Nicholas's Blog

Forgery

Nicholas Ellsworth (North American Title Co.) — Wed, 17 Dec 2008 13:39:50 -0600

Forgery - How We're Protecting You

Forgery is the crime of falsely and fraudulently making or altering a legal document. It is a felony punishable by imprisonment in a state prison. It is also an act which may cloud title to property and may result in protracted legal proceedings.

The incidence of forgery is escalating, and the victims are innocent property owners. Title industry figures reveal that over the last decade forgery losses tripled, accounting now for over 20% of all losses paid by title insurers. These statistics indicate that the consumer's chances of becoming a forgery victim are the greatest ever. Forgeries affecting real property are created in a number of ways.

A deed may be forged by someone, often a family member or associate, in an attempt to transfer legal ownership of the property without the knowledge of the true owner. A lender's recorded security agreement for a loan may be eliminated by a forged instrument falsely indicating payment of the secured debt, thereby allowing another loan to be fraudulently obtained. A note and deed of trust may be forged by a person who then sells the note secured by the deed of trust and disappears, leaving an unsuspecting homeowner to discover the cloud on title when the purchaser of the note commences foreclosure proceedings for the nonpayment of the debt. A fraudulent document may be notarized by either a person impersonating a notary or a legitimate notary who fails to ascertain that the person signing the document is not the person whose name appears on the document.

The mounting trend in forgery has received serious attention. No longer may title companies concentrate only on removing risks arising from inadvertences or errors in recordings; instead, we now have the additional responsibility of contending with criminal acts. The title industry is reevaluating its title and escrow practices and strengthening notarization processes, closing loopholes which forgers might other-wise exploit.

But, what can you as a property owner do about forgery? While you may not be able to prevent a forgery, you can be protected. Title insurance provides protection against forgeries in your title which may have occurred prior to the issuance of your title insurance policy. Without this protection, you would single-handedly face the uncertainty and expense of resolving legal issues.

Understanding Foreclosure

Nicholas Ellsworth (North American Title Co.) — Fri, 05 Dec 2008 13:13:53 -0600

Understanding Foreclosure

It is an unfortunate commentary, but when economic activity declines and housing activity decreases more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate "bonanza," many people go to any length available to get into the market through investments in vacation homes, rental housing, and "trading up" to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third, and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. Neither may occur, and borrowers may be faced with large "balloon" payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner's financial situation improves.

Let's say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the County Recorder's Office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before. After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes "on the block." At the sale, buyers must pay the amount of their bid in cash, cashier's check or other instrument acceptable to the trustee. A lender may "credit bid" up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there has also been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

11 Steps to a Successful Short Sale

Nicholas Ellsworth (North American Title Co.) — Thu, 20 Nov 2008 10:50:23 -0600

11 Steps to a Successful Short Sale

1. Letter of Authorization - LOA

The Letter of Authorization is required by the lenders to confirm that they are authorized by all borrowers to release information to the negotiating party. Please contact your escrow officer for a copy of our LOA form, or visit us online at www.nat.com and search under "Services - Realtor®."

2. Hardship Letter

The Hardship Letter is the Homeowners' opportunity to state why they need relief from their mortgage. It is important that the letter is legible and preferably typed.

3. Financial Statement

The lender wants to review the borrowers‘ monthly income and expenses to determine the significance of the financial hardship. The information that should be provided is:

I. Borrower(s) who are on the loan only

II. Reasonable - if amounts allocated for groceries or entertainment seem out of line, the Lender might question that item and other parts of the file. Review the borrowers' financial statement before submitting it. Most lenders accept the Freddie Mac Financial Statement but there are exceptions. If you have more than one lender who will be discounting their loan, you may need to have your seller complete more than one Financial Statement. (To find out which form to use and to get a copy, go to www.nat.com and click on "shortsales.")

4. Bank Statements

The lender will want to see two months of banking activity for all borrowers on the loan. Ask the seller to provide two months of statements for all non-retirement accounts, including bank accounts, brokerage and mutual funds.

The statements must be:

I. As current as possible

II. Covering consecutive months

Note: Bank statements frequently need to be updated if the short sale process goes over 90 days.

5. Pay Stubs

The lender will require at least one month of pay stubs for each borrower on the loan. If a borrower has more than one job, pay stubs for all jobs should be included. North American Title requests that you provide two months of pay stubs from each borrower. This helps the lender get a complete view of the homeowners' financial situation. If the pay stubs are disability checks, these checks usually have no withholding - gross pay equals net pay. The lender will want a copy of the disability "awards letter" which outlines the terms of the disability income.

6. Tax Returns

The lender will want to see two years of tax returns for each borrower on the loan. Please have your client provide Federal Returns only, for the two most recent years. If we are beyond April 15th, and the borrower has not yet filed for the last full year, include the taxpayers' signed and completed extension form. Always include all pages and applicable schedules for each tax return.

7. Purchase Contract

Please provide a "clean", fully executed copy of the purchase agreement which has been accepted by the homeowner. Include all counter offers and addendums.

8. Estimated HUD - Settlement Statement

The lender will work from the estimated HUD we provide, so review it carefully before including it in this package. Do not rely on your escrow officer to properly interpret your contract. If the estimated HUD is to include estimates for delinquent property taxes, repairs, expenses, and fees on a senior lien, allow some room in your estimate in case costs come in higher or it takes longer to close escrow.

9. Listing Agreement

A lender will want to see a fully executed copy of your listing agreement. Make sure the commission section has been completed. Regarding commission, keep in mind that the lender may want to negotiate.

10. Price History

The lender will want to know that every reasonable effort was made to maximize their recovery of capital. In many cases that means graphically demonstrating to the lender that the property was offered for sale at a price, or at prices, above the list price at the time an offer was received and accepted.

The price history chart should include:

I. List date and dates prices were changed

II. Number of days at each price

III. Each price at which the property was offered

IV. The number of showings at each price

V. The number of offers received at each price

VI. The amount offered in each offer

11. Broker Price Option - BPO

The lender will want you to provide a simple and accurate BPO which states your estimate of the value for the property. If possible, use comps within ¼ mile radius and attach copies of MLS printouts.

Words Can Make or Break a Sale

Nicholas Ellsworth (North American Title Co.) — Thu, 20 Nov 2008 10:29:28 -0600

Words Can Make or Break a Sale

Ann Brenoff, Los Angeles Times Staff Writer

CONTRA COSTA TIMES

Sun, Dec. 24, 2006

WORDS matter. Wars have started over them. Civilizations have collapsed because of them. And it would appear that the speed with which a house sells might be determined by them.

As listings grow old on the vine in this flush-with-inventory market and frustrated sellers grapple for the slightest edge, the findings of several academics might offer some guidance.

For example, a Canadian professor, as part of a broader study on real estate sales patterns, found that sales in which the seller was "motivated" actually took 15 percent longer to sell, while houses listed as "handyman specials" flew off the market in half the average time.

"It surprised even me," said researcher Paul Anglin, who teaches real estate and housing trends at the University of Guelph in Ontario, Canada. The study dissected the wording of more than 20,000 Canadian home listings from 1997 to 2000.

