What if you are suffering flooding and damage to your property from water running off from your neighbor’s property? Is your neighbor liable? Must your neighbor take action to avert the water runoff?

In the District of Columbia, the neighbor is most likely not liable. This is because the District of Columbia follows a modified version of the "Common Enemy" rule.

The Common Enemy rule holds that excessive rainwater is a "common enemy" impacting property at random and you are expected to take measures to protect your own property from coursing water; even if the higher ground neighbor diverted water to prevent flooding and deposited the water onto your land.

The modified version of this rule recognized in the District of Columbia provides an exception such that your neighbor may repel or deflect water to prevent flooding on his own property only to the extent that the deflection is of ordinary use. That is, your neighbor may not deflect or divert the water with the use of drainage piping, ditches, man-made channels, or extraordinary construction.

However, in the case of "extraordinary construction," a DC appellate court (see Ballard v. Ace Wrecking Company, 289 A.2d 888 (D.C. Ct. App. 1972)) ruled against the flood-damaged neighbor after the neighboring property improvements had been demolished and graded. The court stated that because the work was not unusual or extraordinary, the neighbor could not be held liable.

While Affiliated Business Arrangements (also known as a The Legal Kickback) between settlement companies and real estate brokers have been much discussed and criticized over the years as anti-consumer, they continue to permeate the market.

Here is yet another kickback scheme – the Marketing Services Agreement (MSA), which is becoming more popular among real estate brokerages (i.e., brokers) and self-described "independent" title companies, also referred to as the broker's Preferred Partner.

Here’s how it works. Example: Acme Title Co. approaches Beta Real Estate Co. and offers to pay $20,000.00 per year to Beta for the following so-called services:

• Acme Title Co. to be designated the exclusive preferred settlement service provider by Beta
• Acme Title Co. logo and website link to be prominently displayed on Beta’s website
• Acme Title Co. signage and marketing materials to be placed and distributed with Beta’s sales offices and on for sale signs
• Acme Title Co. settlement services offer to appear on all Beta’s home listings
• Beta grants Acme Title Co. the exclusive right to make monthly presentations to its real estate agents
• Beta to place Acme promotional materials in all buyer packets presented by Beta to its clients

These "services" would be better described as "privileges" since the truth is that Acme Title Co. is buying exclusive access to the referral sources (i.e., Beta’s sales agents). It’s an effort to gain "face-time" with those sales agents who are in the best position to refer homebuyers to the title company.

The consumer, in this case a homebuyer, is most likely to use the title company recommended by the sales agent and may never know or realize that she has a right to shop around and choose her own title company.

At the end of the day, this is little more than a kickback from a service provider to a referral source in exchange for access. Is it legal?

Most MSAs are not administered in a legal manner. RESPA Section 8 prohibits a Broker from receiving a thing of value for a referral. Thus, if the marketing fee ($20,000 per year in this example) is based on anything other than the actual value of the marketing services performed by the Beta on behalf of Acme, then the arrangement would be in violation of federal law.

In other words, would an independent consultant value Beta’s efforts to market and promote Acme’s services at $20,000. The answer is most likely "NO."

Ideally, the Consumer Financial Protection Board (CFPB), with oversight of RESPA compliance matters and its army of nearly 1,000 employees, will better scrutinize these Marketing Services Agreements and Affiliated Business Arrangements. As its name implies, the CFPB was established to protect the consumer.

Let’s hope the CFPB follows its charter.

Recently an article appeared in the Washington Post by our colleague Harvey Jacobs about the influx of third-party "vetting" firms that seem to have capitalized on a jittery lending community.

For a fee, these so-called "vetters" claim they will conduct a due diligence investigation into the practices and procedures of a settlement service provider. Then they will assign a score to that settlement company as low-, medium- or high-risk.

The fee is picked up by the settlement company. In exchange, agents are promised preferential access to lenders, who use these index scores to determine if a settlement company is reputable or risky.

Speaking as an owner of an established title company, I am in support of these vetting companies spawned by the CFPB's Bulletin 2012-03. First, as Mr. Jacobs notes, we will simply pass along the costs to the consumer (yes, the consumer will pay more). Second, since we are a well established company, these new requirements will serve to heighten the barrier to marketplace entry for our prospective competitors; hence, limiting the number of competitors such that we would be able to extract an un-challenged premium from our clientele.

