Top Crye-Leike Agents (RT referrals) - February 2012

The following Crye-Leike Agents are the top agents for Realty Title referrals in the respective categories:

Top Agents of the Month (Company Wide)

Lauren Criswell - Arlington/Hwy 64
Bill Malone - Quail Hollow

Leigh Anne & Terry Boyd - Olive Branch
Danny Freeman - Bartlett

Mary Ann Tapp - Arlington/Hwy 64
Patty Rainey - Arlington/Hwy 64
Rita Hallum - Bartlett
Melinda & Eddie Crosslin - Arlington/Hwy 64
Jo Ann & Owen Hughes - Collierville
Jimmie Kay Finch - East Memphis
Beth Price - Olive Branch
Joy Leerskov - Collierville
Cathay Fleming - Cordova
Charly Amos - Collierville
Nate Mitchell - Downtown

Agents of the Month (By Branch)

Arlington/Hwy 64 – Lauren Criswell

Atoka - Crystal Burnett

Bartlett – Danny Freeman

Collierville – Jo Ann & Owen Hughes 

Cordova – Cathay Fleming

Downtown - Nate Mitchell

East Memphis – Jimmie Kay Finch

Germantown Forest Hill – Sharon Ellis and Marty McClatchy (tie)

Germantown Poplar – Marcia Hughes

Hernando – Debbie Aldison and Brent Tippitt (tie)

Hickory Ridge – Clay Dickson and Carolyn Randolph (tie)

Olive Branch – Leigh Anne & Terry Boyd

Quail Hollow – Bill Malone

Southaven – Carmen Kyle

Top Agents YTD (Company Wide)
Lauren Criswell - Arlington/Hwy 64
Rita Hallum - Bartlett
Leigh Anne & Terry Boyd - Olive Branch
Bill Malone - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Danny Freeman - Bartlett
Nate Mitchell - Downtown
Jo Ann & Owen Hughes - Collierville
Curtis Ward - Quail Hollow

Note: Rankings are in order by unit numbers. Managers are excluded.

The TAR Notification Form

Crye-Leike has created a form to be used in conjunction with the residential Purchase and Sale Agreement called "Notification" (or "Notice of Progress of Agreement").  This form is designed to help expedite the communication between parties to a contract and their agents. In particular, the form allows real estate agents to check the appropriate box for different notifications required under the terms of the TAR Purchase and Sale Agreement. For example, the Purchase and Sale Agreement has language that requires the Buyer to notify the Seller of the Buyer having applied for a loan, provide the lender’s name and contact information, and confirm that the lender has been instructed to order the appraisal and credit report. Use of the Notification form is a quick and easy way for a selling agent to provide this required notice to the listing agent. In this case, the selling agent would check box #3 on the Notification form, complete the blanks with the lender information, have the Buyer sign in the appropriate place, and fax, e-mail or deliver it to the listing agent.

There are a number of other pre-printed notifications on the form, so it can be used throughout the transaction prior to closing.  You can find the form on the Crye-Leike Intranet site (Form F26) or here. It’s a handy little form and should prove to be a time-saver for you throughout your deals.

Please contact your Realty Title representative with any questions on the use of this form.

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Can the Executor Sell the Property?

A recent closing we handled highlighted the importance of early communication with the closing attorney regarding sales of real property by an "estate."  When someone dies owning real property in Tennessee, his ownership interest in that property can either:  1) be transferred to a co-owner due to a survivorship right set forth in the deed, 2) be transferred to beneficiaries named in his Last Will and Testatment, or 3) be transferred to his heirs at law if he dies without a Last Will and Testament.  Technically, there is a fourth option that I will discuss shortly, but it only applies in limited circumstances.

When you take a listing for property that was formerly owned by someone who is now deceased, it is important to know early in the process who now owns the property according to the options set forth above.  Our recent closing involved a transaction in which the executor of the estate signed both the listing agreement and purchase and sale agreement.  It was discovered shortly before closing that the executor did not have the power or authority to do this, and that the property was technically owned by the 14 different people/entities named as beneficiaries under the Last Will and Testament.  This "curve ball" caused a delay in closing, and almost caused the buyer to lose his interest rate.

