Real Estate Agent – 6 Reasons to Use One

6 Reason to use a Real Estate Agent

Buyers and Sellers should find an experienced, trustworthy Real Estate Agent and let them guide you through the land closing process in Utah.

A Realtor is your best friend during this process and will walk you through it from beginning to end. They will help you avoid many of the pitfalls and problems that arise when buying land.

Sellers are also usually better using a Real Estate Professional. There are many possible problems with a sale and the agent can work through most of these.

The Real Estate Agent May Be Free!

The Real Estate Agent is paid a commission from the sale of the property. The commission is paid by the seller so buyers use a realtor for free.

Buyers don’t have to use the realtor who listed and advertises the property. Choose the realtor you want, the payment will be worked out between the two realtors, and you will have the realtors services for free.

Will Help You Find The Right Property

A Real Estate Agent has access to the local MLS (Multiple Listing Service) which lists all the property for sale by realtors in the area. Using the MLS the realtor can find properties that meet the buyers criteria and take you to those properties.

Many MLS’s are now listed on Realtor.com, where anyone can view them, but the realtor is an expert at using this information to find the land you are looking for. When selling the agents access to the MLS allows your property to be seen by many potential buyers.

Will Do the Work For You

The Real Estate Agent will do most of the work involved in finding and purchasing property, and finding buyers. A real estate purchase transaction is a complicated procedure which involves many details as well as many people. In most cases the transaction will be easier and much smoother if a realtor is involved in the process.

Will Help You Pay a Fair Price

One problem for buyers is paying too much for land. It is difficult to know what the land is really worth. Because Realtors deal with many parcels of land they know approximately what a specific parcel of land is worth.

In my line of work I have observed those who use a realtor usually buy land at a fair price. Keep in mind the realtor who listed a parcel of land has an obligation to sell for the highest price since they represent the seller.

Will Show You The Property

The Realtor knows the local area and will help you find the land you are looking for. Looking for land may involve driving down back roads without directions or street signs. The realtor will take you to the properties you want to look at, and the areas you want to look in.

Often a piece of land does not have an address or directions. Sometimes you will need to read legal descriptions and topographical maps. The realtor has experience in reading these and can take you right to the property, and show you the property boundaries.

Will Help You Avoid Many Problems

Using a Real Estate Agent will help you avoid many of the problems experienced in land transaction. Many of these problems don’t arise until after the purchase.

There are many possible problems, too many to mention, but include such things as: road issues, water rights, mineral rights, etc. Save yourself from many problems and use an experienced, trustworthy realtor.

Utah Real Estate Vesting: A Tale of Stolen Inheritance

utah real estate vesting

A Tale of Stolen Inheritance of Utah Real Estate

The following story is the best way to illustrate the importance of Utah real estate vesting.

Jim Duncan was a 70 year old widower with 3 grown children. His 2 daughters were married and lived out of state. His son Thomas, also married, lived next to him on the family farm, which had been in the family for 5 generations. His son now handled most of the work on the farm. The farm was on the edge of a mid-size city and was worth several million dollars. Neither Jim nor his son had any interest in selling the farm, to them it was a way of life.

Thomas Duncan would be the 6th generation to own and run the farm. He would pass it on to his children, as the family had done for over 100 years. Thomas was happy when his dad decided to remarry. His new step mom was a few years younger than his father, with two grown children, which he met at the wedding.

Just 2 years later his father, and his fathers wife, were killed in a car accident. His father died at the scene, the wife died 2 days later in the hospital, without regaining consciousness. The funeral was the second time he met her children. A week later they offered to sell him the farm – for 2 million dollars! Thomas thought it was a joke. After consulting with his attorney, he learned they owned everything. Thomas was unable to pay the price and the farm was sold to someone else.

How Did This Happen?

I have seen this type of scenario happen several times. Here is what happened. When Jim Duncan remarried he transferred the farm to himself and his new wife, as “joint tenants”. Joint Tenants is the vesting (type of ownership) which allows the property to go to the owner that lives the longest; in this case the new wife.

