The GCAAR Regional Sales Contract provides basic definitions to clarify
We receive many phone calls from real estate agents asking us, "I have this contract that was ratified on "x" date, it has a home inspection contingency, but we didn’t get notification until "y" date, so have the parties met their obligations under the contract?"
Let’s start with the actual contract itself. Paragraph 26 of the GCAAR Form #1301 – Regional Sales Contract provides us with some basic definitions:
Day or Days are considered to be calendar days unless otherwise directed in the Contract.
Date of Ratification is the date upon which both Purchaser and Seller accepted in writing all terms of the Contract.
Computing Time Period commences on the first day after delivery of the document; with the contingency period expiring no later than 9:00 pm Eastern Standard Time on the date specified in the Contract.
What exactly does this mean? Click beyond the jump to find out...
A lot of folks think real estate taxes across the board are always higher in DC compared to Maryland or Virginia. While it's true transfer (recordation) taxes paid at settlement are higher for DC purchases, those homebuyers pay a far lower annual property tax rate compared to Maryland and Virginia thanks to the Homestead Deduction.
If your homebuyer intends to stay put and use the property as a primary residence for 10 years or more, it's cheaper from a real estate tax standpoint to buy in DC based on today's calculations. The breakdown is summed up in the chart. Of course, there are many other factors your homebuyer will take into consideration when choosing where to buy. When it comes to real estate taxes, your homebuyer should determine how long he or she intends to stay in the property, if the property will be used as a primary residence and if he or she is comfortable paying more taxes up front at settlement.
Another way your homebuyer can lessen the blow to their pocket book at closing is to take advantage of our REAL Credit™, which has saved our clients more than $8 million over the last 10 years.Breakdown of DC, MD and VA property, transfer taxes
The Justice Department negotiated agreements to provide additional assistance to military servicemembers
The Justice Department announced it had reached a $25 billion settlement with the nation’s five largest banks (Wells Fargo, Citigroup, Ally, JP Morgan Chase and Bank of America) and 49 states regarding nationwide mortgage fraud last month.
In addition to this settlement, the Justice Department further negotiated agreements with these lenders to provide additional assistance to military servicemembers and veterans who have been caught in the housing market crisis and who have been unable to obtain any relief from the Expanded Homeowners’ Assistance Program.
However, as these additional agreements have just recently been reached, specific details and how to obtain information from the lenders are inconsistent as the parties work through interpretations of language and implementation.
So, what does all this mean for you? Click beyond the jump to find out...
An Earnest Money Deposit, more commonly known as an EMD, is one of the first steps in the home buying process. Today I will discuss the EMD and how quickly should one be deposited.
An EMD is essentially a good faith deposit to demonstrate to the seller that the purchaser is serious about the transaction and is willing to part with some money in advance of closing to prove his or her willingness to buy.
This is not to be confused with a down payment, which is the remaining amount that the purchaser is going to pay out of pocket to buy the house, and is paid at closing in the form of a wire or a certified or cashier’s check.
The amount of an EMD can vary, depending on the purchase price, the location of the property and the purchaser’s ability to pay in advance. Typically, a larger EMD will make the offer to purchase stronger, since a larger EMD shows to the seller a higher level of seriousness on the purchaser’s part.
Each jurisdiction has a different requirement in regards to how quickly the EMD must be deposited.
District of Columbia: Earnest money deposit must be deposited within 7 calendar days or 5 business days.
Maryland: Earnest money deposit must be deposited within 7 business days.
Virginia: Earnest money deposit must be deposited within 5 banking business days.
Keep in mind that in all three jurisdictions, this requirement can be altered by a written agreement between the purchaser and seller.
Consequently, either the number of days can be changed or the EMD can be deposited at an agreed upon date, for example, "upon the removal of all contingencies." However, once again, keep in mind that this must be in writing and agreed upon by the parties.