What surprised him most was how the buying public put style over substance. Words that denoted "curb appeal" or general attractiveness helped a property sell faster than those that spoke of "value" and "price." Homes described as "beautiful" moved 15 percent faster and for 5 percent more in price than the benchmark. "Good-value" homes sold for 5 percent less than average.

Another finding in Anglin's study was that the plea of "must see!" was received about as enthusiastically as a dinner-time telemarketing call. Homes with listings using the words "must see" had a statistically insignificant impact on the number of days they took to sell.

Listings where the word "landscaping" was heralded sold 20 percent faster, and homes in "move-in condition" took 12 percent less time to sell than the benchmark, although the study showed "move-in condition" had an insignificant impact on the sales price.

Owners use listing language to convey how serious they are about selling. Some words work better than others, Anglin's study found. Listings in which the seller said he or she was "moving" sold for 1 percent less in price compared to 8 percent less when the seller was "motivated."

Real estate listings, not unlike personal ads, are crafted to minimize blemishes and maximize perceived selling points. So if "enjoys moonlight walks on the beach and cooking together" means "I'm unemployed and am looking for someone who won't always expect to eat out," then "needs TLC" might mean "this house will have you on a first-name basis with the clerks at the local hardware store."

Anglin's study isn't alone in efforts to determine what language moves the market.

Last year, the impact of listing language was covered in a National Bureau of Economic Research study that looked at whether real estate agents selling their own homes hold out for a higher price. (They do; the study found they take longer to sell but fetch a higher price.

'As is' lowers price

Descriptions of houses that indicated an obvious problem -- such as "foreclosure," "as is" and "handyman special" -- drew substantially lower sales prices.

Words that suggested desirable attributes -- "granite," "maple," "gourmet" -- translated into a higher sale price, the study found.

One problem discovered was that "superficially positive" words that, in effect, damn with faint praise -- such as "clean" or "quiet" -- had zero or even a negative correlation with prices.

Those findings echo those made in a 2000 paper called "Real Estate Agent Remarks: Help or Hype?" researched by University of Texas finance and real estate professor Ronald C. Rutherford.

Rutherford found, among other things, that buyers read between the lines. If you can't find anything better to say than "new paint," perhaps it's best to say nothing at all.

Positive and factually verifiable comments such as "golf" or "lake" drew increased sales prices; other presumably positive comments regarding new paint or new carpet brought lower ones.

"What you say needs to be extravagant," Rutherford said, "or the signal that is received by buyers is that it's not worth talking about."

Uh-oh: 'New paint'

But what do sellers know? "New paint" appeared on 15 percent of the listings and was the most commonly listed comment.

Rutherford said sellers would be best served by a listing with "just the facts, ma'am."

"In today's market," he said, "if it's a good deal, you need to convey it with factually verifiable language."

An example: "Needs repairs," he said.

Of the information from his study, conducted between 1994 and 1997 of almost 60,000 closed residential transactions in Tarrant County, Texas, what surprised him most?

That homes with "motivated" sellers stayed on the market 15 percent longer than average and sold for 4 percent less.

His theory: "They overpriced the house to start with and eventually had to lower it. That explains the length of time on the market and the lower sales price."

Does he have any advice for today's sellers?

"Yes," he said, "avoid the word 'motivated.'"

Words That Can Help a Listing:

Curb Appeal

Move-In Condition

Landscaping

Granite

Gourmet

Golf

Words that can hurt a listing:

motivated seller

good value

clean

quiet

new paint

Execute Your Marketing Plan

Nicholas Ellsworth (North American Title Co.) — Thu, 20 Nov 2008 10:27:19 -0600

Execute Your Marketing Plan

Your primary goal within the first few months of your real estate career is to build awareness of your services in your target market. The most effective way to do this is on a limited budget (with between $2,000 and $5,000 to spend on marketing), according to industry experts, is to conduct repeated mailings of a single, strong marketing brochure to your target market.

Once you've developed a Personal Marketing Plan and a budget, here are tips on how to execute your plan:

• Decide how large your target market is. You need to know how many marketing pieces you will need over the next few months. Remember, when it comes to printing, it's much cheaper to order one very large quantity as opposed to making ten orders of smaller amounts.

• If you've decided to work with a designer and copywriter to help you develop your brochure, ask for estimates in advance. And review them carefully to see what they include. Ask how many drafts they'll allow under the original charge. Is photography needed and is it included in the cost? Is the estimate made on a set number of hours or on the project? Allow at least two weeks for copy and two weeks for design. When everything is done to your satisfaction, sign off on the final copy.

• Develop mailing lists for your brochure. North American Title Company can help you with labels for your newly selected target market, but you will need to order envelopes and stationary if you need them for your mailing.

• Mail your brochure to your mailing list, which should include your family and friends, also called your Sphere of Influence. Then mail 10 brochures per day into your farm area. If you don't have a farm, send your brochure to 10 names from the reverse directory (a directory that if you have a street address give you the name of the person who live there). Also, hand out 10 brochures per day to people you meet. Always have your brochures and business cards ready to give out. If you eat out, put your tip on top of your brochure when you leave.

• Evaluate the results of your mailing. How many responses did you get? What groups responded most favorably? Keeping track of the responses helps you to determine where you should be spending your marketing dollars and efforts for the best return.

What is Involved in a Title Search?

Nicholas Ellsworth (North American Title Co.) — Thu, 20 Nov 2008 10:23:20 -0600

What Is Involved In a Title Search?

Chain of Title

This is simply a history of the ownership of a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records-usually a County Clerk's or Recorder's Office-or obtained from title plants privately owned and maintained by title companies.

Tax Search

This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due. A due and unpaid tax or special assessment is a prior lien or claim on the property above all others. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

Report on Possession

The purpose of this is to supplement the information learned from the title search. In the eyes of the law, any buyer of real estate is assumed to have notice of all matters properly shown in the public records as to that real estate as well as any information that an actual inspection may reveal.

Judgment and Name Search

One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. A judgment is a general lien against the debtor's real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.

It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So all possible variations of the name must be examined. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

Commitment

When these searches have been completed, North American Title issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the search and examination.

The Basics of a Short Sale

Nicholas Ellsworth (North American Title Co.) — Thu, 20 Nov 2008 10:21:13 -0600

The Basics of a Short Sale

WHAT IS A SHORT SALE?

A short sale is the sale of a property, with the authorization of the creditors, for less than what is owed on it. Whether it is the forgiveness of debt owed by a nation or an individual, it simply means that someone is willing to settle for less than what they originally anticipated. It's part of business. All lenders know that they will not win all the time. Risk and loss of capital is an anticipated cost in the lending industry.

What are the leading causes of short sales?

Changing economic conditions (like what Northern California is experiencing currently), conflicts (such as the ones seen in the eighties in Eastern Europe), and Mother Nature (post Hurricane Katrina) are among some of the many causes of unforeseen situations that turn good lending contracts into bad.

When do short sales occur?

