture in advertising” are included in the basic principles of the code.

When buyers or others believe that there has been an act of unethical behavior, they may file a claim with the association. Typically, ethics complaints need to be filed within 180 days from the time the complainant knew the unethical behavior took place. The complaint will be reviewed by the local board or association’s grievance committee, and if it is determined to be valid, it will be forwarded to a hearing committee. According to the NAR, “claimants have the ultimate responsibility to prove their case and should be prepared to clearly demonstrate what happened and how they believe the Code of Ethics was violated.” If found guilty of an ethics violation, the Realtor could face a reprimand, fine or other penalty, but the board will not award money or punitive damages to the claimant.

When the Realtor/seller pleads innocence or refuses to cooperate, a real estate attorney may be the only alternative. Title claims can be difficult for a layperson to correct, especially if they involve a deed that dates back many years, and/or the heirs may be deceased. A new survey would have shown the lack of parking on the property, unless there had been a fault in the title that dated back many years and was never detected. In most cases, a competent attorney and a reputable title company generally would be able to resolve the issue.

A claim for fraud could be made, but often an element of “intent” will be involved in that type of action and a subsequent lawsuit could end up costing more and taking longer than the alternative “title-based” solution.

“While flipping has increased 20 percent over the last quarter of 2016, and over six and a half percent of homes are flipped properties,” Blomquist said, “buyers still need to be prudent and take the normal precautions before buying any piece of real estate.”

Know Before You Owe Disclosure Forms

(Most states require sellers to fill out a disclosure form or disclose material facts about the property. To find your state’s law, speak to your real estate agent or state regulatory agency. You can find the disclosure requirements in your state at www.arello.org look under “resources-Regulatory Agencies”).

New Forms Improve Consumer Understanding, Aid Comparison Shopping, and Help Prevent Surprises

Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) is issuing a rule today requiring easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a homebuyer. The new “Know Before You Owe” mortgage forms will replace the existing federal disclosures and help consumers understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. “Today’s rule is an important step toward the consumer having greater control over the mortgage loan process.”

For more than 30 years, federal law has generally required that within three business days after receiving a mortgage application, mortgage lenders must deliver two different, overlapping disclosures to consumers. At the closing stage, federal law again generally requires two forms. All of these forms contain duplicative and sometimes confusing information. The Dodd-Frank Wall Street Reform and Consumer Protection Act recognized the need to simplify and streamline this information for consumers and transferred responsibility for the forms to the CFPB.

Today’s final rule requires that lenders use the CFPB’s new disclosures, puts in place rules about when the new forms are given to the consumer, and limits how the final deal can change from the original loan estimate. The forms are available in English and Spanish.

The Loan Estimate: This form will be provided to consumers within three business days after they submit a loan application. It replaces the early Truth in Lending statement and the Good Faith Estimate, and provides a summary of the key loan terms and estimated loan and closing costs. Consumers can use this new form to compare the costs and features of different loans.

The Closing Disclosure: Consumers will receive this form three business days before closing on a loan. It replaces the final Truth in Lending statement and the HUD-1 settlement statement, and provides a detailed accounting of the transaction.

The CFPB conducted more than two years of extensive research, testing, and review to find out how to create mortgage disclosures that do what the law intended them to do: disclose information in a way that consumers can understand. A good disclosure helps consumers know if they want to commit to the loan being offered, and it enables them to make meaningful comparisons between loan products for better shopping. The Bureau received feedback from consumer testing, through the Bureau’s website, from a small business review panel, through public comments on the proposed rule, and from other supplemental outreach.

Improved consumer understanding

An extensive study confirmed the benefits of the new CFPB forms. Consumers of all different experience levels, with different loan types – whether focused on buying a home or refinancing – were able to understand CFPB’s new forms better than the current forms. Testing showed that participants who used the CFPB’s new forms were better able to answer questions about a sample loan – a statistically significant improvement of 29 percent. Importantly, they were better able to decide whether they can afford the loan, including the cost of the loan over time. And, specifically, the forms help consumers better understand key information:

Risk factors: Because information on the CFPB forms is disclosed in an easy-to-read format, consumers can more easily identify risky loan features. In addition, lenders will have to tell homebuyers about prepayment penalties, larger-than usual periodic payments, and complicated loan structures.

Short-term and long-term costs: By putting the important information in a clearer format than the current forms and in plain language, both the Loan Estimate and Closing Disclosure more easily explain the total costs of the loan. This includes an important breakdown of the loan amount, the principal and interest payment, and how it could change, and closing costs.

Monthly payments: The CFPB forms state in bold font what a consumer’s monthly principal and interest payments will be. If it is an adjustable-rate loan, the forms say the projected minimum and maximum payments over the life of the loan.

Better comparison shopping

When consumers understand their loan offers, they can better compare competing offers. In testing, the CFPB’s new forms performed better than the current forms when it comes to comparing competing offers by as much as 42 percent. This leads to better consumer choice. The forms enable better:

Comparisons of competing loan offers: The new forms use formatting that clearly breaks down the costs of the loan, such as the interest rate, mortgage insurance costs, and closing costs. As a result, would-be-homebuyers and those refinancing their existing mortgage are better able to distinguish between two different loan offers.

Shopping for closing costs: Closing costs are the costs of completing a mortgage transaction, including origination fees, appraisal fees, title insurance, taxes, settlement services, inspections, and homeowner’s insurance. Consumers can save money if they shop around for their own service providers for some of these costs. The CFPB forms plainly outline what closing services a consumer will need and which ones they can shop around for.

Avoiding costly surprises at the closing table

With the current forms, consumers can have a hard time comparing their original loan terms to their final loan offer. Consumers need to be reasonably sure that the mortgage they signed up for is the one they are getting. The CFPB’s rules curtail “bait and switch” tactics, where the terms change at closing, by implementing several new consumer protections:

Easier comparisons of the estimated and final terms of the loan: By making the Loan Estimate and Closing Disclosure very similar in format, consumers are better able to compare their estimate with the final terms of the loan. In testing, the CFPB’s new forms performed better than the current forms when it comes to comparing estimated and final numbers by as much as 28 percent.

More time to consider choices: By providing the Closing Disclosure three days before closing, consumers can review their final loan terms and costs in an unpressured environment rather than at the closing table. This allows consumers time to confirm whether they are getting what they expected. It also gives consumers time to ask questions and negotiate over changes that have occurred. This is especially true for consumers who are refinancing and can more easily delay the closing of the loan.

Limits on closing cost increases: Today’s rule restricts circumstances in which consumers can be required to pay more for settlement services than the amount stated on their Loan Estimate. Lenders cannot impose new or higher fees on the final loan unless there is a legitimate reason.

Today’s rule is effective Aug. 1, 2015 and the CFPB is already working with industry and consumers toward effective implementation. As the CFPB continues with “Know Before You Owe,” it will work collaboratively with all, including other government stakeholders, to take a close look at all documents provided at closing.

Today’s rule is a continuation of the CFPB’s efforts to reform the mortgage markets. In January 2013, the CFPB released new rules on mortgage servicing, mortgage loan origination compensation, and the mortgage origination process. Today’s rule and new forms are just one part of the CFPB’s efforts to make the mortgage market work better for consumers, the industry, and the economy as a whole.