This is the most common way of transferring property, to a married couple, and is usually the correct way. Using “Joint Tenants’ when a spouse dies, the property goes to the surviving spouse without attorneys or courts involved. Upon the death of Jim Duncan, in the car accident, the property automatically transferred to his wife. On her death, the property transferred to her heirs, as she was now the sole owner. Her heirs were her 2 children, not Tom Duncan.

The Moral of Utah Real Estate Vesting

Make sure you know the correct way to have property transferred, or the correct real estate vesting. It really does matter!

Note: The names and some details have been changed to protect the privacy of the parties involved. In this case the property should have been tenants in common.

 

Joint Tenancy in Real Estate. Joint Tenancy allows the real estate to transfer to the surviving owner(s) on the death of one owner. It is most commonly used between spouses but is used in other situations and between more than two people.

Tenancy in Common in Real Estate. Tenancy in Common is the standard form of vesting, allowing real estate to pass to the owner’s heirs. When a owners dies their part of the land passes to their heirs instead of the remaining owners. In contrast, Joint Tenancy passes the property to the surviving owners.

The Family Trust and Real Estate. A Family Trust, also known as a Family Living Trust or a Revocable Family Trust, is a legal entity created by a Trust Agreement to hold ownership to your personal and real property. Your attorney will create the necessary documents to establish the trust. A Trust is created for estate planning purposes.

Do I need title insurance, when buying a Utah home?

buying home

Question: Do I need title insurance, when buying a new home in Utah?

Answer: Construction of a new home raises special title problems for the lender and owner.  You may think you are the first owner when constructing a home on a purchased lot.

However, there were most likely many prior owners of the unimproved land.  A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased.

In addition, builders occasionally fail to pay subcontractors and suppliers.  This could result in the subcontractor or supplier placing a lien on your property.

Again, lenders want to make sure the property has clear title.  Purchasing owner’s title insurance will protect you against these potential problems and pay for any legal fees involved in defending a claim.

I’m refinancing, why do I need title insurance?

need title insurance

Question: I’m refinancing, why do I need new title insurance?

Answer: When you obtain a new loan, the lender will require title insurance.  Even if you recently purchased your home, there are some problems that could arise with the title.  For instance, you may have incurred a mechanic’s lien from a contractor who claims they were not paid or you may have had a judgment placed on your house for unpaid taxes.  The lender wants to make sure their interest will be secured and the title to the property is clear.

You will not need to purchase new owner’s title insurance when refinancing.  Owner’s title insurance is purchased at a one-time fee and lasts as long as you own the property.

The Eagle Policy offers additional coverage

eagle policy

The Eagle Policy of Title Insurance

The Eagle Policy provides more coverage than any previous policy offered.  Some of the new coverages are completely new and never before offered by any title insurer.

This policy includes the following coverage:

  1. Your Title is lost or taken because of a violation of any covenant, condition or restriction, which occurred before You acquired Your Title, even if the covenant, condition or restriction is excepted in Schedule B.
  2. You are forced to correct or remove an existing violation of any covenant, condition or restriction affecting the Land, even if the covenant,condition or restriction is excepted in Schedule B. However, You are not covered for any violation that relates to:
    1. any obligation to perform maintenance or repair on the Land; or
    2. environmental protection of any kind, including hazardous or toxic conditions or substances

    unless there is a notice recorded in the Public Records, describing any part of the Land, claiming a violation exists. Our liability for this Covered Risk is limited to the extent of the violation stated in that notice.