In the context of foreclosure on secured assets, a short sale occurs when debtors agree to settle their liens for a known amount of money as opposed to taking a chance at auction. Auction prices are often unpredictable and usually greatly discounted. Many lenders are willing to mitigate further risk of loss by making deals before auction. Bad debt is sold by lenders all the time. For instance, there is a huge market for unsecured credit card debt that is sold for pennies on the dollar to collection agencies. That's self-effectuated short sales. Lenders are more than happy to discuss resolution of aged debt. Their business is to lend capital, not dispose of foreclosed assets.

What are the potential ramifications of a short sale?

The transaction can be completed at no cost to the homeowner - commissions, title and escrow fees and most repair costs are all paid by the lender - there can be negative financial consequences on the seller. Most often, both federal and state governments view a short sale as debt relief (and let's face it, it is a relief) and the difference between what was settled and what your loan was can become taxable. Always check with a professional tax consultant before making any permanent decisions.

What is Mello-Roos?

Nicholas Ellsworth (North American Title Co.) — Tue, 18 Nov 2008 14:36:54 -0600

What is Mello Roos?

The Mello-Roos Community Facilities Act of 1982 was passed by the California Legislature to address local government efforts to fund the cost of facilities in communities through the establishment of special assessments in specified geographic districts.

Mello-Roos districts are often encountered in new developments when the developer seeks creation of an assessment district to finance new public services facilities to meet increased demands on local agencies as a result of the new development. San Francisco County has Mello-Roos taxes within its borders.

The Act, which has been amended several times since its inception in 1982, is contained in section 53313,et seq.,of the Government Code. The act provides for the financing of various types of services within the specified area, including jails, juvenile halls, fire protection, ambulance and paramedic facilities, recreational programs, operation and maintenance of parks and parkways and open space, storm drainage systems, museums and other cultural facilities, and removal or other remedial action for clean-up of any hazardous substance affecting the environment.

The establishment of a Mello-Roos District requires that notice be given to the affected homeowners with the opportunity for them to voice their opinions regarding the formation of the district. The city or county must then adopt a resolution of formation which establishes the district. An election is then held in which at least two thirds of the votes cast in the election are in favor of levying the special tax. After approval, a notice of special tax lien is recorded in the office of the county in which any portion of the district is located.

After establishment of a Mello-Roos district, a special tax sufficient to pay for the stated facilities is imposed and secured by recording a continuing lien against all nonexempt real property within the specified geographic area. The resolution establishing the tax specifies the rate, method of apportionment, and manner of collection of the special tax. This tax, levied annually, remains in effect until the special tax obligation is permanently satisfied and the lien canceled.

Mello-Roos Assessments are usually collected with the secured property tax roll until the assessment has been satisfied. Upon satisfaction of the assessment under the district, a Notice of Cessation of Special Tax is recorded which states that the obligation to pay the special tax has ceased and the lien imposed by the Notice of Special Tax Lien is extinguished.

Prepayment of the assessment may be allowed and a Notice of Cancellation of Special Tax Lien may be issued and recorded in the county recorder's records upon payment of the special tax applicable to a particular parcel of land. In the event of non-payment of Mello-Roos assessment liens, special rules provide for foreclosure to satisfy payment of the lien amount.

Marital Status and Title Vestings

Nicholas Ellsworth (North American Title Co.) — Mon, 17 Nov 2008 13:22:53 -0600

Marital Status and Title Vestings

One of the most common areas of concern in the insurance of title to residential property is that of the vesting of title, as it is affected by the marital status of the owners or prospective buyers. Although on its face, the issue would seem simple, the human condition seems to work to make it more complex all the time.

Consider the concept that a person is either married or not.Well, what about "separated?" tells a title insurer that the person is married and that there is some sort of problem between the person and his or her erstwhile spouse. Or consider the age old question of whether a person is single , unmarried ,divorced, or widowed. One of the recurring issues with which the title insurer is faced is whether the nature of the description makes a difference (it doesn't), or whether it is the number of persons on title which counts (it does).

The vesting of title , for "natural persons," may be as sole and separate property, as community property to exist, there must be a valid subsisting marriage between the parties to the purported community interest. Parties who have acquired title as community property when no valid marriage exists between them would be deemed to hold as tenants in common.

Married persons acquiring property during the marriage are presumed to have acquired as community property unless the documentation provides otherwise. If the property is to be held as separate property, the acquiescence of the spouse is generally needed, most usually in the form of a quit claim deed. The exception to this would be acquisition by gift or inheritance, which is generally accepted as being separate property unless the gift or bequest indicates otherwise. Where the spouses intend is generally accomplished by a quit claim deed from the spouse disclaiming the interest.

If you have questions or problems in this area, a discussion with your North American Title Company title officer will give you the basic information you will need for an efficient conference with your lawyer. Always consult your lawyer when dealing with matters as important as the vesting of title to your real estate.

Written by H.Collyer Church,Vice President

Underwriting Counsel, North American Title Company

Why hasn't my home sold?

Nicholas Ellsworth (North American Title Co.) — Mon, 17 Nov 2008 13:20:48 -0600

Why Hasn't My Home Sold?

Home sellers are very concerned when their home has been on the market for some time. The offers presented, if any, have been too low to even consider. The home hasn't sold. Quite naturally they want to know what's wrong.

That's a fair question. The newspapers say the home market is active again; some homes in the area have sold. Now sellers are asking questions like, "Interest rates are down, aren't they?", "Why haven't I had a serious offer?", "Should I take my house off the market?", "Should I change Realtors?"

FIRST of all, slow down. Don't panic. Take a rational look at the market and make the most of it. Smart home sellers are moving their home right now, today. They recognize the market today is different from last year. Pricing a home correctly initially is vital. Pricing too high and then dropping the price later can cast an unfavorable feeling over the property.

SECOND, the smart home seller comes to the obvious conclusion that with cautious buyers looking at more homes you have to be competitive, flexible, aggressive, and do a better job of marketing to generate offers. Your home can sell, and quickly. Staging a home is just one great way to bring out the full value potential of a home.

THIRD, sit down with your real estate professional and rethink your marketing plan. There are a number of actions to consider to beat out your competition. The correct set of actions will generate the sale.

Be patient. Today's buyers are tough but every market offers opportunities. Seek your real estate professional's advice. Put together an aggressive program and then act on it. Properly priced, packaged, and presented homes are selling. Yours will too!

PRICE. Reviewing your asking price is the most difficult, painful and personal part of answering the question, "Why aren't we getting any action?" This is typically the single most critical element in your new marketing plan. Get fresh comparable sales in your area. Forget the asking prices of homes that aren't selling. Check out the homes that are selling. Your home must be priced to meet today's market or all the other elements of your new plan won't make much difference.

There is a selling price for every property. If the market is showing little interest in your property, the price is probably too high for this market.

TERMS. How flexible are you really prepared to be? How big a second can you take on? Can you offer a fast escrow?