A factsheet about the “Know Before You Owe” mortgage disclosures is available at:http://files.consumerfinance.gov/f/201311_cfpb_factsheet_kbyo_mortgage-disclosures.pdf

A factsheet about the testing process the CFPB used to arrive at today’s rule is available at: http://files.consumerfinance.gov/f/201311_cfpb_factsheet_kbyo_testing.pdf

The “Know Before You Owe” mortgage disclosure rule will be available 12 p.m. Wednesday at: http://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov

What Is the IRS Form 4506 Which I Might Be Asked to Sign at Closing?

What is the IRS Form 4506 which I might be asked to sign at closing?

Form 4506 is a form which gives a lender the right to receive a borrower’s tax returns in order to verify the borrower’s income. Most all lenders use this form. It is honored by the IRS for 60 days after it is signed and dated. A WORD OF CAUTION: If your lender insists that you sign the form, but leave it undated, this would give the lender the right to use the 4506 form and view copies of your tax returns, any time over the life of your loan. To limit the lender from access to your tax returns indefinitely over the term of your loan, be sure to insist that you be able to date the form at the time of signing.

What Happens When Your Rental Is Being Converted Into a Condo?

By Sandy Gadow
Special to the Washington Post

Do you live in an apartment building that is going to be converted to a condominium? If so, are you at risk of being evicted? Or is this your unanticipated chance to finally become a homeowner?

Many cities where land is scarce and housing is hard to find have developers who are clamoring to find established rental buildings that are suitable for conversion.

According to the National Association of Home Builders, the construction of new (multifamily) condominium buildings has fallen below the national average of 20 percent to a low of 10 percent of new homes built last year. Although some areas, such as Miami, may have an oversupply of empty condominiums (ones that were built before property values fell in 2009), other areas — such as San Francisco — have a scarcity of available new housing, especially affordable condominium units.

Before a rental conversion can be approved, there are well-defined steps that a developer must take. State law and city ordinances governing housing, planning and zoning will dictate the requirements a developer must follow. The process actually begins before the property is even purchased, and it includes “qualifying criteria” to determine whether the building is eligible for conversion.Anjanette Tinney-Young, a lawyer with Avenue Title Group in the District, said that once a developer has closed escrow on the property, the process can take eight months or longer to complete, and that is if nothing goes wrong.

[What you need to know before you buy into a condo association]

Although they can vary from city to city, local ordinances are designed to protect the rights of tenants who live in a rental building that is undergoing a conversion. For example, in the District, the Rental Housing Conversion and Sale Act of 1980 gives tenants the right to organize and vote on whether they are in favor of the conversion. If the tenants vote against the project, the developer cannot move forward.

Other cities have passed legislation that controls and regulates the number of conversion applications that will be accepted each year. In San Francisco — where there was a long backlog of properties waiting for approval — the Board of Supervisors took action and passed a new “expedited” conversion program. It stated that as of April (until the year 2020), only buildings that had a signed tenancy-in-common, or TIC, agreement for more than one owner in place as of May 1, 2013, would be eligible to convert to condominiums.

According to David Gellman, a lawyer in the city, buildings without a signed TIC agreement in place “may never qualify for condo conversion.” Among other protections in San Francisco, tenants who are in occupancy during a condominium conversion must be offered the option of a lifetime, rent-controlled lease for their units.

In Berkeley, Calif., the city charges owners of a rental conversion project a mitigation fee of 12.5 percent of the sales price of the condominium. And in Seattle, developers are held responsible for determining whether tenants are eligible to receive relocation assistance, calculating how much that will be and making payment directly to the tenant.

New Jersey’s “Anti-Eviction Act” protects all tenants from eviction resulting from a condominium conversion for at least three years. The Boston condominium ordinance imposes a five-year notice period for new conversions and for units already occupied by elderly, handicapped or low-to-moderate-income households who may have previously had the security of rent control. Other cities have powerful tenant organizations that work to protect the rights of renters and offer financial assistance in the event of a condo conversion.

[Why you should avoid Fridays — and the 15th — when closing on a home]

Once a developer finally receives approval to proceed with a conversion, tenants will receive city-mandated disclosures that will include one or more of the following:

Proper notice (often 120 days or more) and full information packets relating to the conversion and transfer of the property to a condominium.
Opportunity to purchase rights.
Tenant-first rights of refusal.
Relocation assistance if necessary, including the Housing Assistance Payments (HAP) program. This is available to tenants who may be eligible for financial assistance if they are displaced because of the conversion.
A proposed condominium association set-up and bylaws.
Receipt of offer of sale notices.

It is then up to the individual tenants to consider their options. Do they want to stay and purchase their unit or remain as tenants? Will the developer offer to buy them out if they agree to move? If there will be major remodeling or renovation work, where will they live during the construction phase of the project?

Realtor.com offers a “Rent vs. Buy” calculator that can help compare the financial advantage (or disadvantage) of buying or renting the apartment. ( www.realtor.com/mortgage/tools/rent-or-buy-calculator ).

Take a close look at the local condominium conversion laws for your city or municipality, because they can differ from the state’s condo laws. And it pays to consult with a real estate lawyer if you are unsure about your rights.

If you decide to purchase your unit, you will want to be confident that all your concerns have been addressed and that your ownership rights are protected.

Here are some questions to ask and tips to consider if you intend to purchase your rental apartment:

Is the asking price fair? Is it discounted for tenants?
Is financing available?
What is the expected monthly condo association fees?
Will pets be allowed?
Would you be able to rent out your unit if you wanted to?
Can you become a board member in the condo association?
Can you be involved in setting up the budget, the annual owner dues and the reserve fund for future improvements that may be necessary?
What percentage of the association will be required to vote on renovation and decoration work? Necessary repairs generally do not require a membership vote, but discretionary spending on things such as a new decor for the entry or lobby area probably will.
Who will manage the building? Is their fee fair, and is their reputation above reproach?

Offer suggestions and feedback on the covenants (rules) that will be included in the condominium documents. Those conditions and restrictions stipulate what an owner can (or cannot) do in the building. They are also referred to as bylaws, or CC&Rs.

Will I Have to File a State Income Tax Return?

There are currently seven states which do not require you to file a state income tax return.

States with no individual income tax
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

The two states in Blue, Tennessee and New Hampshire, require you to file only if you have dividend or interest income to report.

States which require a state tax return
States which do require you to file a state income tax return are:

Alabama
Arizona
Arkansas
California
Colorado,
Connecticut
Delaware
District of Columbia
Georgia

Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine

Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska

New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon

Pennsylvania
Rhode Island
South Carolina
Utah
Vermont
Virginia
West Virginia
Wisconsin

Flat Income Tax vs. Range Income Tax
Seven states — Colorado, Illinois, Indiana, Massachusetts, Michigan, Pennsylvania and Utah — have a flat income tax, while the rest collect according to income ranges. The ranges that apply to 2012 tax rates vary not only by percentage but also by the amount of brackets within the range, with the fewest being one, the flat tax, and the most being 12. Whether you plan to file as a single or married person also affects the percentage required.