  3. You do not have actual vehicular and pedestrian access to and from the Land, based upon a legal right.
  4. Someone else claims to have rights affecting Your Title because of fraud, duress, incompetency or incapacity.
  5. Someone else has an encumbrance on Your Title.
  6. Someone else has a lien on Your Title, including a:
    1. lien of real estate taxes or assessments imposed on Your Title by a governmental authority that are due or payable, but unpaid;
    2. Mortgage;
    3. judgment, state or federal tax lien;
    4. charge by a homeowner’s or condominium association; or
    5. lien, occurring before or after the Policy Date, for labor and material furnished before the Policy Date.
  7. Any of Covered Risks 1 through 6 occurring after the Policy Date.
  8. Your Title is defective. Some of these defects are:
    1. Someone else’s failure to have authorized a transfer or conveyance of your Title.
    2. Someone else’s failure to create a valid document by electronic means.
    3. A document upon which Your Title is based is invalid because it was not properly signed, sealed, acknowledged, delivered or recorded.
    4. A document upon which Your Title is based was signed using a falsified, expired, or otherwise invalid power of attorney.
    5. A document upon which Your Title is based was not properly filed, recorded, or indexed in the Public Records.
    6. A defective judicial or administrative proceeding.
  9. Someone else has a right to limit Your use of the Land.
  10. Someone else has an Easement on the Land.
  11. Someone else claims to have rights affecting Your Title because of forgery or impersonation.
  12. Someone else has rights affecting Your Title because of leases, contracts, or options.
  13. Someone else owns an interest in Your Title.
  14. The violation or enforcement of those portions of any law or government regulation concerning:
    1. building;
    2. zoning;
    3. land use;
    4. improvements on the Land;
    5. land division; or
    6. environmental protection,

    if there is a notice recorded in the Public Records, describing any part of the Land, claiming a violation exists or declaring the intention to enforce the law or regulation. Our liability for this Covered Risk is limited to the extent of the violation or enforcement stated in that notice.

  15. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 14 if there is a notice recorded in the Public Records, describing any part of the Land, of the enforcement action or intention to bring an enforcement action. Our liability for this Covered Risk is limited to the extent of the enforcement action stated in that notice.
  16. Because of an existing violation of a subdivision law or regulation affecting the Land:
    1. You are unable to obtain a building permit;
    2. You are required to correct or remove the violation; or
    3. someone else has a legal right to, and does, refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it.

    The amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.

  17. You lose Your Title to any part of the Land because of the right to take the Land by condemning it, if:
    1. there is a notice of the exercise of the right recorded in the Public Records and the notice describes any part of the Land; or
    2. the taking happened before the Policy Date and is binding on You if You bought the Land without Knowing of the taking.
  18. You are forced to remove or remedy Your existing structures, or any part of them – other than boundary walls or fences – because any portion was built without obtaining a building permit from the proper government office. The amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.
  19. You are forced to remove or remedy Your existing structures, or any part of them, because they violate an existing zoning law or zoning regulation. If You are required to remedy any portion of Your existing structures, the amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.
  20. You cannot use the Land because use as a single-family residence violates an existing zoning law or zoning regulation.
  21. You are forced to remove Your existing structures because they encroach onto Your neighbor’s land. If the encroaching structures are boundary walls or fences, the amount of Your insurance for this Covered Risk is subject to Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A.
  22. Someone else has a legal right to, and does, refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it because Your neighbor’s existing structures encroach onto the Land.
  23. You are forced to remove Your existing structures which encroach onto an Easement or over a building set-back line, even if the Easement orbuilding set-back line is excepted in Schedule B.
  24. Your existing structures are damaged because of the exercise of a right to maintain or use any Easement affecting the Land, even if the Easement isexcepted in Schedule B.
  25. Your existing improvements (or a replacement or modification made to them after the Policy Date), including lawns, shrubbery or trees, are damagedbecause of the future exercise of a right to use the surface of the Land for the extraction or development of minerals, water or any other substance,even if those rights are excepted or reserved from the description of the Land or excepted in Schedule B.
  26. Someone else tries to enforce a discriminatory covenant, condition or restriction that they claim affects Your Title which is based upon race, color,religion, sex, handicap, familial status, or national origin.
  27. A taxing authority assesses supplemental real estate taxes not previously assessed against the Land for any period before the Policy Date becauseof construction or a change of ownership or use that occurred before the Policy Date.
  28. Your neighbor builds any structures after the Policy Date — other than boundary walls or fences — which encroach onto the Land.
  29. Your Title is unmarketable, which allows someone else to refuse to perform a contract to purchase the Land, lease it or make a Mortgage loan on it.
  30. Someone else owns an interest in Your Title because a court order invalidates a prior transfer of the title under federal bankruptcy, state insolvency,or similar creditors’ rights laws.
  31. The residence with the address shown in Schedule A is not located on the Land at the Policy Date.
  32. The map, if any, attached to this Policy does not show the correct location of the Land according to the Public Records.