APPEARANCE. Remember the old advertising slogan, "Even your best friends won't tell you!"? Well, a good agent will level with you. Have your real estate professional give you a set of ideas on how to spiff up your house. Put aside what you think is "nice" or "adequate." Listen to your professional advisor. Paint, clip, cut, clean, deodorize, send to storage, toss out, caulk, mow, paper, cement, repair, add, scoop, weed, tear down, and scrub. Little things do count. A relatively small amount of time, effort and money spent now can bring back large rewards.

ATMOSPHERE. There are also some "do's and don'ts" which can be helpful in creating a selling atmosphere. Leave the house when it's being shown and take the dog and children with you. If you must be home don't chat with buyers, just disappear. Tune the FM radio to quiet, soothing music. Be careful of cooking odors. Turn on all the lights. Fresh flowers are always a plus. Keep the temperature at a comfortable level, and open the windows and doors if weather and security permit. Pick up kids' toys. Help your real estate professional by creating a warm, pleasant, private sales environment.

Why hasn't my home sold?

Nicholas Ellsworth (North American Title Co.) — Thu, 13 Nov 2008 18:36:17 -0600

Why Hasn't My Home Sold?

There is a selling price for every property. If the market is showing little interest in your property, the price is probably too high for this market.

TERMS. How flexible are you really prepared to be? How big a second can you take on? Can you offer a fast escrow?

ATMOSPHERE. There are also some "do's and don'ts" which can be

helpful in creating a selling atmosphere. Leave the house when it's being shown and take the dog and children with you. If you must be home don't chat with buyers, just disappear. Tune the FM radio to quiet, soothing music. Be careful of cooking odors. Turn on all the lights. Fresh flowers are always a plus. Keep the temperature at a

comfortable level, and open the windows and doors if weather and security permit. Pick up kids' toys. Help your real estate professional by creating a warm, pleasant, private sales environment.

Selling your home at the holidays

Nicholas Ellsworth (North American Title Co.) — Thu, 13 Nov 2008 18:34:01 -0600

Selling Your Home At The Holidays

Are you thinking about selling your home but not sure if the holidays are the best time? Well, it turns out this is a great time of year to list your home for sale!

The holidays are actually one of the best times to sell your home as people take off work during the season. Buyers have more time, and they can look at homes together as a family.

Although home sale activity may appear to slow down, the buyers who are actively looking during the holidays are that much more serious. The market is no more affected by busy schedules during the holidays than during other "busy" periods. If that were so, the market would shut down throughout the year as families concentrate on spring weddings, June graduations, summer vacations, and autumn back-to-school activities.

Many buyers deliberately choose to shop for a home after the busy spring and summer rush. They know that it will be easier to look, and that negotiations will be less stressful. They may not have children, or they may have grown children, so moving to accommodate the school year isn't a consideration. Finding the right home at the right price, however, is.

During the holidays, our culture focuses on family and the home. Preparing for the indoor activities of winter is one of the most enjoyable periods of family life. Allowing buyers to view your home during this most hospitable of seasons lets them better picture their own family life in the attractive environment you have created.

When is your home ever more beautiful and inviting? You have cleaned and decorated, and your home looks like a picture postcard. If the results are good enough for family and friends, they will surely be good enough to impress your buyers. And you can get your family on board to do a five-minute blitz pick-up every morning to keep holiday messes to a minimum.

With reduced inventories and motivated buyers, you will have all the real estate agents in the area on your team. You may find you have more showings than you would if you marketed your home during a busier time of the year.

Because January is traditionally the month for company transfers, having a home on the market at the end of the year can capture the transferees who may not be able to wait until the Spring to buy a home.

Once your homes sells, you'll also discover that this is a great time of year to shop for a new home! Just as some people need to buy before the end of the year, some people need to sell before the end of the year and you can get a home for a good price.

Additionally, you can arrange the terms of a purchase contract to suit your needs. If moving during the holidays isn't an option, you can put in the closing date of your choice. Most people can close 30 to 60 days after a contract is written, so there is plenty of time for you to finish out the holidays in your current home.

Top 10 reasons to buy

Nicholas Ellsworth (North American Title Co.) — Thu, 13 Nov 2008 18:32:36 -0600

Top 10 Reasons To Buy

"Now is one of the best times in California history for home buyers to get a foot in the door."

Did you know that rates are historically low, home selections are varied, and loan options are still solid? Take some queues from the experts and give some real thought to purchasing a home, and soon.

1. Selection, selection, selection.

Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 5,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.

2. No bidding wars.

In 2005 buyers could easily make offers on ten homes or more and not have any of them be accepted. They would lose out in the feeding frenzy that ran rampant across

California. Other buyers bid the properties up substantially from the listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. In this market, there is rarely that kind of competitive bidding.

3. You can make an offer.

A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ratio is about 96%.

4. Patience is tolerated.

In the hot seller's market that existed, everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for more than an hour or two.

5. Due diligence is welcome.

In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order to gain an advantage with multiple offers.

6. There are plenty of specs.

In the not-too-distant past, a buyer had to ‘play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.

7. Repair requests are welcomed.

After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold ‘as is'.

8. Few, if any, investors.

It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyers caused the market to inflate and affordability to decline. Now is a great time to buy without having to compete with these prospective landlords.

9. Location, location, location.

Today's buyers can find homes closer to work. In this market, reasonably priced homes are within biking or walking distance to schools & rapid transit lines.

10. Real financing is available.

Fixed rates are back. FHA financing, first time homebuyer bond programs, special loans for teachers and police officers are back in business. It's a great time to buy real estate!

Should you ask your realtor to cut their commission?

Nicholas Ellsworth (North American Title Co.) — Thu, 13 Nov 2008 18:30:53 -0600

Should You Ask Your Realtor to Cut Their Commission?

Most people know that real estate commissions are negotiable. The question is, "What is fair?"

The first thing which needs to be understood is how the commission is distributed. In most instances, half of the commission goes to the company representing the seller and the other half goes to the company representing the buyer. After that, the agents get a certain percentage of the amount that went to each company.

From the percentage received by the agents, they must pay for their many expenses. They must pay for the marketing of the property and a portion of their annual dues and fees to belong to the various organizations that help them do their jobs: NAR, CAR, the Board of Realtors, WS, etc. In addition to the mandatory continuing education requirements, many agents designate a certain amount of their income toward non-required education programs to ensure that they are the best in the industry. Additionally, there are untold business expenses such as transportation, miscellaneous marketing, accounting, supplies, self-employment, etc. When all is said and done, despite what a seller may feel is a large expense, the net income to the agent is not that great.

It is certainly the seller's prerogative to try and negotiate to have the agent give their best effort for a reduced fee. But keep in mind that if an agent agrees to a reduced commission, one of two options will occur: 1) the agent will still offer 50% of the total commission to the agent that produces a buyer and that probably means that agents representing buyers will show your property last because they will earn less or 2) the agent can still pay a full share to the buyer's agent but then the agent representing you, the seller, will be working for 66% of the going rate. How hard would you work if you were offered a third less than your contemporaries?

Be sure to take the above information into consideration when deciding what is fair for the level of service that you expect.

How to read a prelim

Nicholas Ellsworth (North American Title Co.) — Thu, 13 Nov 2008 18:29:17 -0600

How to Read a Prelim

THE PRELIMINARY TITLE REPORT

THINGS TO LOOK FOR...