New York, for example, has the following brackets for 2102 for single persons, with the percents simply doubling for married persons filing jointly:

4 percent on first $8,000
4.5 percent between $8,001 and $11,000
5.25 percent between $11,001 and $13,000
5.9 percent between $13,001 and $20,000
6.85 percent between $20,001 and $200,000
7.85 percent between $200,001 and $500,000
8.97 percent on more than $500,000

Alabama has a significantly lower income tax for its residents. Single persons, heads of families and married persons filing separate returns pay:

2 percent on first $500
4 percent between $501 and $3,000
5 percent on more than $3,000

Married persons filing jointly pay:

2 percent on first $1,000
4 percent between $1,001 and $6,000
5 percent on more than $6,000

California spans a much wider range of taxpayers. Single persons and married persons filing separately pay:

1.25 percent on first $7,060
2.25 percent between $7,061 and $16,739
4.25 percent between $16,740 and $26,419
6.25 percent between $26,420 and $36,675
8.25 percent between $36,676 and $46,349
9.55 percent on more than $46,350

In California, married couples filing jointly simply double the percentage. The above percentages apply to taxable income, meaning that deductions can move you to a lower tax bracket.

To learn what the income tax rates and brackets are for your state, contact your state’s department of revenue.

I Heard That My Builder Will Be Handling My Escrow. How Can I Protect Myself?

It may be common for you to hear that the builder of the new home you will be buying will be handling the escrow for you. The builder may also be helping you with the mortgage to finance your new home. Are there certain safeguards you should look for? Who will be protecting your interest at the time of closing?

In many areas of the country, there are numerous new home construction projects underway. In Las Vegas, Nevada, for example, there are over 330 new home builders. It is typical for agents working for the builder to handle the closing. These agents will prepare all the necessary paperwork and help you find a lender. Often times, the builder may have an arrangement with a lender to help prequalify you for a loan. There is no problem with this arrangement and you will receive title insurance protection as if you were purchasing an existing home. If you are a first-time home buyer or feel that you would like someone working “for you” in your purchase, there are several things you can do.

You can work with a realtor who is independent of the builder. The real estate associate will be working for you, looking out for your best interests, and can help you negotiate price and terms with the builder. The associate can help you find legal counsel, if you want to have a legal opinion on your purchase agreement with the builder. Although buying directly from a new home builder can work just fine, there may be instances where you might want your own realtor involved in the transaction.

Upon completion of the home, you will want to walk thru the property, perform a final inspection, and perhaps have the house looked at by a building inspection company of your choice. There are many things to look for when buying new construction, such as wiring and plumbing and other systems being installed to code, proper installation of appliances, being certain that everything works as it should, including outside garden systems, such as sprinklers, pool heaters, garage door openers, and the like. You will want to be clear as to the warranties given on areas of the home such as the roof, appliances, heating and plumbing systems, pool and electrical systems. You may feel that you are confident to perform these inspections yourself, but with or without a real estate agent, a licensed outside building inspection company is typically well worth the cost to help you with your final inspection. A reputable inspection company will look at such specific structural issues as joists, roof trusses, radon vents, adequate sealed electrical outlets, adequate slope on plumbing drains, heating and cooling filter slots, any ductwork, and so on.

Certain items may not be installed by the time your closing is ready to take place. The trees in the front of the house may not be planted, the deck may not be fully painted or installed, or other items may not be finished. The builder may have a specified period of time in which to finish these items, but it is important that you have a signed agreement between yourselves and the builder as to what is agreed and who is to do what and by which date. It may be advisable to hold some money “in escrow” from the sales proceeds until the work is completed to your satisfaction.

It is important to be clear at your closing what your builder will be agreeing to do after the closing. There always seem to be some items which need to be repaired or replaced in a new home, perhaps a pipe that was not installed correctly, or an electrical outlet not wired to your specifications, but typically the builder allows for these contingencies, and will fix these problems without any question. Any defects which are found are probably not due to any intentional cost cutting by the builder, but rather a result of a lack of attention to detail or supervision. In some states, builders are required to offer a one-year warranty on any building code violations which are discovered. Many purchase agreements may state that the builder must construct the home according to good construction practice or industry standards, which may cover items which are not code related.

Check over your title insurance policy, checking boundary lines or any new fence lines. Check for any outstanding judgments or liens on the property. You may want to walk the property boundaries, checking for any easements which may have been created. Often in a new home community, easements and right-of-ways may be created for access purposes, and it is important that you understand where these easements and access pathways are located. There may be common shared areas in the development. Be sure to ask if you will be responsible for any monthly or annual charges to maintain these common areas. If your new home is in a gated community, ask to review the documents which govern the maintenance of the common areas.

You might ask if a discounted title insurance rate is available, as the builder may have recently purchased title insurance on the land and you may qualify for the lower rate. This discounted rate may be called a “binder or a re-issue” rate. Typically in a title insurance policy there will be a list of ‘Standard Exceptions.” Ask to have these exceptions deleted from the policy. The builder may need to sign an affidavit stating that there are no judgments or liens on the property. A Notice of Completion will typically be recorded concurrently with your deed and mortgage documents. When negotiating the purchase with the builder, get a copy of an estimate of possible closing costs from the agent who will be handling the closing. Look over the escrow and title fees carefully. Some of these fees may be a negotiable with the builder.

This column may not be resold, reprinted, resyndicated or redistributed without the written permission from Escrow Publishing Company.

Closing Checklists

Buyer’s Home Closing Checklist

Have you made a final walk-thru inspection of the property?
Is the condition of the house or property as it should be? Are there any personal property items left behind by the Seller. Is everything in working order? Did you order a Home Warranty policy for future repairs? If so, did you review that policy?
Are you satisfied that the Seller provided you with all required disclosure documents or any known defects on the property?
Have you carefully reviewed your mortgage closing documents? Are the lender’s closing costs as they represented they would be? Are there any “junk fees” added on that you do not agree to? Are the names correct on the mortgage or Deed of Trust documents?
Is the loan amount, interest rate, term of the loan, and prepayment penalty correctly stated? When will your first mortgage payment be due? Where will the payment be made?
Do you agree with the title fees being paid to the title company, attorney, or escrow agency? Are they the same as previously quoted to you?
Do you understand the prorations, those items or costs of which you will pay a portion of or be given a credit for? Are the prorated dates and amounts correct?
It is clear on which day you will take possession of the property? Will the Seller hand over the keys on the day of closing or at a later date?
Is the purchase price correct on the closing documents?
Have you been credited for all deposits put into escrow either by you or on your behalf?
Is your name correct on the grant deed? Is it spelled correctly, and does it include your correct middle initial? Is the manner in which you will take title stated correctly? Is the legal description of the property correct? Does this description conform with the one given in the title report? Are all the easements and rights-of-way properly listed?
Were any questionable items on the title report removed or explained to your satisfaction?
If there is any personal property included, are you being given a Bill of Sale, and do you agree with the items included?
Are you paying for fire insurance yourself outside of escrow or through the closing agent? Is the premium correct and is the policy for a full year?
Are the property taxes being paid in full? Ask when the next property tax bill will become due.
Does your state allow a Homestead exemption? If so, and you want to choose this option, ask how you file for Homestead exemption status.
Check that the return address on the Deed is where you will want the recorded Deed to be sent. (you will want to keep this official document in a safe place).