What does Title Insurance Cover?

what does title insurance cover

Question: What are some possible title problems covered by a standard Owner’s Title Policy?

Fraud and Forgery

Those involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase.

In a western state, an innocent buyer purchased an attractive home site through a realty company, accepting a notarized deed from the seller, as well as receiving an Owner’s Title Policy.  Then another couple, the true owners of the property (who lived in another locale) suddenly appeared and initiated legal action to prove their interest in the real estate was valid.

Under the owner’s title insurance policy of the innocent buyer, the title company provided a money settlement to protect against financial loss.

As it turned out the forger spent time in advance at the local court house, searching the public records to locate property with out of town owners, who had been in possession for an extended period of time.  The individual involved, then forged and recorded a deed to a fictitious person and assumed the identity of that person before listing the property for sale to an innocent purchaser, handling moot contracts through an answering service.

Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing, despite the most careful precautions.  Although emphasizing risk elimination, an Owner’s Title Insurance Policy protects financially through negotiation by the insurer with third parties, payment for defending agains an attack on the title as insured, and payment of valid claims.

Conflicting Wills

Conflicts over a will from a deceased former owner may suggest a study topic for law school, but the subject can take on a reality dimension and all too quickly your home ownership is at stake.

After purchasing a residence, the new owner was startled when a brother of the seller claimed an ownership interest and sought a substantial amount of money as his share.  It seemed that their late mother had given the house to the son, who placed the deed in his drawer without recording it at the court house.

Some 20 years later, after the death of the mother, the deed was discovered and then filed.  Permission was granted in probate court to remove the property from the late mother’s estate, and the brother to who the residence initially was given sold the house.  But the other brother appealed the probate court decision, claiming their mother really did not intend to give the house to his sibling.

Ultimately, the appeal was upheld and the new owner faced a significant financial loss.  Since the new owner had acquired owner’s title insurance upon purchasing the real estate, the title company paid the claim, along with an additional amount in legal fees incurred during the defense.

Missing Heirs

When buying a home, it’s important to remember what you don’t know can cost you.

As an example illustrating the need for precautions, the American Land Title Association pointed to a couple who purchased a residence from a widow and her daughter, the only known heirs of the husband and father who died whitout leaving a will.

Soon after the sale, a man appeared – claiming he was the son of the late owner by a former marriage.  As it turned out, he indeed was the son of the deceased man.  This legal heir disapproved of his father’s remarriage and had vanished when the wedding took place.  Nonetheless, the son was entitled to a share of the value of the home, which meant an expensive problem for the unwary couple purchasing the property.

Although the absence of a will hindered discovery of the missing heir in a title search, ALTA said that owner’s title insurance issued at the time of the real estate transaction would have financially protected the couple from the claim by the missing heir.  For a one-time charge at closing, owner’s title insurance will safeguard against problems, including those even an exhaustive search may not reveal.

ALTA reminded that owner’s title insurance is necessary to fully protect a home buyer.  Lender’s title insurance, which is usually required by the mortgage lender, serves as protection only for the lending institution.

Warranty Deed says “Ten Dollars”?

Question: Why does my Warranty Deed say the purchase price is “Ten Dollars”?

Answer: Utah is a non-disclosure state, which means you are not required to disclose the purchase price of your property.  The wording put in the deed protects the confidentiality of the purchase price.