1. VESTED OWNERS NAME

• Are the names the same as shown on the purchase agreement, deposit receipt, and application?

• Have all parties executed and approved the purchase agreement?

2. TYPE OF ESTATE OR INTEREST

• Fee Title or other (leasehold or equitable).

3. PRINTED EXCEPTIONS

• Current taxes, supplemental taxes due to recent re-assessment, lien for future supplemental taxes,

sale to state for unpaid delinquent taxes and/or bonds.

4. EASEMENTS

• Understand the type and location of all easements.

• Do not hesitate to ask your escrow officer or title officer for a copy of the recorded easements.

5. COVENANTS, CONDITIONS AND RESTRICTIONS

• Declaration by owners of any subdivision prior to sale describing property restrictions and agreements said property and future owners.

• Copies of all recorded CC&R's are available upon request.

6. DEEDS OF TRUST

• All existing loans against the property or the existence of any paid off loans, which have not yet been

reconveyed of record.

7. NOTICE OF DEFAULT

• Alerts all parties of an existing foreclosure proceeding.

8. STATE OR FEDERAL TAX LIENS, JUDGEMENTS AND BANKRUPTCY

• Any court proceedings affecting the seller and/or the property therein.

9. LEGAL DESCRIPTION

• A method of geographically identifying a parcel of land, by lot and block or metes and bounds

• Also discloses assessors parcel number (APN)

10. FIVE YEAR SHORT TERM RATE & REFINANCE RATE

• If applicable, a 20% savings is passed along to the buyer on properties insured by ANY title company

with the past 5 years.

• The refinance rate is a 30% discount to borrowers.

information provided herein is deemed reliable but is not guaranteed

7 Reasons You Need Title Insurance

Nicholas Ellsworth (North American Title Co.) — Wed, 12 Nov 2008 12:43:55 -0600

7 Reasons Buyers Need Title Insurance

Title Insurance can help ensure the buyer and the lender that title defects will not make the property unsaleable in the future because of:

• Forged Documents

• Undisclosed Heirs to the Property

• Misfiled Documents - such as deeds, liens, and mortgage satisfaction documents

• Confusion Caused by Similarities in Names

• Incorrect Marital Status

• Mental Incompetence

• Mistaken Legal Interpretations of Wills or Trusts

Remind buyers that because the lender's liability under a title insurance policy is usually limited to the outstanding balance of the mortgage, it may be possible to cancel this insurance when the loan balance has been reduced sufficiently. Review the title policy for any exceptions or judgments against the sellers that might derail the closing.

For more information regarding title insurance and other important areas of real estate, log onto www.NAT.com!

Information provided herein is deemed reliable but is not guaranteed.

Please consult an attorney or tax professional before making any decisions.

Waiting can cost you

Nicholas Ellsworth (North American Title Co.) — Wed, 12 Nov 2008 12:41:27 -0600

Why Waiting Can Cost You

If you are a potential first-time buyer wishing you would have taken the home buying plunge while rates were low, it is not too late to dive into the market. In fact, even with interest rates on the rise, waiting to purchase a home could end up costing you money.

For example, let us say that you are interested in buying a house which costs $100,000, but you believe interest rates might fall if you wait one year to purchase. Would you really save by waiting? Probably not if you were to purchase today. Principal and interest payments on a $90,000 loan (after a 10% down payment) would be $660.39 at 8.0% interest.

But if rates did fall over the next year, say by one-half percent to 7.5% interest, you would have lost money by waiting. Appreciation at even a meager 3% annual increase has now elevated the cost of the home by $3,000 to $103,000. That means that you will need $300 more as a down payment for a 90% loan. And a larger loan could mean higher closing costs. Plus, a higher mortgage amount could make loan qualifying tougher.

Financially, the bottom line is that even though your principal and interest payments would be $11.49 per month less with the lower interest rate, it would take you more than twenty-one years to recoup the $3,000 additional money it cost you by waiting ($3,000 divided by $11.49 = 21.7 years.)

Why let your landlord be the financial winner just because rates are edging up?

Perhaps you are one of those would-be buyers wanting to pay off debts before taking on a mortgage. While it is a very prudent undertaking, it may not make financial sense especially if your debt-load is not excessive for your income. The flexibility in today's extensive menu of mortgage programs allows credit-worthy buyers carrying significant debt a variety of ways to secure the type of loan they need, even if qualifying ratios are outside of the usual parameters. Loans include low-documentation, no-documentation, and even stated-income where you state, but not prove, your gross monthly income.

Talk with your licensed Realtor® or lender to find out how you can make the dream of home ownership a reality!

Requirements for Insuring Trusts

Nicholas Ellsworth (North American Title Co.) — Tue, 11 Nov 2008 11:11:48 -0600

Understanding Title Insurance Requirements for Insuring Trusts

Marketing tip at the bottom!

In today's world of busy probate courts and exorbitant death taxes, the living trust became a common manner of holding title to real property. The following may help you understand a few of the requirements of the title insurance industry if title to property is conveyed to the trustee of a living trust.

Q: What is a trust?

A: An agreement between a trustor and trustee to hold title to and administer designated assets of the trustor for the use and benefit of one or more beneficiaries.

Q: Can a trust itself acquire and convey interests in real property?

A: No. The trust is an arrangement between a trustee and trustor. Only the trustee, on behalf of the trust, may own and convey any interest in real property. The Trustee may only exercise the powers granted in the trust.

Q: What will the title company require if a trustee holds the title to the property which is part of the trust?

A: First, a certification that the Trust and amendments (if any) are complete, the names of the present trustees of the trust, and a statement that the trustees are empowered by the trust to complete the proposed transaction. Second, at the discretion of the Title Company, a full copy of the trust and any amendments.

Q: My trust contains certain amount of money to be give to various charities which is none of your business. Can I omit these pages?

A: Because many different provisions may be on the same page, the answer must be no, but if the title company requires a copy of the trust, it may accept a copy with those amounts blacked out.

Q: If there is more than one trustee, can just one sign.

A: Maybe. The trust must specifically provide for less than all to sign.

Q: Can the trustee give someone a power-of-attorney?

A: Only if the trust specifically provides for the appointment of an attorney-in-fact.

Q: What will the title company require if all the trustees have died or are unwilling to act?

A: If the trustor is not able to do so, or the trust provisions prohibit the trustor from appointing a new trustee, the court may do so.

Q: Who can be trustee?

A: Any individual not under a legal disability or a corporation that has qualified to do a trust business in the state of California.

Q: How does a notary acknowledge the signature of the trustee?

A: Title is vested in the trustee. Hence, if the trustee is an individual or a corporation, then the new general form of acknowledgment will be prepared to reflect the intrinsic nature of the trustee.

Q: How would the deed to the trustee ordinarily be worked to transfer title to the trustee?

A: "John Doe and Mary Doe, as trustees of the Doe family trust, under declaration of trust dated January 1, 1992."

Q: Are there any limitations on what a trustee may do?

