What Tampa Homebuyers Don’t Know About Title Work
What Tampa Homebuyers Don’t Know About Title Work
Title work is one of the most important aspects of buying a home and the least understood by Tampa Home Buyers.
Title work is done behind the scenes without much thought from home buyers. Even if a homebuyer reads the title policy, they still don’t understand what it means…
Unfortunately, the quality of title companies in Florida vary greatly which is why 65% of title companies go out of business. Did you know that 90% of title agents are unlicensed…only one person in the title company needs to be licensed and the rest may have been hired last week with “0” experience. Tampa Home Buyers need to know what they should be doing.
In addition, most title companies in Tampa Bay are not attorney owned or operated and some title companies even outsource their title searches to another country.
All this adds up to potential quality issues for the home being purchased and could cost you money if mistakes are not caught early enough.
Home Buyers in Tampa cannot rely on title companies to be forthcoming with information or raise issues for homes buyers, which is why we recommend you hire a real estate attorney so they can review the contractual, technical, and legal aspects of your title work.
What major contractual items should the Buyer be aware of?
Here are the 4 most important items that a Tampa Bay Homebuyer should receive and review.
- Title Commitment
- Lien Search
- Estoppel Letter
Title Commitment is a preliminary view of your Title Insurance Policy
Under the most common Florida Real Estate contract, the Tampa Home Buyer has 5 days under the FAR/BAR contract to make any objections to the Title Commitment created by the title company.
Tampa Homebuyers have no clue how to read a title commitment, understand it, or make changes to it. Regardless of how smart you think your real estate agent is, they are not allowed to disseminate your title insurance policy. That would be acting as a lawyer and they are not licensed to do that.
That is why we always recommend that a homebuyer in Tampa hire a real estate attorney to make sure that you are indeed receiving the correct information and that the title commitment reflects what you are willing to accept.
The Title Commitment is a snapshot of your title insurance policy. It includes items the title agent must complete prior to issuing a title insurance policy. It also lists items that are not covered under the title insurance policy as “exceptions”. Exceptions are exclusions from coverage.
Sometimes these exceptions are only for the convenience of the title agent and not in your best interest. Some exceptions can be removed and should be removed by your attorney.
Unless theTampa buyer requests exceptions to be removed, most title companies will not remove them on their own. Title underwriters are rated just like car insurance so A rating is better than C rating.
If a title commitment is not reviewed by a competent attorney, the home buyer in greater tampa may accept reduced title insurance coverage that they may regret later. The Tampa Home Buyer might also accept some property related easements that may be a problem after purchase.
Survey, Boundaries and Easements…
A Tampa home buyer needs to be aware of the survey, boundary, or easements on their property, because that is what they are buying.
Encroachment Story: Recently, I had a buyer back out of a contract due to the survey showing three encroachments on his property. Both side neighbors had their fences clearly on the property he was buying and the neighbor behind actually built a pergola on this homebuyers property.
The home buyer decided that he did not want to start his new life in Florida by alienating his new neighbors with a boundary dispute, so he chose to cancel the contract and find a different property to buy.
BTW the title company was not the one who advised the buyer of the encroachments …it was the buyer's attorney. The title company said it was not their job to review surveys.
I had a friend who owned a survey company who had many experiences with home buyers not getting their own survey and/or depending upon the seller's old survey. Let your attorney decide if the old survey is acceptable or if you should order a new survey.
Survey story: Buyer bought a lakefront lot for cash and skipped getting a survey. He had eyeballed the boundaries and said he was satisfied. When it came time to start building a house, he ordered a survey only to learn that his entire property was in the lake …not one inch was on dry land. He had bought the land in the middle of the lake!
What is a Municipal Lien Search?
A municipal lien search is a report to identify unrecorded liens before the home buyer closes on the property.
This is a search done at city or county level and normally ordered by the title company to be completed by a third-party. Sometimes, the title company will do it themselves.
A municipal lien search request is included in the Florida FAR/BAR real estate contracts since 2014. It is part of the lien searches a title company should complete.
Things to look for in a Municipal Lien Search
Property Taxes: are the taxes delinquent, or paid in full, or do taxes need to be collected at closing?
Utility Bills: Are they paid in full?. Many water/sewer companies have lien rights and can lien the property for unpaid water/sewer bills. Despite this, many title companies will not remove the “exception” for Florida Statute Chapter 159 in the title commitment. What this means is there will be no title insurance coverage, and the Buyer in Tampa Bay could risk taking on the seller's utility balance if it remains unpaid after closing. So, it’s best to have this exception removed from the Title Commitment.
Code Violations: Have all the property improvements had permits pulled? Were they all inspected by the city and closed out (approved)? Open code violations can lead to fines and liens and problems after closing.
Open Permits: A permit that was pulled but not closed out, is still unapproved and open. This does not impact title work per se, but most title companies will include a permit search within the municipal lien search. However, it is best to have permits closed out before closing or the new homeowner in Tampa Bay may be liable for fines or made to even remove the improvement.
What's an Estoppel Letter?
Estoppel Letter or an Estoppel Certificate is a record of the current status of HOA/COA fees to be collected at closing. These are Important pieces of information that a buyer should know. Such as the cost to transfer the property to them. A Resale or Capital Contribution fee; these may vary from $0 to a few thousand dollars, for association litigation, special assessments, and any HOA/COA property violations.
Title companies do not automatically provide this in Tampa to a home buyer, so it should be requested. More importantly, the law indicates that buyers can rely on this document for the fees and the HOA or Condo association is not allowed to charge any additional fees to the buyers, if there is a mistake.
Last but Not Least READ the ALTA Statement…
ALTA (American Land Title Association) statement is a compilation of a Tampa home buyer's final closing fees or “Final Closing Statement”.
It’s an itemized list of a buyer’s debits and credits, which calculates a buyer’s “cash to close”. The “cash to close” is the amount of money a buyer needs to bring to closing to get the keys.
Sometimes the title companies do not provide this document in a timely manner to allow a home buyer time to review it ahead of closing. Other times, the title company will rely on the lender Closing Disclosure (CD). Many times, the CD is inaccurate at the time it is provided to the buyers, so it cannot always be relied on until it is updated. In addition,some fees are lumped together, not itemized,which makes it harder to decipher.
There are often mistakes or overcharges to the Tampa home buyer, so it is always recommended to review your final ALTA Closing statement before you walk into a closing.
We represent ONLY home buyers, so give us a call for expert advice with home buying experience. Buyers Broker of Florida 727-202-9130.