Seller’s Home Closing Checklist

Have you removed all your personal property items?
Have you left the property in the condition you promised you would?
Is the Sale Price and payoff information correct on your closing documents?
Were you given credit for any items agreed upon to be credited to your account?
Is a satisfaction of mortgage or payoff document being prepared for your old loan?
If you will be signing a Bill of Sale for personal property items, are those correct?
Are the prorations correct? Check the dates on these debit and credit items.
Do you know what day you must vacate the property? Is it the day of closing?
Have you agreed to perform any repairs or other work before or after closing?
Are the title and closing costs as you understood them to be?
Is the attorney fee, closing agent, transfer tax, or title insurance fees correct?
Did you correctly make any disclosures as required by your state or federal law to the new buyer? Or, did you sell the property in “as is” condition?
If there was a Realtor involved in the sale, is that fee correct?
Is any money being held back in escrow on your behalf? If so, how and when will it be released?

This column may not be resold, reprinted, resyndicated or redistributed without the written permission from Escrow Publishing Company.

State by State Closing Guide

This summary is merely a general reference guide. Local practices within your city or county may differ. Contact a local title company or real estate attorney for specific information.

This is not intended as a legal advice, but merely as a general reference guide.” For further explanation and an in-depth resource guide for your state refer to The Complete Guide to Your Real Estate Closing, available at www.amazon.com or sandygadow.com/order.html.

Please choose a state:
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ALABAMA

Attorneys and title companies handle closings. Conveyance is by warranty deed. Mortgages are the customary security instruments. Foreclosures are non-judicial. Foreclosure notices are published once a week for three weeks on a county-by-county basis. The foreclosure process takes a minimum of 21 days from the date of first publication. After the sale, there is a one-year redemption period. Alabamans use ALTA policies to insure titles. Buyers and sellers negotiate who is going to pay the closing costs and usually split them equally. Property taxes are due and payable annually on October 1st.

ALASKA

Title companies, lenders, and private escrow companies all handle real estate escrows. Conveyance is by warranty deed. Deeds of trust with private power of sale are the customary security instruments. Foreclosures take 90-120 days. Alaskans use ALTA owner’s and lender’s policies with standard endorsements. There are no documentary or transfer taxes. Buyer and seller usually split the closing costs. Property tax payment dates vary throughout the state.

ARIZONA

Title companies and title agents both handle closings. Conveyance is by warranty deed. Whereas deeds of trust are the security instruments most often used, mortgages and “agreements for sale” are used approximately 20% of the time. Foreclosure depends upon the security instrument. For deeds of trust, the foreclosure process takes about 91 days. Arizonans use ALTA owner’s and lender’s policies, standard or extended, with standard endorsements. The seller customarily pays for the owner’s policy, and the buyer pays for the lender’s policy. They split escrow costs otherwise. There are no documentary, transfer, or mortgage taxes. The first property tax installment is due October 1st and delinquent November 1st; the second half is due March 1st and delinquent May 1st. Arizona is a community-property state.

ARKANSAS

Title agents handle escrows, and attorneys conduct closings. Conveyance is by warranty deed. Mortgages are the customary security instruments. Foreclosure requires judicial proceedings, but there are no minimum time limits for completion. Arkansans use ALTA policies and endorsements and receive a 40% discount for reissuance of prior policies. Buyers and sellers pay their own escrow costs. The buyer pays for the lender’s policy; the seller pays for the owner’s. The buyer and seller split the state documentary tax. Property taxes come due three times a year as follows: the third Monday in April, the third Monday in July, and the tenth day of October.

CALIFORNIA
Not only do escrow procedures differ between Northern and Southern California, they also vary somewhat from county to county. Title companies handle closings through escrow in Northern California, whereas escrow companies and lenders handle them in Southern California. Conveyance is by grant deed. Deeds of trust with private power of sale are the security instruments used throughout the state. Foreclosure requires a three-month waiting period after the recording of the notice of default. After the waiting period, the notice of sale is published each week for three consecutive weeks. The borrower may reinstate the loan at any time prior to five business days before the foreclosure sale. All in all, the procedure takes about four months. Californians have both ALTA and CLTA policies available. In Southern California, sellers pay the title insurance premium and the transfer tax. Buyer and seller split the escrow costs. In the Northern California counties of Amador, Merced, Plumas, San Joaquin, and Siskiyou, buyers and sellers share title insurance and escrow costs equally. In Butte County, sellers pay 75%; buyers pay 25%. In Alameda, Calaveras, Colusa, Contra Costa, Lake, Marin, Mendocino, San Francisco, San Mateo, Solano, and Sonoma counties, buyers pay for the title insurance policy, whereas sellers pay in the other Northern California counties. Each California county has its own transfer tax; some cities have additional charges. Property taxes may be paid annually on or before December 10th, or semiannually by December 10th and April 10th. Annual taxes are set at no more than 1 percent of the property’s base value or purchase price. Each year following this, a two percent increase is permissible. (Proposition 13). A property transfer between husband and wife will not result in a new tax assessment of one percent of the fair market value.

The homeowner’s exemption allows an owner to be exempt of the first $7,000 of the property’s full cash value. This exemption is allowed only for primary residences. Homeowner must obtain a form from the county tax assessor, and submit it by February 15 of the current tax year to be eligible for the exemption. Californians over the age of 55 also have the option of moving primary residences and taking their prior “old” tax base with them to the new property. This exception may be used only once in a lifetime. Referred to as the” Senior Citizen’s Replacement Dwelling Benefit”, Proposition 60 was a constitutional amendment approved by the voters in 1986. It is codified in Section 69.5 of the Revenue & Taxation Code, and allows the transfer of an existing Proposition 13 base year value from a former residence to a replacement residence, if certain conditions are met. California is a community-property state.
COLORADO

Title companies, brokers, and attorneys all may handle closings. Conveyance is by warranty deed. Deeds of trust are the customary security instruments. Public trustees must sell foreclosure properties within 45-60 days after the filing of a notice of election and demand for sale, but they will grant extensions up to six months following the date of the originally scheduled sale. Subdivided properties may be redeemed within 75 days after sale; agricultural properties may be redeemed within 6 months after sale. The first junior lien holder has 10 additional days to redeem, and the second and other junior lienholders have an additional 5 days each. The public trustee is normally the trustee shown on the deed of trust, a practice unique to Colorado. Foreclosures may be handled judicially. Coloradans have these title insurance policy options: ALTA owner’s, lender’s, leasehold, and construction loan; endorsements are used, too. Although they are negotiable, closing costs are generally split between buyer and seller, and seller normally pays for title insurance. Sellers pay the title insurance premium and the documentary transfer tax. Property taxes may be paid annually at the end of April or semiannually at the ends of February and July.