A: Yes, the trustee is limited principally and most importantly by the provisions of the trust and, thus, may only act within the terms of the trust. The probate code contains general powers which, unless limited by the trust agreement, are sufficient for title insurers to rely on for sale, conveyance, and refinance purposes.

Marketing Tip:

Ask yourself, "Who would benefit from this information?" I think the answer is obvious. Anybody who holds title in a trust! Property owners are looking for more than a real estate license. They want (and need) and agent that can relate to their specific situation. Whether it be a divorce or a trust, show them you're more than capable of assisting them. Schedule an appointment with me today and we can create a marketing plan to target property owners who hold title in a trust.

Condominiums and PUD's

Nicholas Ellsworth (North American Title Co.) — Tue, 11 Nov 2008 11:09:15 -0600

Understanding Condominium and PUD Ownership

California's builders, in an effort to combat the dual problem of an increasing population and a declining availability of prime land, are increasingly turning to common interest developments (CIDs) as a means to maximize land use and offer homebuyers convenient, affordable housing. North American Title Company's parent company, Lennar Corporation (NYSE: LEN) is one of those builders. The two most common forms of common interest developments in California are Condominiums and Planned Unit Developments, often referred to as PUDs. The essential characteristics shared by these two forms of ownership are:

•1. Common ownership of private residential property.

•2. Mandatory membership of all owners an association which controls use of the common property.

•3. Governing documents which establish the procedures for governing the association, the rules which the owners must follow in the use of their individuals lots or units as well as the common properties; and

•4. A means by which owners are assessed to finance the operation of the association and maintenance of the common properties.

Before continuing further, it may be helpful to clarify a common misconception about Condominiums and PUDs. The terms Condominium and PUD refer to types of interest in land, not to physical "styles" of dwellings. Therefore, when homebuyers say that they are buying a townhouse, that is not the same as saying that they are buying a Condominium. When homebuyers say they are buying a unit in a PUD, they are not necessarily buying a single family detached home. Though the townhouse is the most common style of structure found in common interest developments in California, a townhouse might legally be a Condominium, a unit or lot in a Planned Development, or a single-family detached residence. The terms Condominium or PUD will say a great deal about the ownership rights the buyer will receive in the unit and the interest developments offer many advantages to homebuyers-low maintenance and access to attractive amenities-however, there are restrictions and duties which come with ownership of a Condominium or PUD that buyers should be aware of prior to purchase.

Q: What are the basic differences between ownership of a Condominium and ownership of a PUD?

A: The owner(s) of a unit within a typical Condominium project owns 100% of the unit, as defined by a recorded Condominium Plan. As well, they will own a fractional or percentage interests in all common areas of the Condominium project. The owner(s) of a lot within a PUD own the lot which has been conveyed to them as shown in the recorded Tract Map or Parcel Map and the structure and improvements thereon. In addition, they receive rights and easements to use in common areas owned by another frequently a homeowner's association of which the individual lot owners are members.

(The above are basic descriptions and should not be considered legal definitions.)

Q: Besides ownership of my unit, what other amenities (common areas) will I be acquiring use of and how will I own them?

A: Common interest areas may span the spectrum from the ordinary-buildings, roadways, walkways and utility rooms to the extravagant-equestrian trails and gold courses-with more usual amenities including community swimming pools and clubhouse facilities. Your ownership rights in common areas will be spelled out in your project's Declaration of Covenants, Conditions and Restrictions (CC & R's will be expanded upon later). As stated in the answer to the previous question, Condominium owners own a fractional or percentage interest in common with all other owners in the Condominium project, in all common areas. PUD owners receive rights and easements to use of common areas through their membership in a homeowner's association, which typically owns and controls the common areas. Some PUD projects, hoever, provide that the homeowners will own a fractional interest in the common areas. Again, in this case, a homeowner's association will have the right to regulate the use of the common areas and to assess for purpose of maintaining the common areas.

Check your CC and R's and association Bylaws (basically, rules governing the management of the development) to insure that you understand your rights to use of your unit and common areas.

Q: What services will my homeowner's assessments help to finance?

A: Your homeowner's assessments support not only the easily recognizable building and swimming pool upkeep, landscape maintenance - but also the unseen association management and legal fees and association insurance.

As well, reserves must be factored into your assessments, including reserves for replacements of such items as roadways and walkways. In the case of Condominiums, where ownership is usually limited to airspace within the walls, floors and ceiling of the unit, reserves will frequently fund replacements of such items as roofs and plumbing.

Each member of the homeowner's association, upon purchasing their unit, must receive a pro forma operating budget from the association. Basically, this will be a financial statement of the income and obligations of the association, which must include an estimate of the life of the obligations covered under the assessments and how their replacement is being funded.

Q: What happen if I fail to pay my homeowner's assessments?

A: Delinquency fees will be added onto the unpaid assessments. Should your delinquency continue, the association has the right to place a lien upon your property. The lien may lead to a foreclosure if the delinquency is not paid.

Q: Of what importance are CC & R's and Bylaws?

A: CC & R's and Bylaws are the rules and regulations of the community, meant to guide the use of individual properties and common areas. Buyers should be aware the CC & R's and Bylaws may be written so as to restrict not only property use, but also to restrict owner's lifestyles, for instance, spelling out hours during which entertainment, such a parties, may be hosted. CC & R's and Bylaws are highly important and should be thoroughly examined and understood prior to purchase. They bind all owners and their successors to the rules and regulations the community. Failure to follow those rules and regulations can be considered a breach of contract. Legal action may he taken against the homeowners for any such breach.

Q: At what point in the real estate transaction will I be allowed to review a copy of any CC & R's and Bylaws:

A: Legally, it is the responsibility of the owner to provide the prospective purchaser with the governing documents of the development (CC & R's and Bylaws), the most recent financial statement of the homeowner's association and notice of any dues delinquent on the unit.

The law states that these items should be delivered as soon as practicable;however, the prospective buyer should request to see them as early as possible. If you do not fully understand what is stated in these documents, consult a real property attorney.

Q: Should I object to items included in the CC & R's and/or Bylaws, will I have the opportunity to terminate those items prior to taking ownership?

A: No. The process required to terminate these restrictions is often complex and costly. Termination of restrictions will require, at least, a majority vote by members of the homeowner's association, and may require litigation.

Q: What if have further questions regarding Condominium and PUD ownership?

A: Ask any questions you may have before you buy! Don't wait to take ownership to find out about restrictions and regulations affecting your homeownership rights.

What's in a name?

Nicholas Ellsworth (North American Title Co.) — Mon, 10 Nov 2008 16:49:33 -0600

Understanding Statements of Information

What's in a name?

When a title company seeks to uncover matters affecting title to real property, the answer is, "Quite a bit".

Statements of Information provide title companies with the information they need to distinguish the buyers and sellers of real property from others with similar names. After identifying the true buyers and sellers, title companies may disregard the judgments, liens or other matters on the public records under similar names.

Q: What is a Statement of Information?

A: A statement of Information is a form routinely requested from the buyer, seller and borrower in a transaction where title insurance is sought. The completed form provides the title company with information needed to adequately examine documents so as to disregard matters which do not affect the property to be insured, matters which actually apply to some other person.