Now, speaking as someone advocating for the consumer and a healthier marketplace, I oppose these new requirements. These private vetting companies specifically cite the CFPB Bulletin and the Dodd-Frank Act as predicates to the requirements under their business model.

The $2 billion in title company fraud cited by a "concerned industry insider" in response to Mr. Jacobs's article occurred under current regulatory schemes which include

1. Issuance of closing protection lenders/insured closing letters to lenders
2. State licensing codes established in all 50 states
3. Criminal background checks and fingerprint record requests
4. Successful completion of state-mandated license examinations
5. Annual continuing education requirements
6. Appointment application requirements from the title agent's respective title underwriter
7. Mandatory errors and omissions coverage
8. Fidelity and surety bond coverage requirements
9. Annual escrow audits and quality control reviews performed by the agent's respective title underwriter
10. Unfair trade practices and other consumer protection statutes
11. State-mandated escrow and quality control audits.

As you can see, the title industry is already one of the most heavily regulated industries and, to consider the title industry's handling of over $1 trillion in assets per year, the $2 billion in fraud previously cited pales in comparison to other industries.

You will never "regulate out" bad actors in any industry.

These new requirements are a mere act of redundancy. The quality control processes contemplated by these vetting companies are already being performed by state insurance departments and licensed title insurance underwriters.

They serve no useful purpose other than to squeeze more money out of the transaction at the expense of the consumer and at the risk of stifling competition in the marketplace.

A healthy marketplace encourages competition, and competition encourages more transparency and innovation. CFPB should immediately issue further guidance to its bulletin to address the redundancy and unnecessary nature of these budding third-party vetting companies.

Please keep in mind that attending settlement is always the best solution, but we understand that sometimes a situation might arise where you will be out of town on the closing date.

If you are the buyer and, you cannot attend settlement, here are some potential solutions. Click beyond the jump to continue reading.

There is a lot of confusion regarding attorneys and the perception of their role when a buyer is purchasing or a seller is selling a house or other property in Miami or anywhere else in Florida.

Below is a summary of several common misunderstandings related to the purchase and sale of properties in Miami and Florida which is intended to provide buyers and sellers with a better understanding as to the role of real estate attorneys and the benefits they can provide to buyers and sellers.

1. Attorneys kill deals

The most common misunderstanding in Florida real estate transactions is that attorneys cause deals to fall apart. This is entirely untrue. In fact, attorneys are trained to facilitate real estate transactions and get them to close as efficiently as possible. The most common reasons real estate transactions do not close are material defects in the title of the property which cannot be cured and the failure of the buyer and the seller to agree on certain material terms of the deal. Florida real estate attorneys have the unique ability and training to spot both apparent and hidden issues with the property which if not properly addressed prior to closing can be large, expensive, and time consuming problems for both the buyer and the seller after the closing.

2. A Florida real estate attorney is more expensive than a title company

The second most common misunderstanding is that attorneys are expensive and cost more than a title company. This is untrue as well. In Florida both attorneys and non-attorney title companies can act as the title and closing agent in a real estate transaction. The promulgated rate for the title insurance premium is the same everywhere in Florida. The closing fees charged by Florida attorneys for conducting the closing are usually the same as those charged by a title company. In fact, in many cases the total charges of Florida attorneys acting as title and closing agents are less than those charged by a title company with the additional benefit of the protection only an attorney can provide.

3. An attorney charges an attorney’s fee in addition to the title charges

When most Florida attorneys handle the title insurance side of a routine real estate transaction, in many cases they do not charge an additional attorney fee. However, some transactions are not routine and require additional services that only an attorney can perform such as clearing material title issues. In cases such as these, a reasonable attorney’s fee is charged for these additional services, and when the attorney is also acting as the title and closing agent these attorney’s fees are typically less than those that would be charged by an attorney not handling the closing.

4. In Florida an attorney is not needed for a real estate closing because the title company handles everything

A title company is prohibited by law from giving legal advice, so if a counter party is trying to get out of a contract, or a buyer does not know how to take title to the property, or a title issue exists, the title company cannot help with this. An attorney will be needed for these and many other matters which can arise, and that will cost extra if a non-attorney title company is involved. For these reasons, many other States require the buyer and seller to be represented by an attorney in a real estate transaction. It only make sense to have a Florida real estate lawyer handle the whole transaction from the beginning which will likely save money in the long run and will provide the additional protection a title company cannot, by law, provide.