CONNECTICUT

Attorneys normally conduct closings. Most often conveyance is by warranty deed, but quitclaim deeds do appear. Mortgages are the security instruments. Judicial foreclosures are the rule, either by a suit in equity for strict foreclosure or by a court decree of sale. Court decreed sales preclude redemption, but strict foreclosures allow redemption for 3-6 months, depending upon the discretion of the court. There are lender’s and owner’s title insurance policies available with various endorsements. Buyers customarily pay for examination and title insurance, while sellers pay the documentary and conveyance taxes. Property tax payment dates vary by town.

DELAWARE

Attorneys handle closings. Although quitclaim and general warranty deeds are sometimes used, most conveyances are by special warranty deeds. Mortgages are the security instruments. Foreclosures are judicial and require 90-120 days to complete. ALTA policies and endorsements are prevalent. Buyers pay closing costs and the owner’s title insurance premiums. Buyers and sellers share the state transfer tax. Property taxes are on an annual basis and vary by county.

DISTRICT OF COLUMBIA

Attorneys, title insurance companies, or their agents may conduct closings. Conveyances are by bargain-and-sale deeds. Though mortgages are available, the deed of trust, containing private power of sale, is the security instrument of choice. Foreclosures require at least six weeks and start with a 30-day notice of sale sent by certified mail. ALTA policies and endorsements insure title. Buyers generally pay closing costs, title insurance premiums, and recording taxes. Sellers pay the transfer tax. Property taxes fall due annually or if they’re less than $100,000, semiannually, on September 15th and March 31st.

FLORIDA

Title companies and attorneys handle closings. Conveyance is by warranty deed. Mortgages are the customary security instruments. Foreclosures are judicial and take about 3 months. They involve service by the sheriff, a judgment of foreclosure and sale, advertising, public sale, and finally issuance of a certificate of sale and certificate of title. ALTA policies are commonplace. Buyers pay the escrow and closing costs, while county custom determines who pays for the title insurance. Sellers pay the documentary tax. Property taxes are payable annually, but the due and delinquent dates are months apart, November 1st and April 1st. Under Florida law, a widow or widower has the right to live in their deceased spouse’s house for the remainder of his or her life, even if the home is willed to someone else. A Homestead Exemption exists for an owner’s residence in Florida. Florida’s exemption is unique because it lacks any monetary cap on the homestead protection, while other states which offer a homestead exemption usually place a limit on the valuation which can be protected.

GEORGIA

Attorneys generally take care of closings. Conveyance is by warranty deed. Security deeds are the security instruments. Foreclosures are non-judicial and take little more than a month because there’s a power of attorney right in the security deed. Foreclosure advertising must appear for 4 consecutive weeks prior to the first Tuesday of the month; that’s when foreclosure sales take place. Georgians use ALTA title insurance policies, including owner’s and lender’s, and they use binders and endorsements. Buyers pay title insurance premiums and also closing costs usually. Sellers pay transfer taxes. Property tax payment dates vary across the state.

HAWAII

By law, only attorneys may prepare property transfer documents, but there are title and escrow companies available to handle escrows and escrow instructions. Conveyance of fee-simple property is by warranty deed; conveyance of leasehold property, which is common throughout the state, is by assignment of lease. Condominiums are everywhere in Hawaii and may be fee simple or leasehold. Sales of some properties, whether fee simple or leasehold, are by agreement of sale. Mortgages are the security instruments. Hawaiians use judicial foreclosures rather than powers of sale for both mortgages and agreements of sale. These foreclosures take 6-12 months and sometimes more, depending upon court schedules. Title companies issue ALTA owner’s and lender’s policies and make numerous endorsements available. Buyers and sellers split escrow fees. Sellers pay the title search costs and the conveyance tax. Buyers pay title insurance premiums for the owner’s and lender’s policies. Property taxes come due twice a year, on February 20th and again on August 20th.

IDAHO

Closings are handled through escrow. Conveyance is by warranty deed or corporate deed, though often there are contracts of sale involved. Either mortgages or deeds of trust may be the security instruments. Deeds of trust which include power of sale provisions are restricted to properties in incorporated areas and properties elsewhere which don’t exceed 20 acres. After the notice of default has been recorded, deed-of-trust foreclosures take at least 120 days, and there’s no redemption period. Judicial foreclosures for mortgages take about a year, depending upon court availability, and there’s a 6-12 month redemption period after that, depending on the type of property involved. Idahoans use ALTA policies and various endorsements. Buyers and sellers split escrow costs in general and negotiate who’s going to pay the title insurance premiums. There are no documentary taxes, mortgage taxes, or transfer taxes, but there are property taxes, and they’re due annually in November and delinquent on December 20th or semiannually on December 20th and June 20th. Idaho is a community-property state.

ILLINOIS

Title companies, lenders, and attorneys may conduct closings, but only attorneys may prepare documents. Lenders generally hire attorneys and have them prepare all the paperwork. Conveyance is by warranty deed. Recorded deeds must include a declaration of the sales price. Mortgages are the customary security instruments. Judicial foreclosure is mandatory and takes at least a year from the filing of the default notice to the expiration of the redemption period. Illinoisans use ALTA policies. Buyers usually pay the closing costs and the lender’s title insurance premiums; sellers pay the owner’s title insurance premiums and the state and county transfer taxes. Property tax payment dates vary. Larger counties typically schedule them for March 1st and September 1st, and smaller counties schedule them for June 1st and September 1st.

INDIANA

Title companies, lenders, real estate agents, and attorneys handle closings. Conveyance is by warranty deed. Mortgages are the customary security instruments. Judicial foreclosures are required; execution of judgments varies from 3 months after filing of the complaint in cases involving mortgages drawn up since July 1, 1975, to 6 months for those drawn up between January 1, 1958, and July 1, 1975, to 12 months for those drawn up before that. Immediately following the execution sale, the highest bidder receives a sheriff’s deed. Hoosiers use ALTA policies and certain endorsements. Buyers usually pay closing costs and the lender’s title insurance costs, while sellers pay for the owner’s policy. There are no documentary, mortgage, or transfer taxes. Property taxes fall due on May 10th and November 10th.

IOWA

Attorneys may conduct closings, and so may real estate agents. Conveyance is usually by warranty deed. Mortgages and deeds of trust are both authorized security instruments, but lenders prefer mortgages because deeds of trust do not circumvent judicial foreclosure proceedings anyway. Those proceedings take at least 4 -6 months. Since Iowa is the only state which does not authorize private title title insurance, Iowans who want it must go through a state administered title company or fund. Buyers and sellers share the closing costs; sellers pay the documentary taxes. Property taxes are due July 1st based upon the previous January’s assessment.

KANSAS

Title companies, lenders, real estate agents, attorneys, and independent escrow firms all conduct closings. Anyone who conducts a title search must be a licensed abstracter, a designation one receives after passing strict tests and meeting various requirements. Because many land titles stem from Indian origins, deeds involving Indians as parties to a transaction go before the Indian Commission for approval. Conveyance is by warranty deed. Mortgages are the customary security instruments. Judicial foreclosures, the only ones allowed, take about 6 months from filing to sale. Redemption periods vary, the longest being 12 months. Kansans use ALTA policies and endorsements. Buyers and sellers divide closing costs. Buyers pay the lender’s policy costs and the state mortgage taxes; sellers pay for the owner’s policy. Property taxes come due November 1st, but they needn’t be paid in a lump sum until December 31st. They may also be paid in two installments, the first on December 20th and the second on June 20th.