Q: What does a Statement of Information do?

A: Every day documents effecting real property-liens, court decrees, bankruptcies-are recorded.

Whenever a title company uncovers a recorded document in which the name is the same or similar to that of the buyer, seller or borrower in a title transaction, the title company must ask, "Does this document affect the parties we are insuring?" Because, if it does, it affects title to property and would, therefore be listed as an exception from coverage under the title policy.

A properly completed Statement of Information will allow the title company to differentiate between parties with the same or similar names when searching documents recorded by name. This protects all parties involved and allows the title company to competently carry out its duties with out unnecessary delay.

Q: What types of information are requested in a Statement of Information?

A: The information requested is personal in nature, but not unnecessarily so. The information requested is essential to avoid delays in closing the transaction.

You, and your spouse if you are married, will be asked to provide full name, social security number, year of birth, birthplace, and information on citizenship. If you are married, you will be asked the date and place of your marriage.

Residence and employment information will be requested, as will information regarding previous marriages if you are divorced.

Q: Will the information I supply be kept confidential?

A: The information you supply is completely confidential and only for title company use in completing the search of records necessary before a policy of title insurance can be issued.

Q: What happens if buyer, seller or borrower fails to provide the requested Statement of Information?

A: At best, failure to provide the requested Statement of Information will hinder the search and examination capabilities of the title company, causing delay in the production of your title policy. At worst, failure to provide the information requested could prohibit the close of your escrow. Without a Statement of Information, it would be necessary for the title company to list as exceptions from coverage judgements, liens or other matters which may affect the property to be insured. Such exceptions would be unacceptable to most lenders, whose interest must also be insured.

Conclusion

Title companies make every attempt in issuing a policy of title insurance to identify known risks affecting your property and to efficiently and correctly transfer title so as to protect your interests as a homebuyer.

By properly completing a Statement of Information, you allow the title company to provide the service you need with the assurance of confidentiality.

Subdivision Public Reports

Nicholas Ellsworth (North American Title Co.) — Wed, 05 Nov 2008 12:47:32 -0600

Understanding Subdivision Public Reports

Q: What is a Subdivision Public Report?

A: The Subdivision Public Report is a disclosure statement for the public which permits the sale or lease of lots, parcels or units within a subdivision. Just as corporations must obtain approval to issue and sell stock certificates, a developer must obtain approval to sell or lease five or more lots, parcels or units within a subdivision.

Q: Who must obtain a State of California Department of Real Estate Subdivision Public Report?

A: Any person or persons who intend on selling or leasing five or more lots, parcels, or units within a subdivision must first obtain a Subdivision Public Report.

Q: What types of subdivision projects would be exempt from obtaining a Public Report?

Those subdivisions with less than five units.
Commercial and industrial subdivisions.
A standard subdivision (having no common area) within the boundaries of a city with all lots to be improved.

For specific examples and explanations regarding exempt status, visit the DRE website at www.dre.ca.gov.

Q: Is there more than one type of Subdivision Public Report?

A: The Subdivision Public Report, also called a White Report or Final Subdivision Public Report, authorizes a developer to sell or lease lots, parcels or units within a subdivision. On some occasions a developer may apply for a Preliminary Public Report, also known as a Pink Report, which will allow a developer to advertise and take reservation deposit monies for the sale or lease of lots, parcels or units within a subdivision. Reservation deposits taken by a developer under a Preliminary Subdivision Public Report are fully refundable.

Q: What kind of information can typically be found in the Public Report?

A: The Department of Real Estate guidelines are specific about certain conditions that should always be included in the Public Report. Generally, the Public Report will disclose such information as: applicant's name, location and size of the subdivision, information on utilities, school, taxes, management, maintenance and operational expenses, unusual easements, right of way, set back requirements on vacant land offerings, restrictions or conditions imposed upon the buyer, any unusual costs that a consumer might have to incur and any unusual financial or conveyance arrangements. Each Public Report is unique to its specific project. The information found within the pages is provided to assist the potential purchaser with making an informed decision.

Q: What is the purpose of the Subdivision Public Report?

A: The purpose of the Subdivision Public Report is to inform the consumer about a specific property/project, thereby offering some protection from misrepresentation, deceit and fraud. During the processing of the Subdivision Public Report, the California Department of Real Estate, among the things, reviews the developer's project management budget, deposit money handling, advertisements and the guarantees made to complete all promised improvements.

Q: What State of California agency is responsible for policing compliance with Public Reports?

A: The Commissioner of the Department of Real Estate is responsible for policing compliance of the Subdivision Public Report. Whenever the Commissioner believes from satisfactory evidence that any person has or is about to violate any provisions, conditions, or requirements of the Subdivision Public Report, the Commissioner may bring an action in the Superior Court against such person, in the name of the People of the State of California.

Q: Why is the California Department of Real Estate Subdivision Public Report important to a new home buyer?

A: The Subdivision Public Report gives a potential home buyer pertinent information regarding the subdivision he/she is buying into. Although the Public Report is neither an offer nor a recommendation to purchase, it is an invaluable source of information for the consumer. Also important is the disclosure portion of the Public Report which serves to alert consumers to any negative aspects of a particular offering.

Q: What California State Agency is responsible for issuing the Subdivision Public Report?

A: Under the California Business and Transportation Agency is the Department of Real Estate, whose Chief Officer is the Real Estate Commissioner. It is the Real Estate Commissioner's duties, through the Department of Real Estate, to issue the Subdivision Public Reports, license real estate brokers and sales persons, and adopt rules and regulations for the enforcement of the California laws dealing with the real estate industry.

Q: How does the California Department of Real Estate protect the Subdivision purchaser?

A: The Department of Real Estate has established stringent guidelines and standards with which developers must comply when structuring their projects. All aspects of the subdivision offering are subjected to these guidelines and standards in order to protect the public from misrepresentation, deceit and fraud.

California's Prop 99

Nicholas Ellsworth (North American Title Co.) — Wed, 05 Nov 2008 12:33:22 -0600

Good morning,

Today I wanted to share some great information on Proposition 99. Most of us are familiar with Proposition 60 and 90, and a maybe a few others, but I wanted to bring something to the table that isn't uniform with what every other title company is doing. Just like you, one of my goals is to separate myself and my company from the rest of the competitors in the arena.

Understanding Prop 99

California state and local governments frequently acquire private property to build public facilities (such as roads, parks, and schools) or to promote public objectives (such as economic development and affordable housing). Most of the time, government buys property from willing sellers. Sometimes, however, property owners do not want to sell their property or do not agree on a sales price. In these cases, California law allows government to take property form a private owner provided that government uses the property for a "public use" (a term that has been broadly interpreted to mean a variety of public purposes), and pays the property owner "just compensation" (generally, the property's fair market value) and relocation costs (including certain business losses). This government power to take property for a public use is called "eminent domain".