In Tennessee, generally the executor does not have the power or authority to sell real property formerly owned by someone recently deceased - it is not part of the probate estate.  Title to real property generally vests immediately in the beneficiaries, and therefore, they are the correct people to sign any listing agreement or purchase and sale agreement.  The exception to this rule is when one of the following are present:  1) the Last Will and Testament directs the executor to sell the property and administer it as part of the estate, or 2) the estate is insolvent and the executor petitions the probate court to sell the property in order to use the proceeds to pay claims against the estate. 

The takeaway point is to be sure to contact the closing office as soon as you know you are dealing with property that was owned by someone recently deceased.  There are a number of hurdles to completing such a transaction in a successful manner, and the earlier the closing office knows about it, the better chance of clearing all those hurdles.  Please contact your Realty Title representative with any questions.

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Borrower Right of Redemption After Foreclosure

I was recently asked by a real estate agent whether Tennessee is a "redemptive state," as she wanted to verify something she was told by another real estate agent. Initially I wasn't sure what she was referring to, but when I learned the identity of the other real estate agent (an REO specialist) I realized that she was asking about a borrower's right to redeem property after it has been foreclosed. I found it interesting that this was the second time I had been asked that question in as many weeks, but I presume that since foreclosures and REOs are making up a greater percentage of the transactions in the marketplace, these issues become more and more important. In this case, the agent had been told that Tennessee is not a "redemptive state," but that is simply not true. Under Tennessee law (TCA Section 66-8-101 for anyone inclined to look it up), a borrower under a deed of trust which has been foreclosed by power of sale (which is the typical foreclosure in Tennessee) has a right to redeem the property within 2 years after the foreclosure sale.

This begs the question of what, exactly, is the right to redeem. It is the right of the borrower who lost the property at foreclosure to pay the successful bidder (or current titleholder if subsequently sold) the amount such person paid for the property at foreclosure plus a certain amount of interest and costs defined by the law. As previously mentioned, this right extends for 2 years from the date of sale. If you're following along, you may be asking yourself how you can protect your buyer who purchases an REO property from losing title to the property when the foreclosed borrower exercises his right to redeem - good question. Fortunately, Tennessee law allows a borrower to waive the right to redeem in the deed of trust document, and such waiver allows lenders to foreclose without the threat of future redemption by the borrower. Thankfully, almost all standard form deeds of trust in Tennessee will contain an appropriate waiver clause - in fact I don't remember the last time I saw one without it. So while technically Tennessee is a "redemptive state," for all practical purposes the right to redeem does not present any problems in a foreclosure.

For our friends in Mississippi, Richard Johnson has informed me that, as in Tennessee, the borrower has the right to redeem the property before foreclosure. However, there is no right spelled out in the Mississippi Code to redeem after foreclosure.

Please contact your Realty Title representative with any other questions about foreclosures and REOs.

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Tax Consequences of a Short Sale

Our tip this week is about the possible tax consequences a seller may face as a result of a short sale of his primary residence. Given the current market conditions, many homeowners are faced with the prospect of selling a home where they owe more than its current value. Fortunately for them, the federal government has provided some relief relating to taxes and debt forgiveness. This issue is separate from a prior tip on the Tax Consequence of a Sale, as this issue relates solely to potential taxes on the amount of debt forgiven, and not to the tax owed as a result of any gain realized on the property.

The law used to be that if a mortgage lender forgave a certain amount of mortgage debt on someone’s primary residence (for example, in a short sale), the amount that was forgiven was considered income to the borrower and taxable as such. The Mortgage Forgiveness Debt Relief Act of 2007 changed that. This federal law was enacted on December 20, 2007 and states that mortgage debt forgiven on a borrower’s primary residence is not to be considered income to that borrower and is not, therefore, taxable as such. Keep in mind, though, that this applies to primary residences only - not second homes or investment properties. It also does not apply to any other form of debt like credit cards or car loans. Furthermore, it applies to debt forgiven only in the years 2007-2012 (the time period was extended from 2009 to 2012 per the Emergency Economic Stabilization Act of 2008).  UPDATE:  The administration’s FY2013 budget proposal includes a provision that would extended this through 2014 – we will keep you posted with any developments.