5. Every Florida title company is operated or owned by an attorney

There is no requirement that a Florida title company must be operated or owned by an attorney. In fact, many Florida title companies are owned and operated only by a Florida licensed title insurance agent, and that person does not need to be an attorney. Florida licensed title insurance agents only need to attend a 40 hour classroom course in title insurance to satisfy the education requirement to become a title agent. Florida attorneys, on the other hand, need to not only have a college degree, but must also spend an additional 3 years in rigorous study in law school, pass a 2-day bar exam, and continuously expand their knowledge and skills through continuing legal education. Additionally, Florida real estate attorneys have certain fiduciary duties and obligation to place the interests of their clients first which Florida title companies do not have.

6. A buyer or property owner in Florida cannot choose who will be handling their closing

This is absolutely untrue as well. Federal law provides that a person buying a property or refinancing a property has an absolute right to select their own title and settlement agent. This is intended to ensure that the buyer’s and the owner’s interest is protected instead of being compromised by the influence of other interested parties in a transaction. The only way to ensure that a buyer’s and an owner’s interest is fully protected is for them to choose who will be handling their closing.

You cannot maintain a Homestead Deduction on a non-owner occupied property. If you no longer occupy a property that currently receives the Homestead Deduction benefit, you must complete and submit this Cancellation of Homestead Benefit form.

Under the following circumstances you should likely cancel your DC Homestead Deduction if you recently:

• moved out of the property and are now renting the property
• purchased another property in the District of Columbia and filed for a DC Homestead Deduction on the new property.
• declared another property you own (in DC or in another state) as your new principal residence

Don’t get caught up in the District of Columbia’s Homestead Deduction Audit Program or it could cost you dearly.

For Maryland homeowners who wish to submit their one-time application to confirm eligibility for the homestead tax credit, the deadline is finally approaching. 

Every principal residence homeowner in Maryland should follow these steps to make sure that their property is registered and eligible for the homestead tax credit:

Step 1: Check your status

Visit the Maryland State Department of Assessments & Taxation (SDAT) Real Property Data Search page. Select the county and search either by Street Address, Map/Parcel, Property Account Identifier or Property Sales (typically Street Address is the easiest way to search). 

Once you have entered the information, the tax record for your property will appear. At the bottom of the record, a separate category appears called Homestead Application Information, and beneath that category is the Homestead Application Status. 

There are four status categories: Approved (with date of approval); Application received (but not yet processed); No application; or Application denied.

If your application is listed as approved, you previously filed the homestead and have nothing further to do. If it is "received," you should check back to make sure it is approved. If your status states "no application," continue to Step 2. If the application has been denied and you disagree with the denial, you should contact the Homestead Division to contest the denial: 

Homestead Division
Telephone: 410-767-2165
1-866-650-8783

Fax: 410-225-9344
Email:  This email address is being protected from spambots. You need JavaScript enabled to view it.

Step 2: File application

There are three ways to file the Homestead Eligibility Application:

1. File electronically. To file electronically, you will first have to send an email request to  This email address is being protected from spambots. You need JavaScript enabled to view it. .  In your email, make sure to include the following information: the purpose of the email (to electronically file the Homestead Eligibility Application), your name, property address and county. 
   
   You will receive an email response with your real property account number and an access number with a link to file electronically and will need to enter both the account number and the access number in order to use the link. It could take up to a week to receive a response back after you submit your request. Immediately upon filing through the link, you will receive back an automated email confirmation, which you should keep for your records.
   
   
2. File by mail. To file by mail, print and mail the completed application to:
   
   Department of Assessments and Taxation
   Homestead Tax Credit Division
   301 West Preston Street, 8th Floor
   Baltimore, MD 21201

3. File by fax. You can also print out the application using the above link and fax in the application to 410-225-9344. Make sure you keep a fax confirmation.

Do not print out the application, complete it and email it to SDAT. The only way to file electronically is to follow the above directions – they will not accept a scanned and emailed application.

After submitting your application, keep checking your SDAT records by following Step 1 above to make sure that your application is approved. It can take several weeks from the application submission before the status shows up as approved, so make sure to keep copies of all correspondence. 

Click beyond the jump for background on Maryland's homestead tax credit. 

When purchasing a home in Miami or anywhere else in South Florida there are numerous fees, costs and expenses which get allocated between the buyer and the seller on the closing statement (or HUD-1 Settlement Statement).

