Common Title Issues in Residential Real Estate Sales

Common Title Issues in Residential Real Estate Sales

A clear title is a critical part of any residential real estate transaction. Simply put, clear title means that the seller has the legal right to pass on the property to the buyer.
To verify that a title is clear and free of “defects” or “clouds,” a title company or skilled real estate attorney does a title search. The attorney determines that the real estate title is legitimate, as well as in whom the title is vested, so the buyer can be confident that they are the real estate’s legal owner.

Common Issues Affecting Clear Title

The title search includes searching for potential issues that limit the seller’s ability to pass the title to the buyer. These include things like outstanding mortgages, judgments, restrictions and other encumbrances against the property that may affect ownership. Here are some of the most common issues residential real estate buyers encounter.

Mechanic’s Liens

Mechanic’s liens are liens placed against the property by a general contractor or someone else who has helped improve the property. Contractors place liens against the property to help ensure they get paid, and the lien is intended to be released when the job is complete. However, sometimes contractors fail to release the lien, either because of a paperwork error or because they were never paid. When a creditor has filed a lien on the home against a seller, it prevents the seller from selling the home.

Divorces and Family Disputes

Family dynamics can also cloud an otherwise clear title. For example, a couple purchases property together and then later divorces, the ex’s name sometimes remains on the deed. The ex’s name must be removed from the deed before the seller can pass title to the buyer.
Children who inherit a property can also cause title issues when not all of them agree to sell it. Your attorney can help negotiate the purchase with the remaining siblings who inherit a share of the property.
Finally, past due child support or spousal support can also lead to liens that prevent a seller from transferring property rights to the buyer.

Financial Issues

Financial issues can also prevent the transfer of clear title from a seller to a buyer. When a seller has failed to pay taxes, a lien can be placed on the property. The tax issues must be resolved before the sale is final.
Bankruptcy can also cloud a title. When the seller has been involved in bankruptcy proceedings, it may be necessary to petition the court to release the property from the bankruptcy process.

Contact an Experienced Real Estate Lawyer for Help

Any title issue discovered needs to be resolved so that the seller can pass clear title on to the buyer. That’s just one of the reasons it’s important to have an experienced real estate lawyer on your side.
Your lawyer can help you discover potential issues and resolve them quickly so that you can sell your home or purchase the home of your dreams without worry. To contact one of the real estate attorneys at the Lonergan Law Firm P.L.L.C. call 214-760-6768214-760-6768.

Commercial Real Estate: 5 Red Flags to Look for Before You Sign a Lease

Signing a commercial real estate lease marks an exciting time for your business, as it shows growth and greater opportunities for the future. Before you sign on that dotted line, however, it’s important to read your commercial lease in its entirety. Ensure you understand your rights and responsibilities, as well as the landlord’s rights and responsibilities.

5 Red Flags to Watch Out for in a Commercial Property Lease

If you sign an undesirable lease, it’s nearly impossible to exit without suffering some form of loss. As you read through your draft lease, watch out for these red flags.

1. Automatic Rent Increase

An automatic rent increase clause allows the landlord to increase the rate of rent automatically after a chosen period of time, often in yearly increments. For start-up businesses or small to medium-sized businesses, an automatic rent increase can cause unexpected financial struggle. Your lease should clearly explain any automatic rent increases or renewal terms, if applicable.

2. Broad Renewal Clause

Your lease should include a renewal clause that explains your options should you need to renew your lease. Make sure the renewal clause defines terms with great specificities, such as covering how much notice you need to provide to renew, how may renewal terms you have available to you and much more.

3. Unexpected Fees

Avoid a lease that mentions “occasional” or “unexpected” fees. With this wording, some landlords may attempt to charge your business fees that are not listed in your contract. If you have any concerns with the wording regarding fees, require the landlord to state each one outright in the lease itself. You don’t want unforeseen financial issues cropping up mid-lease.

4. Unfair Relocation Clause

Your landlord may try to work in a clause that says it may choose to move your business to another storefront or floor at any time. While relocation clauses are common in commercial property leases, you can ask for certain terms to be included. For example, you can ask to include contingencies that require the landlord to help pay for relocation and allow you to pay the original rent amount. If you cannot remove the clause or add in such contingencies, you may want to think twice about signing on the dotted line.

5. References to Spoken Promises

Any promise made by your landlord should be outlined in writing within your lease. Even if you know your landlord personally, a written agreement solidifies your relationship, protecting both your business and the landlord’s property. Make sure to include all verbal agreements within the written lease before both parties sign.

Does Your Commercial Lease Show any of These Red Flags?

If you have concerns about any of the clauses included in your draft commercial property lease, reach out to a professional commercial property attorney for help.

What Is a Short Sale and Is It the Right Choice for You?

Have you found yourself in a severe financial bind, unable to pay your mortgage? You’re not alone. A study completed by Harvard has shown that 38 million households can’t afford their homes. Going through a foreclosure isn’t your only option, however. A short sale can benefit both you and your lender while helping you get back on your feet faster.

What Is a Short Sale?

A short sale occurs when real estate property is sold for less than the whole amount owed on the mortgage. Short sales are typically considered before foreclosure when a homeowner is behind on mortgage payments. A short sale can also occur when the housing market decreases, leaving behind a house that is now worth less than the mortgage balance.

The Benefits of a Short Sale for Your Property

Although a short sale can take some time—up to a year in some cases—there are some benefits to pursuing it, for both the homeowner and the original lender.