Editor's note: In Maryland, if the EMD is held by a real estate broker, the Maryland Real Estate Commission requires that the broker must deposit the check within 7 business days from when the contract is ratified. If the EMD is to be held by the title company or any other party, the number of days can be altered. (Thanks to commenter Mike for helping to clarifying this.)
Part 5 of a series
Too often we hear prospective homebuyers or real estate agents dismiss the need for owner’s title insurance coverage because the property is "new or in a newer development." In fact, nothing could be further from the truth since a large percentage of title claims occur on new construction properties.
Title insurance claims on new construction mostly involve cases of mechanic’s liens. A mechanic’s lien is a lien placed on the property by a contractor or sub-contractor for unpaid labor and material performed during construction.
Many times, a mechanic’s lien is filed after a homebuyer has purchased the property from the seller. In other words, a title report performed at the time of closing will not reveal the mechanic’s lien.
In this instance, a homebuyer who elects to purchase the standard (limited) owner’s title insurance coverage will be stuck with having to pay off and clear the mechanic’s lien at their own expense since mechanic’s lien coverage is not afforded under this type of owner’s policy.
However, if the homebuyer selects the enhanced owner’s title insurance coverage, there is specific affirmative coverage for a mechanic’s lien so long as the work was performed prior to the date of closing (or policy date).
The Internet makes it so easy for consumers to find the best prices on all kinds of goods. Why would anyone willingly pay retail price when it's so easy to point-and-click your way to a bargain?
If we were talking about furniture or household electronics, it would seem like a no-brainer. But because it's title insurance – and title insurance is a pretty wonky subject – so many consumers seem complacent to let someone else do the shopping (or steering) even if it does wind up costing them hundreds or even thousands more at the closing table.At Federal Title, we're trying to get the word out to consumers (shopping is easy, saving is awesome), so we partnered with our friends at the Better Business Bureau to produce a television commercial that will air on CBS for the rest of this month.
This month, Federal Title & Escrow Company’s innovative REAL Credit™ will celebrate 10 years of providing substantial closing cost savings to home buyers.
Ten years ago, against the pressures of sharing our revenues with real estate firms, we bucked the trend, remained an independent settlement service provider, and decided to give the money back to the home buyer instead of the referring real estate firm. We named it the REAL Credit™.
While most of our competitors, at the expense of the home buyer, were jumping into bed with referral sources through Affiliated Business Arrangements, Federal Title got busy figuring out a way to reward the home buyer instead of the referral sources. Seems only fair – right? I mean, after all, it’s the home buyer who pays the costs, not the referring real estate firm.
The REAL Credit™ has served over 20,000 home buyers during its ten years, saving home buyers over $8 million dollars.
Let me repeat, unlike most other title companies, Federal Title has shared over $8 million of its revenue with home buyers instead of sharing that same $8 million with a referral source in exchange for the referral of business.
YES, it’s legal.
Our competition, most of who are beholden to their affiliated referral partners and, as a result, cannot compete with the costs savings realized by home buyers using the REAL Credit™, continue to spread falsehoods to real estate agents and others within the marketplace that the REAL Credit™ is somehow illegal.
The respective insurance commissions for DC, Maryland, and Virginia have all reviewed the REAL Credit™ and given it a “Thumbs UP.” Not only is it legal, it’s the right thing to do for the consumer.
Combined with Federal Title’s advanced technology and superior customer service, the REAL Credit™, after 10 years, remains the most innovative and consumer-friendly approach to improving the title insurance industry.
Two reasons basically. By selecting a title company that is not bound by what’s known as an Affiliated Business Arrangement, you eliminate potential conflict of interest and generally save money.
When buying a home, you will be working with three groups of people: a real estate agent, mortgage lender and your "settlement team."
Click beyond the jump to keep reading.
There's been a push to improve consumers’ ability to shop for title services and encourage price competition since about April 2007, when the U.S. Government Accountability Office released its Report on Title Insurance.