These items are called closing costs and are typically allocated according to local custom or are, at times, negotiated between the buyer and the seller. Below is a list of the typical closing costs paid by both the buyer and the seller in a typical residential real estate transaction in Miami and South Florida.

It is advisable for a buyer or a seller to engage the services of an experienced Florida real estate attorney prior to signing the purchase and sale contract to not only review the terms of the contract, but also to make sure that these various closing costs are properly allocated between the buyer and the seller in the contract.

Buyer closing costs

Customary buyer closing costs include:

• Down payment
• Title insurance
• Documentary stamps on the note
• Intangible tax on the mortgage
• Loan fees
• Prepaid interest
• Inspection fees
• Appraisal
• Survey fee
• Mortgage insurance
• Hazard insurance

Seller closing costs

Customary seller closing costs include:

• Loan payoff
• Broker's commission
• Documentary stamps on the deed
• Prorated real property taxes
• Title search fee
• Lien search fee

As a highly experienced Florida real estate law firm and title company, Federal Title continually guides both buyers and sellers regarding the proper allocation of closing costs and makes sure that what the parties contracted for is properly reflected on the closing statement at the time of closing so that there are no surprises on the day of closing.

After 16 years of handling real estate closings, I could easily provide 100 examples of why a borrower, whether a homebuyer or a refinancing homeowner, should choose a local title company rather than allowing a national "out-of-town" title company to handle your real estate closing. But allow me to just give you 3 simple and basic reasons.

1. Duty of Care

In reviewing title work over the years, I have witnessed countless cases of national title companies failing to release paid mortgages/liens from a homeowner’s title records, only to be cleaned up by our office – a local title company.

In addition, I have often dealt with faulty deeds, unpaid real estate taxes, and other improper filings by the national title companies due to the national title company’s failure to understand or adhere to local laws and customs.

These mistakes leave the homeowner with defective title and often present hardship to the homeowner when attempting to re-sell or refinance their property. As a hometown title company, Federal Title & Escrow Company has a vested interest in maintaining healthy and accurate local real estate records

2. Performance

National "out-of-town" title companies often dispatch an inexperienced, non-attorney, notary public to your home or place of business to conduct the closing. In contrast, when you choose Federal Title & Escrow Company, as a local title company, you get an experienced and licensed real estate attorney to conduct your closing for the same (or often less) closing fee – get a quote and compare.

3. Accountability

A local "hometown" title company has a reputation to defend and must answer to the local community in order to preserve that reputation. Their business relies on referrals from the community which includes neighbors, friends, family, real estate agents, and local lenders.

We're about to see some big changes regarding the delivery of HUD-1 Settlement Statements and Truth-in-Lending Disclosures, which could result in added cost and closing delays for homebuyers, if the Consumer Financial Protection Bureau's new rules go into effect as proposed.

The CFPB rule would merge the HUD-1 and TILA forms, which together total five pages, into a single five-page document known as a Closing Disclosure form. The proposed rule would also require lenders to deliver the Closing Disclosure to consumers instead of settlement companies.

Allowing this rule to go into effect will only wind up costing the consumer more while upping the chances for settlement delays, which is why I'm encouraging you to take a minute before November 6 to voice your comments to the CFPB.

How is the CFPB's proposed rule bad for the consumer?

Compared to the current HUD-1, the proposed Closing Disclosure re-categorizes and re-numbers all closing costs and prepaid items, rendering current settlement software, merge documents and disbursement coding useless while delivering very little (if any) benefit to the consumer.

Lenders and settlement service providers already invested substantially in upgrades for software and re-training of staff about three years ago and are now being asked to do so again.

We were told then such changes would make homebuying more transparent for the consumer, but the reality is they have only made homebuying more expensive for the consumer.

But perhaps the biggest change – with negative consequences to the consumer — is CFPB’s proposal that the Closing Disclosure be prepared and delivered by the lender instead of the settlement company, which will leave the closing process more vulnerable to delays.

Currently, the lender sends its instructions to the settlement company and it is then the settlement company’s responsibility to prepare the final HUD-1 and deliver it to the homebuyer and all other parties to the transaction.

