Real Estate: December 2010 Archives

what if i sign all the paper work for a house at a title agency, can i back off the house?

Depends upon the laws in your state. The Federal three day right of rescission only applies to refinancing your primary residence.

(here's an article about that in case this is a refinance, because refinancing your primary residence has a mandatory three day right of rescission.)

In most states, for purchases and purchase money loans, there is no right of rescission whatsoever - you have to go through the courts, and prove something actionable, to get out of the purchase. The person handling escrow could theoretically fund and record a purchase immediately upon signing, although in practice you can figure it happening next day, providing everything really is ready to go.

If the escrow officer has not yet funded and recorded, then by amending those escrow instructions, giving the escrow handler new instructions not to continue with the transaction, and making them aware of amending instructions, you can almost certainly get them to stop if they're not yet finished. However, there are likely to be legal consequences and cancellation fees and all of that stuff. Talk to a lawyer in your state if you want to know all about this dismal subject.

But once you sign the basic documents, there is no legal impediment to finishing a purchase transaction. So you want to be darned certain before you sign that all is as it should be. TAKE YOUR TIME. If the signing agent is in a hurry, that's their problem. Concentrate on three items for the loan: The Note, the Trust Deed, and the HUD-1. Any funny business with the loan has to show up on at least one of those, and usually two.

For the property, make certain they're not trying to slide any last minute disclosures that you weren't aware of ("You didn't know that they're building a chemical factory on one side and a stockyard on the other?" "You didn't know that the foundation is cracked and the roof leaks?"). It's disgusting how often I hear about things buyers should have known before they made an offer being presented to them at the final signing. That's not an agent who was looking out for your best interests - that was an agent who hosed you engaging in legal manouevers to cover their backside after the fact. An uncommonly large proportion of the ones I find out about are in Dual Agency situations, where the agent is pretending they can serve two diametrically opposed interests at the same time.

There's a blortload of paperwork at signing for a loan, just by itself, and adding a purchase at the same time doesn't exactly cut it down. Quite often, the less scrupulous will use that, trying to hide something that should kill the deal (at least as written) in amongst the blizzard of paperwork you're asked to sign. You need to understand everything you sign. If they tell you a given form doesn't apply to you, there is no reason why you should have to sign it. Set it aside in a separate stack under your control, so they can't ask again. If you don't understand it, read it until you do. Ask questions. If there's a problem, get it dealt with before you sign. Do not accept, "Just sign now, and we'll deal with it later." Once you have signed, you are stuck.

I always call the signing "The Moment of Truth," because if there's an issue you should be concerned about, whether it be property or loan based, it can be hidden until then, and often is, because at the signing your average person has their eyes on the prize, and they're thinking "all I have to do is sign all of this and we're done!" So many unscrupulous sellers and loan officers will hide things until then, knowing that industry statistics say something like half of all the people won't even notice changes at signing, and of the ones that do, eighty to ninety percent will sign anyway, not knowing enough to realize they shouldn't. You shouldn't be discovering anything for the first time at signing. If you are, it's a sure sign that someone didn't do their job, and quite often, indicative that they actively hid things from you. I cannot tell you absolutely that you should cancel the entire transaction if you discover something you didn't know at signing, but you should always go to signing mentally prepared to cancel. You always need to keep a sense of perspective in real estate, but if you discover something you didn't know at signing, especially if you don't immediately understand all the consequences, chances are good that you should cancel.

A good agent or loan officer has absolutely nothing to fear from someone going into signing ready to cancel if something is not as they were led to expect. Oh, occasionally a loan officer you've never worked with before will bite a good agent, and vice versa. This is one reason I try very hard to get my buyer clients to at least apply for a back up loan with me, and why I really want my purchase money loan clients to work with me as a buyer's agent (While carefully emphasizing that it is their choice as under RESPA it's a serious offense to try and force people to do this). That way, whatever happens is all my fault and I have nobody else to blame - but also I can make sure nothing goes wrong with either side by making sure my client knows everything well in advance. Nothing that my clients see at final signing should be a surprise. Ever.

Caveat Emptor

Original article here

My husband and I are on title and loan to a piece of property with 4 homes on it. We want to add 3 people to title. Can we do this if they are not on the loan? Also, any advice as to where I can find information as to how to hold title? Each party wants their percentage to go to next of kin and not to the rest of us on title.

This is a property that my family all live on. Basically we all bought it but we couldn't put all of them on loan for various reasons. We do have a sort of "operating agreement" going for maintenance and stuff like that, so I just want to know if they can be added to title so it's all official.

There are significant perils in this, especially since you're the only one on the loan. I can envision half a dozen scenarios where you end up liable for the loan even though you no longer own the property, or end up only owning a smaller piece of the property. Nobody likes to consider ending up in court opposite a family member, but family members are much more likely a legal adversary than complete strangers. This stuff happens every day. Partition suits aren't exactly uncommon. I suspect a certain number of them may even be manufactured, because a multi-residence property may be more valuable as multiple legally separate lots. But even if you manufacture such a suit, there's no way to insure that the other party will remain loyal to you.

Quitclaiming is easy, and requires no permission from anyone, but you really need to understand the consequences of what you intend to do before you do it. Furthermore, there's more than one way to hold title, each of which means different things. Joint Tenants, Tenants in Common, trust, corporation, partnership, etcetera. You need to choose a form of ownership that protects you, while still serving your needs.

I'd seriously suggest getting a partnership or corporation agreement executed first, and quitclaiming to that entity, but you really need to pay a real estate attorney for some advice, first, and you'll be better off following their advice than mine.

Not that I'm a big fan of lawyers. But the hour of time you pay for now has a good chance of saving you at least a million dollars down the road, from the type of property you're talking about. Ounce of prevention and all that.

Caveat Emptor

Original article here