Why do Buyers need to pay $87.00 to get a copy of their deed after closing?

By Gary A. Coffin, President

Horizon Settlement Services, Inc.

We have had a few buyers call our office recently and ask the same question.   So, I thought I would clear things up in the event any Real Estate Agents or Lenders are being asked the same question.  The short answer is that they don’t need to pay $87.00 to get a copy of their deed.  In New Hampshire, most real estate buyers will receive the original recorded deed within a few weeks of closing. Most law firms and title companies will have the original document returned directly to the buyer by the county registry of deeds after it is recorded.  If they don’t receive it within a few weeks they can always call the law firm or title company that conducted the closing to get a copy.  The other alternative is to obtain a copy themselves directly from the county registry of deeds for a nominal fee, generally around $4.00 to $6.00.  

Recently, shortly after closing, many New Hampshire homebuyers have been receiving a document from the “Record Retrieval Department” stating that the “State Record Regulation Department recommends that all United States homeowners obtain a copy of their current Grant Deed”.  The document looks very much like an official letter from a government agency, however, it is not. It goes on to indicate that they will need to pay a processing fee of $87.00 in order to obtain a copy of the deed and if they do not respond by a certain date an additional fee of $35.00 will be incurred.  Again, even though the letter appears very official, it is not coming from a government agency but rather a private organization seeking to get homebuyers to pay them $87.00 to obtain a copy of a document they will either get for free or at a nominal cost.   They seem to skirt any potential legal issues by including several disclaimers at the bottom of the form including the statement “This product or service has not been approved, or endorsed by any governmental agency, and this offer is not being made by an agency of the government.”  Actually, quite to the contrary, not only is this service not endorsed by the government, the New Hampshire Department of Justice, Office of the Attorney General has released a consumer alert about the service at http://doj.nh.gov/media-center/press-releases/2012/20120803-consumer-alert.htm.  

So before your buyers pay an additional $87.00 for their deed, have them check the mail or call the company that handled their closing. CAVEAT EMPTOR!

WHAT IS A REAL ESTATE TITLE SEARCH?

By: Gary A. Coffin           

A title search is an examination of real estate ownership records filed with the local county registry of deeds, other municipality or other depository of records depending on your state.  The examiner will look at the current owners’ deed and prior owners’ deeds to make certain each deed was prepared following the proper procedures for real estate conveyances within the state the property is located.  Most states have statutes dictating the format a deed must follow to properly convey interest in real estate.  

The examiner will also review the following:

• Look to make certain the seller on each deed was in fact the individual who owned the rights to the interest they were conveying.  
• The description will also be checked for errors or inconsistencies.  
• They will look to see if any other interests in real estate were granted along with the home and lot described such as a right of way over a neighbors property.
• Rights to the property that were given away by the current or prior owners that are indicated on the deed be will reviewed by the examiner to make certain they are consistent with the current deed. 
• They will also look at estate records at the municipal probate office for any ownership transferred as a result of a person’s death.  

After establishing a chain of ownership the examiner will then look at the records to see what each owner did with the property during their ownership, for example:

• Did they subdivide it and sell off a portion of the property?
• Did they grant anyone an easement to use the property for a specific purpose? 
• Did they add another person to the deed? 
• Are there conditions or restrictions on title? 
• Did they mortgage the property or were any other liens placed against the property?  
• Did they convey out any property rights not accounted for in the current deed?

This information will be analyzed to make certain it is consistent with the information contained in the current deed.  Mortgages and liens will be examined closely to make certain they were properly released and no longer affect the title.  Any irregularities or undischarged liens will be noted and reported back to the person or company requesting the search. 

It is important to understand that the examiner is only reviewing the information available to them at the depository they are searching.  It does not mean the information contained at the depository they are searching is complete or correct.  The examiner has no way of determining if a signature on a deed was forged, if all the heirs were identified and listed in the estate records or if the information in the depository was properly listed so the examiner could retrieve it.  Equally important to understand is that most titles are not researched back to the beginning of time, which in New Hampshire is a grant of land from the King.  Each state has their own title standards dealing with what is considered a reasonable amount of time to examine title.  To qualify as a full search in New Hampshire an examiner can start the search when they find a Warranty Deed in the chain of title that was recorded with the registry of deeds at least 35 years ago or a Quitclaim Deed recorded at least 50 years ago.  In New Hampshire and many states the title examination is limited to research in the registry of deeds and probate.  Money due for property taxes, condominium association dues and other real estate related assessments will not be disclosed by a title examination unless a lien has been recorded against the real estate at the appropriate depository.  

The examiner researches easements, conditions and restrictions to ensure they comply with local statues and title standards. Depending on the purpose of the search, the examiner may not be looking at the title through the eyes of the buyer. For example a property may have a restriction that prevents horses kept on the property, which would not be viewed a a title defect but may affect a buyers enjoyment of the property if their intent was to build a barn and raise horses on the property.   If a title has property restrictions, title conditions or association by-laws, a buyer should obtain a copy of the most recent amended version and review them thoroughly.

Although a title examination preformed by a competent title examiner will uncover many title related issues, there are many risks that lay outside the the scope of a title examination.  Protection for some of these risks can be obtained through the purchase of an owner’s title insurance policy which will be the subject of next weeks blog.