Under CFPB’s option for preparation and delivery of the Closing Disclosure, here is the drill:

1. At least 3 days prior to closing, the settlement company prepares and sends a draft Closing Disclosure to the lender.
2. The lender manually transcribes (since there is no universal sharing of software between lenders and settlement companies) various line items from the settlement company’s draft Closing Disclosure. This will lead to the potential for numerous errors.
3. Lender then sends transcribed Closing Disclosure to the homebuyer (not to the real estate agent or any other party) and the settlement company.
4. The settlement company then has to transcribe the final lender numbers into its disbursement software production, check for accuracy, and check for proper escrow/disbursement balancing.
5. On the day of closing, even the slightest change in numbers (i.e., addition of home warranty, seller credit, termite report, etc.) would require notification of the lender to re-prepare the Closing Disclosure and return to the settlement company in order to commence with the settlement. In our experience, closings will be delayed by at least 1 hour for even the slightest of change to the Closing Disclosure.

The proposed rule change will result in a more costly and potentially more frustrating homebuying experience for your client, which is why I strongly encourage you to submit a comment to the CFPB before November 6.

Tell them we want to make real estate closings easier — not harder!

Homebuyers and refinancing homeowners are often confused at closing about their mortgage lender escrow/reserve requirements.

Typically if a homebuyer’s down payment amount is less than 20% or a refinancing homeowner’s equity is less than 20%, a lender will require the homebuyer to maintain a reserves account controlled by the lender for the purpose of paying homeowner’s insurance premiums and real estate taxes.

The lender has good reason to make sure homeowner’s insurance premiums are paid in since the lender is also a named insured under the policy. Equally important to the lender, real estate taxes must be paid in order to avoid a tax lien, which would become a priority lien over the lender’s mortgage lien.

For the purposes of this discussion, we will only focus on real estate taxes.

A lender will require the homebuyer to put down a deposit at the time of closing to establish the escrow/reserves account such that the lender has enough money to pay the future real estate tax bills.

Beginning with the homebuyer’s first monthly principal and interest mortgage payment, the lender will include 1/12th of the annual real estate taxes.

The escrow/reserves deposit is calculated based on the number of months before the next tax bill is due against the number of months the lender will have collected through the mortgage payments from the date of closing.

For example, if you are closing in January then your first mortgage payment will be due on March 1. Yes, that’s correct – March 1 – because the lender will collect prepaid interest from the date of closing through January 31. That makes your first payment due on March 1 because mortgage interest is paid in arrears.

Your March 1 payment will cover the interest that will have accrued in the month of February.

So if you close in the month of January and the next semi-annual (6 mos.) tax bill is due on July 15, the lender will require a real estate tax escrow/reserves deposit equal to 3 months worth of taxes.

This is because from March 1 through July 1 you will have contributed 5 months worth of real estate taxes through your mortgage payments and with 3 months already deposited into the escrow/reserves account at the time of closing, the lender will have a total of 8 months worth of real estate taxes in order to pay the 6 month tax bill.

But wait! Why does the lender have 8 months worth of taxes when they only need 6 months worth of taxes in order to pay the bill? Well, by law, the lender is allowed a 2 month cushion in order to help cover for any sudden real property tax re-assessments or other supplemental tax bills.

In order to better assist homebuyers or refinancing homeowners in calculating how many months will be required by their lender as a deposit for real estate tax escrow/reserves, I have created the following charts below for properties in District of Columbia, Maryland, Virginia and Florida.

DC Tax Periods
1st Half 10/1-3/31 (Due 3/15 -Paid in Arrears)
2nd Half 4/1-9/30 (Due 9/15 - Paid in Arrears)

MD Tax Periods
1st Half 7/1-12/31 (Due 9/30 - Paid in Advance)
2nd Half 1/1-6/30 (Due 12/15 -Paid in Advance)

Arlington, VA Tax Periods
1st Half 1/1-6/30 (Due 6/5 -Paid in Arrears)
2nd Half 7/1-12/31 (Due 10/5 - Paid in Arrears)

While this would seem to be obvious, purchasers should pay close attention to exactly what they are buying. I am not referring to inspection issues, I am referring to something that seems obvious, but does occasionally come up as a problem.

Here are some real scenarios where an individual bought something that was not exactly what they were expecting.

SCENARIO 1: I bought more land (and headaches) than I thought!

Upon review of the survey, the purchasers realized that the property line in the back of the property did not end at the fence, but continued back another 100 feet. While this sounds great (the buyers bought more property than they intended to purchase), the survey also revealed that the neighbor behind the property built an encroaching fence. The seller’s response was that he never said that the property ended at his fence, and in fact the listing did show the correct property square footage. The buyers were stuck having to deal with the neighbor’s fence.