KENTUCKY

Attorneys conduct closings. Conveyance is by grant deed or by bargain-and-sale deed. Deeds must show the name of the preparer, the amount of the total transaction, and the recording reference by which the grantor obtained title. Mortgages are the principal security instruments because deeds of trust offer no power-of-sale advantages. Enforcement of any security instrument requires a decree in equity, a judicial foreclosure proceeding. Kentuckians use ALTA policies and endorsements. Sellers pay closing costs; buyers pay recording fees. Responsibility for payment of title insurance premiums varies according to locale. Property taxes are payable on an annual basis; due dates vary from county to county.

LOUISIANA

Either attorneys or corporate title agents may conduct closings, but a notary must authenticate the documentation. Conveyance is by warranty deed or by act of sale. Mortgages are the security instruments generally used in commercial transactions, while vendor’s liens and seller’s privileges are used in other purchase money situations. Foreclosures are swift (60 days) and sure (no right of redemption). Successful foreclosure sale bidders receive an adjudication from the sheriff. Louisianians use ALTA owner’s and lender’s policies and endorsements. Buyers generally pay the title insurance and closing costs. There are no mortgage or transfer taxes. Property tax payment dates vary from parish to parish (parishes are like counties). Louisiana is a community-property state.

MAINE

Attorneys conduct closings. Conveyance is by warranty or quitclaim deed. Mortgages are the security instruments. Foreclosures may be initiated by any of the following: an act of law for possession; entering into possession and holding the premises by written consent of the mortgagor; entering peaceably, openly, and unopposed in the presence of two witnesses and taking possession; giving public notice in a newspaper for three successive weeks and recording copies of the notice in the Registry of Deeds, and then recording the mortgage within 30 days of the last publication; or by a bill in equity (special cases). In every case, the creditor must record a notice of foreclosure within 30 days. Judicial foreclosure proceedings are also available. Redemption periods vary from 90-365 days depending on the method of foreclosure. Mainers use ALTA owner’s and lender’s policies and endorsements. Buyers pay closing costs and title insurance fees; buyers and sellers share the documentary transfer taxes. Property taxes are due annually on April 1st.

MARYLAND

Attorneys conduct closings, and there has to be a local attorney involved. Conveyance is by grant deed, and the deed must state the consideration involved. Although mortgages are common in some areas, deeds of trust are more prevalent as security instruments. Security instruments may include a private power of sale, so it naturally is the foreclosure method of choice. Marylanders use ALTA policies and endorsements. Buyers pay closing costs, title insurance premiums, and transfer taxes. Property taxes are due annually on July 1st. Police officers in Prince George’s County who are first-time home buyers get a break on their transfer taxes at closing under a law that took effect July 1, 2006. Officers pay 1 percent of the purchase price rather than 14%, the regular rate. County school teachers were made eligible for the same tax break in an earlier law without the first-time buyer limitation. Teachers must commit to living in the house for at least three years and maintain their teaching position with the county during that time.

MASSACHUSETTS

Attorneys handle closings. Conveyance is by warranty deed in the western part of the state and by quitclaim deed in the eastern part. Mortgages with private power of sale are the customary security instruments. Creditors forced to foreclose generally take advantage of the private power of sale, but they may foreclose through peaceable entry (entering unopposed in the presence of two witnesses and taking possession for 3 years) or through the rarely used judicial writ of entry. Frequently, cautious creditors will foreclose through both power of sale and peaceable entry. People in Massachusetts use ALTA owner’s and lender’s title insurance policies and endorsements. Buyers pay closing costs and title insurance fees, except in Worcester, where sellers pay. Sellers pay the documentary taxes. Property taxes are payable in two installments, November 1st and May 1st.

MICHIGAN

Title companies, lenders, real estate agents, and attorneys may conduct closings. Conveyance is by warranty deed which must give the full consideration involved or be accompanied by an affidavit which does. Many transactions involve land contracts. Mortgages are the security instruments. Private foreclosure is permitted; it requires advertising for 4 consecutive weeks and a sale at least 28 days following the date of first publication. The redemption period ranges from 1 to 12 months. Michiganders use ALTA policies and endorsements. Buyers generally pay closing costs and the lender’s title insurance premium, and sellers pay the state transfer tax and the owner’s title insurance premium. Those property taxes which pay for city and school expenses fall due July 1st; others (county taxes, township taxes, and some school taxes) fall due on the first of December. In many tax jurisdictions, taxpayers may opt to pay their taxes in two equal installments without penalty.

MINNESOTA

Title companies, lenders, real estate agents, and attorneys may conduct closings. Conveyance is by warranty deed. Although deeds of trust are authorized, mortgages are the customary security instruments. The redemption period following a foreclosure is 6 months in most cases; it is 12 months if the property is larger than 10 acres or the amount claimed to be due is less than 2/3 of the original debt. This is a strong abstract state. Typically a buyer will accept an abstract and an attorney’s opinion as evidence of title, even though the lender may require title insurance. People in the Minneapolis-St. Paul area use the Torrens system. Minnesotans use ALTA policies. Buyers pay the lender’s and owner’s title insurance premiums and the mortgage tax. Sellers usually pay the closing fees and the transfer taxes. Property taxes are due on May 15th and October 15th.

MISSISSIPPI

Attorneys conduct real estate closings. Conveyance is by warranty deed. Deeds of trust are the customary security instruments. Foreclosure involves a non-judicial process which takes 21-45 days. Mississippians use ALTA policies and endorsements. Buyers and sellers negotiate the payment of title insurance premiums and closing costs. There are no documentary, mortgage, or transfer taxes. Property taxes are payable on an annual basis and become delinquent February 1st.

MISSOURI

Title companies, lenders, real estate agents, and attorneys may conduct closings. In the St. Louis area, title company closings predominate. In the Kansas City area, an escrow company or a title company generally conducts the closing. Conveyance is by warranty deed. Deeds of trust are the customary security instruments and allow private power of sale. The trustee must be named in the deed of trust and must be a Missouri resident. Foreclosure involves publication of a sale notice for 21 days, during which time the debtor may redeem the property or file a notice of redemption. The foreclosure sale buyer receives a trustee’s deed. Missourians use ALTA policies and endorsements. Buyers and sellers generally split the closing costs. Sellers in western Missouri usually pay for the title insurance polices, while elsewhere the buyers pay. There are no documentary, mortgage, or transfer taxes. Property taxes are payable annually and become delinquent January 1st for the previous year.

MONTANA

Real estate closings are handled through escrow. Conveyance is by warranty deed, corporate deed, or grant deed. Mortgages, deeds of trust, and unrecorded contracts of sale are the security instruments. Mortgages require judicial foreclosure, and there’s a 6-12-month redemption period following sale. Foreclosure on deeds of trust involves filing a notice of default and then holding a trustee sale 120 days later. Montanans use ALTA policies and endorsements. Buyers and sellers split the escrow and closing costs; sellers usually pay for the title insurance policies. There are no documentary, mortgage, or transfer taxes. Montanans may pay their property taxes annually by November 30th or semi-annually by November 30th and May 31st.