The borrower is still required to report the forgiven debt on his income tax return using IRS Form 982, and he should receive a Form 1099-C from the lender indicating how much debt was forgiven. If your clients have any questions relating to this, we suggest you direct them to the IRS web site for an explanation (search the site using the term "Mortgage Forgiveness Debt Relief Act of 2007") or to their tax adviser.

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Presidents' Day Closure

Just a reminder that Realty Title offices will be closed Monday, February 20 in observance of Presidents' Day. Should you have a closing emergency that day, please feel free to e-mail me at mmcdonald@realtytitle.com.  Thanks for making us the #1 title and closing company in the Mid-South.

Power of Attorney Basics

You don't have to be in the real estate business too long before you encounter someone wanting to use a power of attorney for a transaction. And it's only a bit longer before you find out that they are generally frowned upon for such purposes. The problem with powers of attorney, and the reason that title insurers and mortgage lenders detest them so much, is that they are fraught with all sorts of potential for fraud.

A power of attorney is simply an authorization by one person, the "principal," for another person, the "attorney-in-fact," to act on his behalf for either general or specific purposes. It allows the attorney-in-fact to legally stand in the place of the principal. But a power of attorney, while being a legal document, is only as good as someone's willingness to accept or honor it. Just because I give you a power of attorney authorizing you to sell my property on my behalf, that doesn't force a potential buyer (or lender, or title insurer) to accept it. Any of those parties may tell you that they will not buy (or lend money against, or insure) unless I (as the principal) actually sign the deed transferring title, regardless of the fact that I authorized you to do it for me. Now you may wonder why he wouldn't accept the power of attorney, but over the years the real estate industry has learned about powers of attorney, and sometimes the hard way. As previously mentioned, the opportunity for fraud with the use of powers of attorney can be tremendous, and given current technology and legal recognition of fax copies, e-mail signatures, and electronic signatures, it begs the question as to why a power of attorney may even be necessary. After all, can't we just e-mail the deed to the seller, wherever he is, and have him sign it.

So the first lesson in this tip is that generally powers of attorney should be avoided if possible. If not, and there are certainly cases where they are useful, here are a few guidelines for real estate transactions:

• The POA should be specific to a particular transaction, and should not be a "General" POA
• The POA should be recent - something signed five years ago is viewed with suspicion
• The POA should describe the property involved, preferably using the legal description
• The POA should be "durable," which means it is still good in the event the principal becomes legally incapacitated
• The POA should be properly signed by the principal and notarized by a Notary Public, so that it can be recorded in the public records along with the deed or mortgage documents
• The POA should be an original document vs. a copy (again for recording purposes)

Keeping these rules in mind will keep problems with powers of attorney to a minimum, and as always, please contact your Realty Title representative with any questions.

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Top Crye-Leike Agents (RT referrals) - January 2012

The following Crye-Leike Agents are the top agents for Realty Title referrals in the respective categories:

Top Agents of the Month (Company Wide)

Rita Hallum - Bartlett

Lauren Criswell - Arlington/Hwy 64

Curtis Ward - Quail Hollow

Leigh Anne & Terry Boyd - Olive Branch

Danny Burke - Quail Hollow

Dianna Carr - Southaven

Carmen Kyle - Southaven

Mary Ann Tapp - Arlington/Hwy 64

Marcia Hughes - Germantown-Poplar

Josie Robinson - Germantown-Forest Hill

Karen Thompson - Atoka

Agents of the Month (By Branch)

Arlington/Hwy 64 – Lauren Criswell

Atoka - Karen Thompson

Bartlett – Rita Hallum

Collierville – Owen & JoAnn Hughes and Beverly Michalek (tie)