SCENARIO 2: Where in the world is my parking space?

The sales contract called for limited common element parking space 27 to be conveyed. The buyer never looked at the space, thinking that it was a space just like any other in the building’s garage. After closing, the buyer couldn’t find the space in the garage, and discovered that the space was instead an outside space.

Other variations on this issue: the parking space was too narrow for my vehicle, the parking space was supposed to be near the elevator but was not, the parking space was on a different floor than expected, etc.

Always make sure to inspect the parking space. Limited common element parking spaces are not covered by title insurance, so pay extra attention when purchasing one. (Read more on limited common elements.)

SCENARIO 3: I thought I bought the parking area behind the house!

Just because it looks like you own it, doesn’t mean that you do own it. If there is any question about whether or not something conveys, ask the seller. Further, this is the reason why a location survey is typically obtained.

We have had some recent settlements where the purchaser saved a couple hundred dollars by waiving the location survey, only to later on discover an unexpected surprise and then try to file a title insurance claim. Keep in mind that if the location survey is waived, the title insurance policy will take exception to matters that would have been revealed by the survey, thereby eliminating the ability to file a claim related to a survey matter.

SCENARIO 4: The seller told me that I had an easement!

We hear this one a lot. The seller told me that there is an easement for me to … access the back of my property through the neighbor’s yard, use the neighbor’s driveway to get to my back yard, use the neighbor’s driveway to access the alley, etc.

But then, upon further investigation, no written document turns up. When the seller is asked to provide the easement, the response is, "that’s what the seller told us when we bought the house."

If anybody tells you that a property has an easement, right of way, etc., ask for them to provide you with a copy of the document. If they claim it has been recorded, the title company can provide you a copy of the recorded document.

Do not trust that one exists simply because somebody tells you that you have "an easement."

Whenever a real estate settlement is close to a property tax due date, the potential for a post closing property tax issue increases. Simply, it is a matter of bad timing. Here are a couple escrow issues that can cause problems for home sellers who are planning to close near a property tax due date.

Taxes are double-paid

Let’s take Montgomery County, Maryland for example. Real estate property taxes are due by September 30 and December 31 (assuming a principal residence).

Now let’s say that you have scheduled a closing for the sale of your home on September 20. Your current lender is escrowing for property taxes, which means that they are planning to pay your property tax bill by September 30. So what could go wrong?

As of September 20, your payoff lender has not sent in the property taxes so the title company, collects the property tax bill from you at closing and pays it, since the deed cannot be recorded unless the taxes are paid.

The title company sends out your payoff, but it doesn’t get credited until September 21, and in the meantime the payoff lender has sent in your taxes to the county.

As of September 20, the county tax office has not credited your taxes as having been paid. So the title company collects and pays the taxes with the deed. When you receive your escrow refund from the payoff lender, it is less than you expected.

When you call the payoff lender, you find out that they paid the taxes as well, but the check was sent to the county a few days before the closing, so they were not credited until after September 20.

In both situations, the taxes have been double paid, and, because of bad timing, nobody is really at fault. Now you are stuck having to try and obtain a refund from the county for having overpaid the property tax bill. That will likely take some time and, depending on the size of the tax bill, could mean you are chasing thousands of dollars.

Taxes are delinquent

You were pro-active and called the payoff lender and found out that they sent a check to the county, but the county cannot yet confirm that the taxes were paid.

The title company, since it has to provide title insurance and one of the conditions to close is to make sure the taxes were paid, has agreed to escrow from you the taxes until they are credited by the county, but that means they are holding onto $3,000 to $5,000 of your funds in escrow.

Not much you can do here. You are at the mercy of the county tax office and how quickly they process your check and report the taxes as paid.

So, what can be done?

Probably the best solution is to contact your payoff lender and inform the bank that you are selling your home, give them the settlement date, and inform the bank that you do not want them to pay your property tax bill.

Most lenders will freeze or put a hold on your escrow account if you tell them to do so and they know that you are selling the property. The title company can then collect the taxes at closing and the payoff lender will not have paid the bill, and will therefore refund it to you as part of the escrow refund (which should arrive within 30 days of payoff).

