Ohio real estate agents,
This information was recently presented to agents in our real estate office by Terry Monnie of Classic Title Agency, Cincinnati, Ohio 45236 (513) 256-4779. He gave me permission to re-print this information here.
Much of what follows you have heard before, but the impact of this new "Homebuyer's Protection Act" is so far-reaching that it bears repeating. This legislation is the most significan for the title industry in years.
The "Homebuyer's Protection Act" has five primary facets:
Owner's Title Insurance Disclosure: For all residential transactions involving a purchase in which a lender's policy of title insurance is bing issued, but NO owner's policy has been requested, the title company handling the closing MUST provide a disclosure to the buyer "at the time the commit" is prepared.
Closing Protection Coverage: Title insurance policies protect the insured parties against defects in the title, but offer no protection to the normal parties to a residential transaction (lender, sellers and buyers) for the illegal acts of the title company/agent handling the closing. Keep in mind that in the mormal closing, the title agent's client is the lender and not the buyer or seller and if the title agent is dishonest and abscounds with thte funds or doesn't pay off a mortgage lien, the obligation to the various sellers and buyers is unclear. As a result, in the past, only lenders would be issued a closing protection letter by the title insuance underwriter, indemnifying the lender from the acts of the closing agent. The Ohio legislature recognized this situation and now mandates that all parties to the deal, lenders, seller and buyers, will be offered this 'closing protections coverage'. The cost is $35 for lenders, $50 for sellers and $15 for buyers (with a minimum charge of $35). These fees go directly to the underwriter with nothing to the local agent who does all of the work associated with this coverage.
Independent Review of Title Agent Escrow Accounts: The state of Ohio now requires that each title agent have their escrow accounts annually audited by an independent CPA. This is an expensive, yet arguable important protection to the public to avoid fraud and/or collusion.
Surety Bond: All title agents who handle closings (cash) in which NO title insurance policies are issued, must now obtain a surety bond in the amount of $150,000 and errors and omissions coverage with minimum coverage of $500,000 for the agent and $250,000 for any subcontractors working for them. As you know, we strongly urge all buyers to purchase the owner's policy of title insurance.
Consumer Sales Practice Act: This provision subjects title agents to the provisions of the SCPA for all transactions with mortgage loans of $75,000 or less. This is a sleeper provision which has long-term, adverse implications for non-compliance, so stay tuned for more upcoming details.
So, what does this all mean? There's going to be more disclosure about owner's title insurance. I've always told my clients, it's an important coverage to purchase whether you have a large downpayment on the property or not. I've always purchased it for myself when buying a home, because if you need it, you'll be glad you have it. It also looks like title agencies will be under more scrutiny to help protect the Ohio consumers during the real estate transactions.
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