Note to New Hampshire Real Estate Agents: This blog is a condensed version of a New Hampshire Real Estate Commission approved 1 hour elective course entitled “Basics of Title Insurance”.  For information on this or other courses provided by Horizon Settlement Services, Inc. please click on the real estate education tab at www.horizonsettlement.com. 

What Buyers Need to Know About Buying at a New Hampshire Foreclosure Auction

By: Gary A. Coffin                                                              

I have started this blog in order to provide what I hope will be valuable information to real estate consumers, the real estate industry and the lending industry with respect to current real estate related issues and trends.  A question I get most often from buyers and real estate agents at various courses and seminars I conduct is whether buying real estate from a bank at a foreclosure auction is risky.  Generally, buying at foreclosure auctions does contain a certain amount of risk.  Although you may not be able to eliminate the risk, you can minimize the risk by following the tips I have outlined below.  Do not confuse purchasing property from a bank or mortgage company at a foreclosure auction with a transaction where you purchase property from the bank or mortgage company after the bank or mortgage company has acquired the property at the auction themselves.  The tips below are for those bidding and purchasing directly at a New Hampshire foreclosure auction.

1. Do all your homework BEFORE YOU BID!  First and foremost buyers must do the proper research and take proper action prior to bidding at the auction.  The only item you can negotiate at a foreclosure auction is price.  There are virtually no contingencies and at the very least you stand to lose your deposit if you cannot complete the purchase within 60 days of the auction date.
2. Consult with a Real Estate Attorney.  You want to make certain you are performing the proper preliminary research and have considered all potential issues.  Real estate law is constantly changing and buyers should make certain they are up to speed with anything that could impede their ability to complete the purchase.
3. Know what mortgage lien is being foreclosed.  This is important in order to determine if you will be purchasing the property subject to other liens that you will have to pay.  Typically it is a first mortgage that is being foreclosed and if proper procedures are followed, subordinate liens will not have to be paid.  Occasionally an auction may be conducted by a mortgage holder other than the first mortgagee.  If a second lien-holder is conducting the foreclosure auction, you will be responsible for paying off the first mortgage when you take title.  You will want to take into account the payment of this amount when you establish your maximum bid price.  
4. Hire a Buyer Broker. You will need someone to assist you who knows the local market.  The last thing you want to do is bid higher than what the property is worth.  A buyer broker can assist you in determining an estimate of the market value of the property.  This will help you to avoid a situation where you overbid.  In hiring a buyer broker you should understand that most banks or mortgage companies will not pay the agent’s commission at a foreclosure so that will be an expense you will have to pay.
5. The property will be sold “as is”.  Inspect it carefully and have a home inspection performed by a licensed home inspector.  You will be purchasing the property in “as is” condition.  Unfortunately many homes are still occupied at the time of the auction and an inspection may not be possible so you may want to avoid bidding on a property that is still occupied. If the interior is damaged at the time of the auction or even after, you could be faced with unexpected repair costs that you did not factor into your bidding price.
6. You may become a landlord.  Many homes are foreclosed on while the owner still occupies the property.  In New Hampshire you will need to take title to the property and complete the transaction within 60 days of the auction (and often the contract will require you to close within 30 days) .  Although many lenders will do their best to make certain the property is vacant by the closing, there is no guarantee the prior owners will have vacated the premises.  You may end up taking title with the occupants still in the property which means you will be faced with having to evict them.
7. Have the title examined. Hire a real estate attorney or title company to research the title and obtain an owners title insurance commitment PRIOR TO BIDDING.  You want to make certain the title will be clear  and that you and your lender will be able to get title insurance.
8. Get pre-approved for financing.  Unless you are paying cash, have a local mortgage lender pre-approve you for financing.  Foreclosure purchase contracts do not contain a financing contingency clause.  If you cannot get financing and are unable to complete the purchase you stand to lose your deposit.
9. Beware of issues with post auction access. If you are obtaining financing the lender is going to require access to the property in order to conduct an appraisal. If you cannot get access you may not be able to get financing.
10. Research the property tax situation. You will be responsible for payment of any outstanding property taxes so you should know the amount that is due.  Also be aware of any current use penalties that may be due if the property is in current use.  You may also be responsible for private association and condominium dues.
11. Contact your homeowners insurance agent.  Make certain you can obtain affordable homeowners insurance on the property before you make the bid.
12. Beware of IRS liens.  When the title search is performed make certain the owner losing the property does not have IRS liens filed against them.  The IRS will have a 120 day right of redemption after the foreclosure.
13. Remember you will need to close within 60 days of the auction.  Make certain you will be prepared to close within 60 days of the auction date (and often the contract will require you to close within 30 days).  Any delays may result in you having to satisfy additional liens placed against the property which means you will be paying more than expected.
14. Preliminary research needs to be done 1st!  Remember these are the items you need to address and research before you bid!

This blog is a condensed version of a New Hampshire Real Estate Commission approved 1 hour elective course entitled “Basics of Guiding Clients Through Foreclosure, REO & Short Sales”.  For information on this or other courses provided by Horizon Settlement Services, Inc., please click on the real estate education tab at www.horizonsettlement.com.  

This blog is intended as a general overview of what a buyer should be aware of when contemplating purchasing at a foreclosure auction.  As this is an ever changing segment of the real estate market, anyone purchasing at a foreclosure auction should seek legal advice prior to bidding and this blog should not be constructed as having provided legal or professional advice.