Of course, there are risks with this solution as well, chiefly that if the settlement is delayed, you might be delinquent on your taxes.

Using the above example, let’s say that you called your payoff lender and informed the bank that you will be closing on September 20 and that they should freeze your escrow account. As long as settlement takes place on September 20, there will not be a problem, but what if the settlement is delayed?

If the settlement is pushed back after September 30, the taxes will be paid late, and a late fee will apply. Also, if the settlement falls through at the last minute – say for example there is a walk-through dispute that kills the deal – then the payoff lender will have frozen the account and your taxes will not be paid.

So if you do call the payoff lender and ask for the account to be frozen or put on hold, make sure that you also inform the payoff lender if there are any settlement delays. It would be unfortunate (and ironic) that being pro-active about the taxes might cause penalties, interest or, potentially, a tax lien.

The cost of buying a home dropped 12 percent from last year, according to a survey conducted by Bankrate.com, which reports homebuyers nationally pay $2,159 on average for title and closing costs.

The numbers vary a bit by state, but in every case Federal Title charges less than average for title and closing costs. In the District of Columbia, for example, homebuyers pay an average of $2,319 compared to $2,176 when they settle at Federal Title.

Closing costs in the District of Columbia rose to 10th place on the list of most expensive closing costs in the country from its 11th place position in 2011.

Average closing costs in Maryland and Virginia are quite a bit less than the national average, coming in at $1,997 and $2,046 respectively. Maryland homebuyers who settle at Federal Title pay $1,691 while their Virginia counterparts pay $1,696.

This year closing costs in Virginia are on average the 29th most expensive in the country, a big jump from the No. 38 position the state held last year. Maryland also jumped up on the list to 35th most expensive closing costs on average from 42nd in 2011.

Did you know Federal Title has a sister office in Coral Gables, Florida? Homebuyers in the state pay an average of $2,772 for title and closing costs compared to the $2,486 paid by homebuyers who settle with us.

Closing costs on average in Florida were 12th most expensive in 2011. This year Florida has the 4th highest closing costs on average.

These numbers come as no surprise to Federal Title. A similar closing costs study conducted last year using slightly bigger numbers also demonstrated that our title charges are among the most competitive in the region, and in most cases (DC & Maryland) top the competition.

Bankrate used the following parameters to gather Good Faith Estimates from 10 lenders in each of the 50 states and the District of Columbia for their June 2012 survey:

• Loan amount: $200,000
• Down payment: 20 percent
• Purchase price: $250,000

View average closing costs by state

To calculate Federal Title's charges, homebuyers should use our Quick Quote tool. It is the easiest and fastest way to calculate closing costs. It's free to use and completely anonymous – we don't ask for your e-mail address.

If you are about to refinance your mortgage, your mortgage lender has or will soon provide you with a Good Faith Estimate (GFE) which will include, among other costs, a line item charge for title insurance.

Although you are required to pay for it, this is "lender’s" title insurance as opposed to the "owner’s" title insurance, which you likely purchased at the time of your original closing.

The lender’s title insurance premium is often the single most costly line item for refinancing homeowners. While it’s the borrower's right to choose a title company, unfortunately, thousands of borrowers are allowing their mortgage lender to choose a settlement company on their behalf.

As a result, they are sometimes paying hundreds of dollars more in title insurance and settlement fees than if they spent a few minutes online shopping among and choosing their own title company.

Some title companies require proof of an existing owner’s title insurance policy less than 10 years old in order to obtain a discount (or Reissue Rate) on the new lender’s title insurance premium, while other title companies provide an Absolute Reissue Rate.

An Absolute Reissue Rate is a discounted rate on the title insurance premium without requiring the homeowner to provide any evidence of existing owner’s title insurance coverage.

For example, Bob purchased his home more than 10 years prior to his current mortgage refinancing and Title Company A, selected by Bob’s lender, charged $1,200 for lender’s title insurance because they require – and Bob could not produce – a copy of an existing owner’s title insurance policy less than 10 years old.

In the alternative, Jane also purchased her home more than 10 years prior to her current mortgage refinancing. However, wisely, Jane compared title charges among local title companies and chose a title company that didn’t require proof of an existing owner’s title insurance policy.

Jane paid $720 compared to Bob’s $1,200 charge for lender’s title insurance.

Federal Title is one of the few title companies in the District of Columbia, Maryland, and Virginia that provides an Absolute Reissue Rate to all its customers.