Cordova – Trey Hogue, Cheryl Lamghari and Mae Rose Moore (tie)

Downtown - Nate Mitchell

East Memphis – Kathryn Anne Matheny and Sarah Scoggin

Germantown Forest Hill – Josie Robinson

Germantown Poplar – Marcia Hughes

Hernando – Diane Haskett and Lisa Utterback

Hickory Ridge – Toni Withers

Olive Branch – Leigh Anne & Terry Boyd

Quail Hollow – Curtis Ward

Southaven – Dianna Carr and Carmen Kyle (tie)

Note: Rankings are in order by unit numbers. Managers are excluded.

New TAR Contract Provision - Association Transfer Fees

You may have noticed that the Tennessee Association of Realtors (TAR) has published a new version of its residential Purchase and Sale Agreement (i.e. 2012), and with it come some changes from previous forms. One of those changes is the addition of paragraph 4E (lines 177-178) which allows the buyer and seller to specify who will be responsible for the payment of any fees or costs associated with the transfer of the property charged by any homeowners or condominium association (HOA), or agent of the same. We are seeing more and more of these charges at the closing table, and they usually involve a charge from a third-party management company that manages the homeowners association. For instance, a private management company may charge $50 to provide the closing attorney with a statement regarding the status of HOA dues for the particular property and for changing the HOA books to reflect the new owner. In most case, I see these fees split in half between buyer and seller. However, there are certain neighborhoods that may charge a significant assessment in connection with a property transfer. For instance, Aintree Farms in Germantown assesses a 1% charge against an owner when selling his property, which is paid to the HOA and used for future capital improvements. This is obviously the kind of charge that will get a seller's (and buyer's) attention, so TAR felt like it was appropriate to allow the parties to negotiate this issue before finalizing the deal.

Please remember to always verify HOA dues and assessments, whether through the Property Condition Disclosure report or independently, and plan your negotiations accordingly. And as always, please feel free to contact your Realty Title representative with any questions on this issue.

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Mississippi Homestead Exemption by Bethany Hesser

Note: This is a guest post from one of our attorneys, Bethany Hesser.

We wanted to remind you that if you have a client who purchased a home in Mississippi last year, then now is the time they need to file for their homestead exemption credit. You may want to reach out to your clients and remind them of this. It's a great way to stay in touch with past clients and provide an addiitonal service that may help you stand out. Below is a list of the tax assessor's offices in DeSoto, Tate and Marshall County. We've also included a list of eligibility requirements and items that your client will want to take to that office when they go to file for the homestead exemption. You may want to suggest that your clients call the applicable office prior to going to verify all information, office hours, etc. Please make a note that the time to file is now. The owners must be living in the property as of January 1st, and must file by March 31st. Also, there are additional credits available for seniors and those declared 100% disabled by Social Security. Please feel free to share this with your clients by forwarding a link to this page via e-mail.

DeSoto County Tax Assessor
662-429-1335
365 Losher Street, Suite 100
Hernando, MS
http://www.desotoms.com/officials/tax-assessor

Marshall County Tax Assessor
662-252-6209
103 S. Market St., #A
Holly Springs, MS
OR
Byhalia Office, Open Tuesdays & Fridays ONLY, 8:30 – 4:30
1311 Hwy. 309 N.
Byhalia, MS

Tate County Tax Assessor
662-562-6011
201 S. Ward St., #A
Senatobia, MS

List of requirements:
- Owners must live in the property as of January 1st
- May file between January 1st and March 31st
- Must go in person to file (only 1 person is required to go if the owners are married, but you must have information on both owners with you)
- To file for a Senior Exemption you must be at least 65 as of January 1st
- Things to take with you:

Copy of the recorded deed

Social Security Numbers for all owners

Tag numbers

If the property is new construction a copy of the settlement statement

- If you are filing for the Senior Exemption or Social Security Disability Exemption there are additional documents you must have with you in order to file. Please contact the tax assessor’s office for a complete list of what you will need.