More recently, the RESPA reforms of 2010 were intended to lend more transparency to consumers for easier price comparison among settlement service providers.
Welcome to the latest installment of our series regarding Deed Transfers.
(1) Transferring title from a sole owner to a Revocable Trust
We all eventually get to an age where we should be doing at least a little estate planning. One of the popular tools for estate planning is the Revocable Trust. When your estate planning attorney or adviser sets up your revocable trust, she will often advise that you title your property in the name of the trust.
I am often asked how much this will cost in the District of Columbia.
Click beyond the jump to find out...
At the end of last year, I compiled a list of all the news stories that mentioned Federal Title or featured a quote from one of our attorneys. The original list includes a lengthy piece from Washington Post columnist Harvey S. Jacobs that mentioned a study we commissioned about a year ago. The study, along with the article, highlight the importance of selecting your own settlement team. The extra effort could net you a savings of up to $1,180.
That piece is probably my favorite, but it turns out there were quite a few articles published in 2011 in which Federal Title got a say. So I decided to go one step further and compile all the articles we've been mentioned in since I took over as marketing director in August 2009. All of these articles can be found in a new section of our website, the Media Hits section.
For now you'll find the media hits section under the Buyers & Sellers menu item, nestled under Articles. Happy Reading!
Rates keep falling and homeowners (at least the ones who are not underwater) keep refinancing. Here are some tips on what you should do after your refinance closing is over:
Save your closing documents
- Remember when all everybody talked about was reducing paper and going green? Well, the mortgage and real estate industries never received that memo. At closing, you will be provided with a set of copies of everything that you just signed, and that package could number up to 100 sheets of paper. Hold on to them; you might need a copy of the HUD-1 Settlement Statement for tax purposes, and you never know when you might want to review the Note and loan terms.
- BONUS TIP: If you prefer not to have to find room for another stack of documents, or if you really are concerned about doing something good for the environment, at Federal Title & Escrow Company we can scan your closing package and email it to you. This way you can save it to a computer file, not have to worry about the wasted paper, finding a place to keep the stack of pages, or losing confidential documents. We will always maintain an electronic copy of the file here at our offices as well.
Save your closing documents from the prior transaction(s)
- I know this is disappointing, since most clients would likely enjoy burning their prior closing package, but even though the prior loan is being replaced by the new loan, you should hold on to the prior papers as well. One day, you, your estate or your heirs will end up selling that house. You might have to prove that a prior loan was paid off, or that you have a title insurance policy, or you might need to confirm the prior sales price, etc. Having your prior loan documents could save you a lot of time and some future headaches.
Cancel any auto payments that are set up for the prior loan.
- Even if your next auto payment is scheduled for April 1 and your closing is March 10, and your current mortgage will be paid off well before the next payment due date, it is a good idea to make sure that any automatic payments are cancelled. Of course the prior lender would owe the money back if they took another payment, but nobody wants to have to chase money from a bank.
If you signed up for automatic payments on the new loan, make sure that the first payment is made.
- I always recommend double checking to make sure that the payment has been properly processed.
If your taxes are being escrowed, make sure the lender pays the bill
- It is especially important to check the first tax bill after your refinance. Typically, you can view escrow payments on the mortgage lender’s website or you can call the mortgage lender’s automated number.
Recently, I have been receiving the following question on tax abatement:
I applied for DC Tax Abatement as part of my closing. I did not get my letter from the District of Columbia saying I got tax abatement and that I am exempt from real estate taxes for the next five years; and my lender is still collecting taxes in escrow to pay my bills. What do I do?
Well, there are a number of things to look at before we know if anything is "wrong."
Click beyond the jump to continue reading.
As a home buyer, almost all interaction with the title company is prior to closing. But what about after the closing? Here are some tips on what you as a home buyer should look out for and do post settlement.
Click beyond the jump for 6 post-closing tips.