Prop 99 limits state and local government's use of eminent domain in certain circumstances. Specifically, the proposition prohibits government from using eminent domain to take a single-family home (including a condominium) for the purpose of transferring it to another private party (such as a person, business, or association). This prohibition, however, would not apply if government was taking the home to:

Protect public health and safety
Prevent serious, repeated criminal activity.
Respond to an emergency.
Remedy environmental contamination that posed a threat to public health and safety.
Use the property for a public work, such as a toll road or airport operated by a private party.

In addition, the prohibition would not apply if the property owner did not live in the home or had lived there for less than a year.

Government may use eminent domain to take property for a public use if it pays just compensation and relocation costs. Common examples of public use also includes broad public objectives, such as economic development, eliminated urban blight and public nuisances, and public ownership of utility services.

What Are Just Compensation and Relocation Costs?

Just compensation includes (1) the fair market value of the property taken and (2) any reduction in value of the remaining property when only part of a parcel is taken. In addition to the payment of just compensation, California law requires governments to pay property owners for certain other expenses and losses associated with the transfer of property ownership.

The color of our souls

Nicholas Ellsworth (North American Title Co.) — Wed, 05 Nov 2008 10:38:41 -0600

Good morning,

I don't know about you, but I am overwhelmed with the energy that is still racing across the planet. We can feel the energy here in the U.S., but I guarantee you every country can feel the positive energy that is racing from one end of our country to the other. What an amazing, historic event that we are all a part of. This is living proof that we, Americans, are not judging each other by the color of our skin, but by the color of our souls. Let us join hands in taking the first step towards a better America. Today, I am proud to be an American, and I am proud to say that Barack Obama is the President of the United States of America.

Passing on Wills ...and Passwords!

Nicholas Ellsworth (North American Title Co.) — Wed, 05 Nov 2008 10:20:04 -0600

Here is an article I read about a year ago:

Passing on Wills...and Passwords

The digital age is adding a new dimension to the list of delicate topics to broach with aging or sick loved ones. In addition to planning for life insurance, living wills and funeral arrangements, estate planners are recommending that clients leave instructions to survivors on unraveling their electronic accounts, including a list of passwords and security codes.

If your loved one did not provide password data before dying, most Internet-based companies have instituted guidelines to help. When a survivor wants to take over a deceased member's AOL account, says a spokeswoman, the company asks to see a copy of a death certificate and means of proof that the survivor is authorized to administer the estate. If a relative of a deceased eBay seller provides similar documentation, the auction company will provide the account information. EBay will not grant access to a buyer's account.

When Facebook is informed of a user's death, the company puts the profile into "a memorial state," allowing friends and family to post and read mourner comments. The company will respond to request from immediate family members to remove from the site a profile of a deceased member. However, "the login and password to the account will not be provided to anyone," according to a spokeswoman.

To access a Gmail account after someone's death, Google generally requires survivors to submit by fax or regular mail a death certificate, proof that the relative has been legally authorized to act as an administrator as well as an email showing that the deceased had contacted the survivor on any topic before from the Gmail account in question.

As more people conduct their financial affairs online, the issue has become more pressing. Elaine King, a certified financial planner for Gibraltar Private Bank & Trust in Coral Gables, Fl., says recently, as man in his thirties died. His family could not even determine what financial accounts it needed to close until it could access his email account. The deceased man's Internet service provider required the family to get a court order granting it entry to his account. "It can be a very lengthy process," says Ms. King who adds that her firm now advises most clients to leave a list of electronic passwords along with a will.

Required reporting to the IRS

Nicholas Ellsworth (North American Title Co.) — Wed, 05 Nov 2008 10:11:06 -0600

Understanding Required Reporting to the I.R.S.

Sellers of real property will have certain information regarding the sale reported to the Internal Revenue Service (I.R.S.). This required reporting of information is a consequence of the Tax Reform Act of 1986; it is intended to encourage taxpayer compliance with the Internal Revenue Code and aid in audit and enforcement efforts by the I.R.S.

Q: Who is required to report to the I.R.S.?

A: Sellers of real property, under guidelines established by the I.R.S., are required to have the dollar amount of their gross proceeds from the sale reported on a Form 1099S. When a settlement agent is used, the I.R.S. makes the settlement agent responsible for the delivery of the seller's gross proceeds information on the Form 1099S.

The settlement agent generally will be the escrow agent or title company (North American Title Company); however, it may be an attorney, real estate broker or other person providing settlement services.

Q: What is an I.R.S. Form 1099S; and what will be reported?

A: The Form 1099S is the reporting form adopted by the I.R.S. for submitting the seller's gross proceeds information required by law.

The information is transferred onto magnetic media by the settlement agent who will make the required report to the I.R.S. The settlement agent is also responsible to keep a master copy of all transactions reported for a length of four years from the date of the transaction.

In general, information required by the I.R.S. falls into the following categories:

1. The name, address and taxpayer ID (social security number or tax identification number, often called the "TIN", of the sellers).

2. A general description of the property (in most cases an address).

3. The closing date of the transaction.

4. The gross proceeds of the transaction (even though gross proceeds do not correspond to taxable income).

5. Any property involved as part of the transaction other than cash or cash equivalent.

6. The name, address and TIN of the settlement agent.

7. Real estate tax paid in advance that is allocable to the buyer.

Q: On what type of transactions is a Form 1099S REQUIRED?

A: Currently, typical homeowner transactions covered include sales and exchanges of 1-4 family residential properties such as houses and condominiums. Also reportable are sales or exchanges of improved or unimproved land, commercial or industrial buildings, condominiums, stock in a cooperative housing corporation and mobile homes affixed to real property.

Specifically excluded from reporting are:

1. Foreclosures

2. Abandonments

3. Financing or refinancing of properties

Additionally, a 1099S is not required for the sale or exchange of a principal residence with gross proceeds of $250,000 or less ($500,000 or less for married filing jointly and possible other taxation scenarios) if an acceptable written assurance (certification) from the seller is obtained that indicates the full gain is excludable from the seller's gross income.

Q: What happens if the seller(s) refuse to provide the TIN for the Form 1099S?

A: The settlement agent is required to request the transferor's TIN number(s) before the time of closing. You may request a TIN on Form W-9 or use an alternative written request. The I.R.S. has included sample wording of an alternative written request in the instructions for preparation of Form 1099S.

Should the seller fail to provide the TIN and certify is correctness, the settlement agent may choose to:

1. Delay the closing of the transaction(s) until the information is furnished, or

2. Complete the transaction and report to the I.R.S. that an attempt was made to obtain the information from the seller.

Q: How is the sale reported when there is more than one seller involved or when multiple sellers do not own equal interests in the property?

A: Multiples sellers may allocate the gross proceeds among themselves for purposes of reporting. If there is no allocation, an incomplete allocation of conflicting allocations, then the entire gross proceeds will be reported for each seller.

Q: Where can I go for further information on taxation of real property:

A: The I.R.S. provides free publications that explain the tax aspects of real estate transactions. You may wish to order:

1. Publication #523, "Selling Your Home"

2. Publication #530, "Tax Information for First-Time Homeowners"

3. Publication #544, "Sales and Other Dispositions of Assets"

4. Publication #551, "Basis of Assets"