NEBRASKA

Title companies, lenders, real estate agents, and attorneys all conduct closings. Conveyance is by warranty deed. Mortgages and deeds of trust are the security instruments. Mortgage foreclosures require judicial proceedings and take about 6 months from the date of the first notice when they’re uncontested. Deeds of trust do not require judicial proceedings and take about 90 days. Nebraskans use ALTA policies and endorsements. Buyers and sellers split escrow and closing costs; sellers pay the state’s documentary taxes. Property taxes fall due April 1st and August 1st.

NEVADA

Escrow similar to California’s is used for closings. Conveyance is by grant deed, bargain-and-sale deed, or quitclaim deed. Deeds of trust are the customary security instruments. Foreclosure involves recording a notice of default and mailing a copy within 10 days. Following the mailing there is a 35-day reinstatement period. After that, the beneficiary may accept partial payment or payment in full for a 3-month period. Then come advertising the property for sale for 3 consecutive weeks and finally the sale itself. All of this takes about 4 1/2 months. Nevadans use both ALTA and CLTA policies and endorsements. Buyers and sellers share escrow costs. Buyers pay the lender’s title insurance premiums; sellers pay the owner’s and the state’s transfer tax. Property taxes are payable in one, two, or four payments, the first one being due July 1st. Nevada is a community-property state.

NEW HAMPSHIRE

Attorneys conduct real estate closings. Conveyance is by warranty or quitclaim deed. Mortgages are the customary security instruments. Lenders may foreclosure through judicial action or through whatever power of sale was written into the mortgage originally. Entry, either by legal action or by taking possession peaceably in the presence of two witnesses, is possible under certain legally stated conditions. There is a one-year right-of-redemption period. The people of New Hampshire use ALTA owner’s and lender’s policies. Buyers pay all closing costs and title fees except for the documentary tax; that’s shared with the sellers. Property tax payment dates vary across the state.

NEW JERSEY

Attorneys handle closings in northern New Jersey, and title agents customarily handle them elsewhere. Conveyance is by bargain-and-sale deed with covenants against grantors’ acts (equivalent to a special warranty deed). Mortgages are the most common security instruments though deeds of trust are authorized. Foreclosures require judicial action which take 6-9 months if they’re uncontested. New Jerseyites use ALTA owner’s and lender’s policies. Both buyer and seller pay the escrow and closing costs. The buyer pays the title insurance fees, and the seller pays the transfer tax. Property taxes are payable quarterly on the first of April, July, October, and January.

NEW MEXICO

Real estate closings are conducted through escrows. Conveyance is by warranty or quitclaim deed. Deeds of trust and mortgages are the security instruments. Foreclosures require judicial proceedings, and there’s a 9-month redemption period after judgment. New Mexicans use ALTA owner’s policies, lender’s policies, and construction and leasehold policies; they also use endorsements. Buyers and sellers share escrow costs equally; sellers pay the title insurance premiums. There are no documentary, mortgage, or transfer taxes. Property taxes are payable November 5th and April 5th. New Mexico is a community-property state.

NEW YORK

All parties to a transaction appear with their attorneys for closing. Conveyance is by bargain-and-sale deed. Mortgages are the security instruments in this lien-theory state. Foreclosures require judicial action and take several months if uncontested or longer if contested. New Yorkers use policies of the New York Board of Title Underwriters almost exclusively, though some use the New York State 1946 ALTA Loan Policy. Buyers generally pay most closing costs, including all title insurance fees and mortgage taxes. Sellers pay the state and city transfer taxes. Property tax payment dates vary across the state.

NORTH CAROLINA

Attorneys or lenders may handle closings, and corporate agents issue title insurance. Conveyance is by warranty deed. Deeds of trust with private power of sale are the customary security instruments. Foreclosures are non-judicial, with a 10-day redemption period following the sale. The entire process takes between 45 and 60 days. North Carolinians use ALTA policies, but these require an attorneys opinion before they’re issued. Buyers and sellers negotiate the closing costs, except that buyers pay the recording costs, and sellers pay the document preparation and transfer tax costs. Property taxes fall due annually on the last day of the year.

NORTH DAKOTA

Lenders, together with attorneys, conduct closings. Conveyance is by warranty deed. Mortgages are the security instruments. Foreclosures require about 6 months, including the redemption period. North Dakotans base their title insurance on abstracts and attorneys’ opinions. Buyers usually pay for the closing, the attorney’s opinion, and the title insurance; sellers pay for the abstract. There are no documentary or transfer taxes. Property taxes are due March 15th and October 15th.

OHIO

Title companies and lenders handle closings. Conveyance is by warranty deed. Dower rights require that all documents involving a married person must be executed by both spouses. Mortgages are the security instruments. Judicial foreclosures, the only kind allowed, require about 6-12 months. People in Ohio use ALTA policies; they get a commitment at closing and a policy following the recording of documents. Buyers and sellers negotiate who’s going to pay closing costs and title insurance premiums, but sellers pay the transfer taxes. Property tax payment dates vary throughout the state.

OKLAHOMA

Title companies, lenders, real estate agents, and attorneys may conduct closings. Conveyance is by warranty deed. Mortgages are the usual security instruments. Foreclosures may be by judicial action or by power of sale if properly allowed for in the security instrument. Oklahomans use ALTA policies and endorsements. Buyers and sellers share the closing costs, except that the buyer pays the lender’s policy premium, the seller pays the documentary transfer tax, and the lender pays the mortgage tax. Property taxes may be paid annually on or before the last day of the year or semi-annually by December 31st and March 31st.

OREGON

Closings are handled through escrow. Conveyance is by warranty or bargain-and-sale deed, but land sales contracts are common. Mortgage deeds and deeds of trust are the security instruments. Oregon attorneys usually act as trustees in non-judicial trust-deed foreclosures. Such foreclosures take 5 months from the date of the sale notice; defaults may be cured as late as 5 days prior to sale. Judicial foreclosures on either mortgages or trust deeds allow for a one-year redemption period following sale. Oregonians use ALTA and Oregon Land Title Association policies. Buyers and sellers split escrow costs and transfer taxes; the buyer pays for the lender’s title insurance policy, and the seller pays for the owner’s policy. Property taxes are payable the 15th of November, February, and May; if paid in full by November 15th, owners receive a 3% reduction.

PENNSYLVANIA

Title companies, real estate agents, and approved attorneys may handle closings. Conveyance is by special or general warranty deed. Mortgages are the security instruments. Foreclosures take 1-6 months from filing through judgment plus another 2 months or more from judgment through sale. State law restricts aliens in owning real property with respect to acreage and income and includes special restrictions affecting farmland. Pennsylvanians use ALTA owner’s, lender’s, and leasehold policies. Buyers pay closing costs and title insurance fees; buyers and sellers split the transfer taxes. Property tax payment dates differ across the state.