  • Homeowners can avoid foreclosure: Short sales are voluntary and don’t have as many consequences as forced foreclosure. Foreclosures can keep homeowners from securing another mortgage for up to seven years and are damaging to their credit.
  • Lenders can get back what they gave: During a short sale process, lenders can receive most of the original loan through the sale of the property. Other options such as foreclosure require a more expensive process.
  • Financial flexibility: You could benefit from greater financial flexibility with a short sale. Often, homeowners are not required to make mortgage payments while undergoing the short sale process, benefiting those who are under major financial stress.
  • Exit the property with dignity: As a homeowner, you’ll benefit from knowing you sold your home, instead of having it taken from you forcefully. You’ll also keep foreclosure from being a part of your credit report.

Is a Short Sale the Right Choice for You?

For a successful short sale, it’s important to hire someone to help you navigate the intricacies of the process. If you’re considering selling your home as a short sale, consider speaking to a professional short sale attorney. To learn more about the short sale process, send us a message.

Rehab or Prehab for Retail Sale

Do you want to put in all the work required to totally renovate a house to resell or would you like to repair only the essentials and make a few cosmetic changes? Whether you choose to rehab or prehab, there’s money to be made when you market your property right.

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Several factors must be considered when marketing a rehab or prehab, fixing only critical problems inside and making the property attractive on the outside.

  1. Identify your target market.
  2. Create your marketing strategy for resale, including positioning the property correctly.
  3. Show your distinguishing style on the inside.
  4. Make the outside attractive.
  5. Double check the details.

IDENTIFY YOUR TARGET MARKET

If you are rehabbing, you are probably targeting the traditional home buyer or investor who wants to buy and rent. Depending on the price, you might specifically target deal hunters.

For a prehab, you could have three markets – deal hunters, flippers, and remodelers.

CREATE YOUR MARKETING STRATEGY FOR RESALE

Price is king and positioning is queen!

Obviously you need to check comps in the area so you can buy and sell at a competitive price. Comps also may provide insight into whether rehabbing or prehabbing makes more sense.

If you are rehabbing, you’ll need to position the house as the best move-in ready option available. Prehabs must be positioned as the best deal on the market for someone who doesn’t mind doing a little remodeling to make the house their own at the best price. This strategy opens the market to real estate investors.

Position with professional pictures! Cell phone cameras simply won’t do your masterpiece justice.

Mention renovation loans in your advertising if you are prehabbing. The projected renovation costs can be factored into the overall loan amount if the prospect qualifies. This can help prospective buyers understand their options more clearly.

Create a resale marketing strategy that fits your style. A Realtor® likely will encourage you to advertise or show the property only after it is 100% complete. Waiting can cut into your profits, however. Every investor wants real estate to sell fast, so some begin the marketing process on the first day the property is acquired – especially when the target buyers want to complete some of the renovation themselves.

Should you incorporate a few upscale popular features? It depends on the neighborhood and what the buyers expect. Rather than focusing 100% on sticking to a  budget when making these kinds of decisions, always consider buyer’s preferences. House renovations that are based solely on a budget can become costly if the house doesn’t sell at the right time! It may take a granite counter top, for example, to catch the eye of the right buyer in your geographic market.

If you’re selling to an investor, verify their funding source before you sign a contract.

SHOW YOUR DISTINGUISHING STYLE ON THE INSIDE

First, have it cleaned by a professional. Clean sells. Clean both inside and outside the windows as well as the window sills so prospects will get a great view rather than being distracted by bugs and dust! Clean out the closets and other storage spaces. Most people want storage space, so make yours look as spacious as possible. Be sure all pet hair and pet odors are gone. (Prospects can smell someone else’s pet when they walk in the door.)

Feature the uniqueness of your house. What makes it stand out from the rest? You may want to add your personal style to distinguish it from all the neutral houses they have seen. (Don’t go crazy! Beware of flashy paint color, for example. I tried to sell a house that featured burgundy walls several years ago and had no takers until I painted the walls a more popular color. Lesson learned.)

A little staging in the living space, kitchen/dining, and master bedroom can go a long way toward helping your potential buyers visualize what it could be like to live in the house. A simple, affordable example is to use attractive bedding. It doesn’t have to be expensive; you may want to purchase a used bedspread, for example. Be sure everything looks tidy. No clutter!

MAKE THE OUTSIDE ATTRACTIVE

Make a good first impression with curb appeal. Follow a landscape plan even if it is a simple one. For example, incorporate a flower bed or a few well-designed flower pots, remove all the weeds, and maintain the lawn. Trim trees if they are obviously overgrown. Place trash and recycle bins out of site. The bottom line is that you want the property to look attractive and clean.

DOUBLE CHECK THE DETAILS

Be very choosy about your contractors and pay them well if you wish to build relationships for future real estate projects. Only accept quality work, regardless of whether you are doing a rehab or prehab.

Double-check ALL the work. It’s not about trust; it’s about your investment. You have the final responsibility for Quality Control.

SUMMARY

There’s more than one way to fix and flip a home. You can choose to completely rehab the house or prehab by repairing only the most essential areas and sprucing it up. Either way you must carefully choose your target market and use strategies to attract them to your property so everyone wins!

Gaylene Rogers Lonergan, Board Certified Commercial and Residential Real Estate Attorney | 214-503-7509 | lonerganlaw.com | Escrow2@lonerganlaw.com

© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2017-19. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.