Why Buy Title Insurance.

Question: Why Buy Title Insurance?

Answer: In order to issue title insurance, the title company must search public land records for matters affecting that title.  Many search the “chain of title” back 50 years.  Twenty-five percent of title searches find a title problem that is fixed before the insurance is issued. Some examples of items that can cause a problem are: deeds, wills and trusts that contain improper information, outstanding judgments or tax liens against the property, and easements.  Title companies fix the problems then issue the title insurance

Occasionally, in spite of an exhaustive title search, hidden hazards can emerge after closing.  Things such as mistakes in the public record, previously undisclosed heirs claiming to own the property, or forged deeds could cloud the title.  Owner’s title insurance offers financial protection against these by negotiating with third parties and paying claims and legal fees involved in defending the title.
For more information on reasons why you need title insurance, click here.

Types of Title Insurance

Question: Are there different types of title insurance?

Answer: There are two basic types of title insurance: Lender’s title insurance, also called a Loan Policy, and Owner’s title insurance. Most lenders require a Loan Policy when they issue you a loan.  The Loan Policy is based on the dollar amount of your loan.  It protects the lender’s interests in the property should a problem with the title arise.  The policy amount decreases each year and eventually disappears as the loan is paid off.

Owner’s title insurance is usually issued in the amount of the real estate purchase amount.  It is purchased for a one-time fee at closing and lasts as long as you have and interest in the property.  This may even be after the insured has sold the property.  Only Owner’s title insurance fully protects the buyers should a problem arise with the title that was not uncovered during the title search.  Owner’s title insurance also pays for any legal fees involved in defending a claim to your title.

Real Estate Closing Documents

real estate closing documents

Real Estate Closing Document

If you are involved in land you should understand the basics of real estate closing documents. They may not be exciting, but they are the method used to transfer land and secure loans on real estate.

Conveyance Documents

Conveyance documents are those that transfer (or convey) ownership of land. The most common is the Warranty Deed but there are others such as Special Warranty Deeds, Quit Claim Deeds, Grant, Bargain and Sale Deeds.

Each is different in certain ways but each transfers real estate from sellers to buyers. If buying you always want a Warranty Deed, as it transfer the land to you with the greatest guarantees from the seller.

Loan Closing Documents

Loan documents are used to secure the loan. The most common are the Trust Deed and Trust Deed Note. These two go together and are used by lenders nationwide.

Older loan documents include Mortgages and Real Estate contracts. Both are now rarely used, and are not recommended.

HUD 1 Settlement Statement

In buying or selling land the HUD-1 Settlement statement is the most important. All transaction costs are included on this closing statement. Although it looks similar, this is not a balance sheet nor does the bottom figure show the cost of the transaction.

The bottom lines show the amount of cash to be brought in or paid by the buyers and sellers.

Most Important Documents

There are many closing documents involved in a real estate closing. Many of these documents are to gather or disclose information. While all the documents are important  a few are the most important and should be reviewed carefully.

These are the HUD1 Settlement Statement, the Warranty Deed and the Trust Deed Note. You should review all figures on the the HUD-1 to assure you are not overcharged and all items are paid correctly.

The Warranty Deed is reviewed to assure that your names are spelled correctly and vesting is correct. If there is a loan involved in the transaction review the Trust Deed Note to insure the terms of the loan are correct. This would include loan amount, interest rate, payments, and payments dates.

Recording Of Documents

After closing, several documents are recorded to transfer ownership to the new owner and secure the interest of the lender. These are the Warranty Deed and the Trust Deed (or Deed of Trust).
The original deed is mailed to the new owner after the closing, although the most important step is the recording at the local County Recorder’s Office.

Review Documents At Closing

A mistake often seen at closing is the buyer or seller rushing through the documents, instead of reviewing them and asking questions. While many of the documents are routine and less important, those listed above is reviewed carefully and you should ask any questions necessary to fully understand them.

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