RHODE ISLAND

Attorneys usually conduct closings, but banks and title companies may also conduct them. Conveyance is by warranty or quitclaim deed. Mortgages are the usual security instruments. Foreclosures follow the power-of-sale provisions contained in mortgage agreements and take about 45 days. Power-of-sale foreclosures offer no redemption provisions, whereas any other foreclosure method carries a 3-year right of redemption. Rhode Islanders use ALTA policies and endorsements. Buyers pay title insurance premiums and closing costs; sellers pay documentary taxes. Property taxes are payable annually, semi-annually, or quarterly with the first payment due in July.

SOUTH CAROLINA

Attorneys customarily handle closings. Conveyance is by warranty deed. Mortgages are most often the security instruments. Foreclosures are judicial and take 3-5 months depending on court schedules. Foreclosure sales take place on the first Monday of every month following publication of notice once a week for 3 consecutive weeks. South Carolinians use owner’s and lender’s ALTA policies and endorsements. Buyers pay closing costs, title insurance premiums, and state mortgage taxes; sellers pay the transfer taxes. Property tax payment dates vary across the state from September 15 to December 31.

SOUTH DAKOTA

Title companies, lenders, real estate agents, and attorneys may handle closings. Conveyance is by warranty deed. Mortgages are the usual security instruments. Foreclosures may occur through judicial proceedings or through the power-of-sale provisions contained in certain mortgage agreements. Sheriff’s sales follow publication of notice by 30 days. The redemption period allowed after sale of parcels smaller than 40 acres and encumbered by mortgages containing power of sale is 180 days; in all other cases, it’s a year. There’s a unique statute which stipulates that all land must be platted in lots or described by sectional references rather than by metes and bounds unless it involves property described in documents recorded prior to 1945. There’s another unique statute called the Affidavit of Possession Statute. Certain exceptions aside, it provides that any person having an unbroken chain of title for 22 years thereafter has a marketable title free of any defects occurring prior to that 22-year period. South Dakotans use ALTA policies and endorsements. Sellers pay the transfer taxes and split the other closing costs, fees, and premiums with the buyers. Property taxes come due May 1st and November 1st.

TENNESSEE

A title company attorney, a party to the contract, a lender’s representative, or an outside attorney may conduct a closing. Conveyance is by warranty or quitclaim deed. Deeds of trust are the customary security instruments. Foreclosures, which are handled according to trustee sale provisions, are swift, that is, 22 days from the first publication of the notice until the public sale, and there is normally no right of redemption after that. Tennesseans use ALTA policies and endorsements. The payment of title insurance premiums, closing costs, mortgage taxes, and transfer taxes varies according to local practice. Property taxes are payable annually on the first Monday in October.

TEXAS

Title companies normally handle closings. Conveyance is by warranty deed. Deeds of trust are the most common security instruments. Following the posting of foreclosure sales at the local courthouse for at least 21 days, the sales themselves take place at the courthouse on the first Tuesday of the month. Texans use only Texas standard policy forms of title insurance. Buyers and sellers negotiate closing costs. There aren’t any documentary, transfer, or mortgage taxes. Property taxes notices are send around October 1st, but are not due until the end of the year. Texas is a community-property state.

UTAH

Lenders handle about 60% of the escrows and title companies handle the rest. Conveyance is by warranty deed. Mortgages and deeds of trust with private power of sale are the security instruments. Mortgage foreclosures require judicial proceedings which take about a year; deed-of-trust foreclosures take advantage of private power-of-sale provisions and take about 4 months. Utahans use ALTA owner’s and lender’s policies and endorsements. Buyers and sellers split escrow fees, and sellers pay the title insurance premiums. There are no documentary, transfer, or mortgage taxes. Property taxes are payable November 30th.

VERMONT

Attorneys take care of closings. Conveyance is by warranty or quitclaim deed. Mortgages are the customary security instruments, but large commercial transactions often employ deeds of trust . Mortgage foreclosures require judicial proceedings for „strict foreclosure‰; after sale, there is a redemption period of one year for mortgages dated prior to April 1, 1968, and 6 months for all others. Vermonters use ALTA owner’s and lender’s policies and endorsements. Buyers pay recording fees, title insurance premiums, and transfer taxes. Property tax payment dates vary across the state.

VIRGINIA

Attorneys and title companies conduct real estate closings. Conveyance is by bargain-and-sale deed. Deeds of trust are the customary security instruments. Foreclosure takes about 2 months. Virginians use ALTA policies and endorsements. Buyers pay the title insurance premiums and the various taxes. Property tax payment dates vary.

WASHINGTON

Title companies, independent escrow companies, lenders, and attorneys may handle escrows. An attorney must prepare real estate documents, but there is a limited practice rule which lets licensed non-attorneys prepare most of the commonly used real estate documents. Conveyance is by warranty deed. Both deeds of trust with private power of sale and mortgages are used as security instruments. Mortgages require judicial foreclosure. Deeds of trust require that a notice of default be sent first and 30 days later, a notice of sale. The notice of sale must be recorded, posted, and mailed at least 90 days before the sale, and the sale cannot take place any earlier than 190 days after the actual default. Sellers generally pay the title insurance premiums and the revenue tax; buyers and sellers split everything else. Property taxes are payable April 30th and October 31st. Washington is a community-property state.

WEST VIRGINIA

Attorneys conduct escrow closings, although lenders and real estate agents do them occasionally. Conveyance is by warranty deed, bargain-and-sale deed, or grant deed. Deeds of trust are the customary security instruments. Foreclosures are great for lenders; when uncontested, they take only a month. West Virginians use ALTA policies and endorsements. Buyers pay the title insurance premiums and sellers pay the documentary taxes; they divide the other closing costs. Property taxes may be paid in a lump sum after July 6th or in two installments on September 1st and March 1st.

WISCONSIN

Lenders and title companies conduct what are called “table closings” throughout the state, except in the Milwaukee area, where attorneys conduct the closings. Conveyance is by warranty deed, but installment land contracts are used extensively, too. Mortgages are the customary security instruments. Within limits, the actual mortgage wording determines foreclosure requirements; redemption varies from 2 months for abandoned property to a full year in some cases. Lenders generally waive their right to a deficiency judgment in order to reduce the redemption period to 6 months. Wisconsinites use ALTA policies and endorsements. Buyers generally pay closing costs and the lender’s policy fees; sellers pay the owner’s policy fees and the transfer taxes. In transactions involving homesteads, conveyances may be void if not joined into by the spouse. Property taxes may be paid in full on February 28th, or they may be paid half on January 31st and half on July 31st. Wisconsin is a quasi-community-property state.

WYOMING

Real estate agents generally conduct closings. Conveyance is by warranty deed. Mortgages are the usual security instruments. Foreclosures may follow judicial or power-of-sale proceedings. Residential foreclosures take around 120 days; agricultural foreclosures, around 13 months. Wyomingites use ALTA owner’s and lender’s policies and endorsements. Buyer and seller negotiate who’s going to pay the various closing costs and title insurance fees. There are no documentary, mortgage, or transfer taxes. Property taxes may be paid annually December 31st or semi-annually September 1st and March 1st.

Sandy Gadow

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