A View From The Closing Table

Mississippi Homestead Exemption by Bethany Hesser

2012-01-23T11:05:00.018-06:00

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.

Goodbye to Mimi Nguyen-Havens :(

2011-12-22T10:05:00.002-06:00

Mimi Nguyen-Havens, one of the closing attorneys at our main location on Quail Hollow, will unfortunately be leaving us at the end of the year. She has taken a position as title underwriting counsel with the Fidelity National Title Group office in Memphis, and is looking forward to the new challenges that position will bring. Ironically, we are a licensed title agent for Fidelity National Title Insurance Company, one of the Fidelity Group companies, so we'll continue to get to work with her on a regular basis. Please join me in wishing Mimi continued success in her new position - we will certainly miss her.

Top Crye-Leike Agents (RT referrals) - November 2011

2011-12-11T16:58:00.004-06:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Patty Rainey - Arlington/Hwy 64
Leigh Anne & Terry Boyd - Olive Branch
Carol Iverson - Quail Hollow
Lauren Criswell - Arlington/Hwy 64
Lauren Harkins - East Memphis
Bonnie Patton - Germantown-Forest Hill
Cheryl Lamghari - Cordova
Tim Forrester - Cordova
Kay Paul - Collierville
Mary Ann Tapp - Arlington/Hwy 64
Dempsey Fisher - Quail Hollow
Karen Thompson - Atoka
Barbara Stewart - Olive Branch
Suzanne Tidwell - Arlington/Hwy 64
Curtis Ward - Quail Hollow
Clara Yerger - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Patty Rainey
Atoka - Karen Thompson
Bartlett – Nancy Moore
Collierville – Kay Paul
Cordova – Cheryl Lamghari
Downtown - Nate Mitchell
East Memphis – Lauren Harkins
Germantown Forest Hill – Bonnie Patton
Germantown Poplar – Heather Fox
Hernando – Cecil Pettis
Hickory Ridge – Landra Pryor
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Cherie Price

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Joyce McKenzie - Collierville
Danny Freeman - Bartlett
Bill Malone - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Cheryl Lamghari - Cordova
Patty Rainey - Arlington/Hwy 64
Rita Hallum - Bartlett
Tommie Criswell-Jones - Arlington/Hwy 64
Tommy Salmon - Olive Branch
Josie Robinson - Germantown-Forest Hill

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

"Time of Essence" Clause Can Be Waived By Actions

2011-12-11T16:02:00.000-06:00

Image by John-Morgan via Flickr

A recent Tennessee court case emphasizes the point that although a real estate contract may state that “time is of the essence,” the parties can waive that provision through their actions. It’s important to remember that when a real estate contract specifies that “time is of the essence,” as the TAR and Crye-Leike contracts do, it is an expression of the intent of the parties to stick with the various deadlines set forth in the contract. However, like many other provisions of the contract, that intent can change during the life of the contract and either party can waive the other party’s violation of that provision. Therefore, if “time is of the essence” is in your contract and the other party misses a deadline, you and your client should decide immediately what your response will be. Will you use that as grounds to cancel the contract? Will you let this one slide? Or will you just throw the deadlines out because you need this deal to work? If you want to forgive this one missed deadline, while preserving the other deadlines, we recommend that you communicate that to the other party in writing. For example, if the buyer misses the loan commitment deadline (20 days after the binding agreement date) and the seller wants to continue to proceed to closing, the listing agent may want to communicate to the selling agent as follows:

“Please be advised that your client is in violation of the terms of the contract for failure to meet the deadline for the conditional loan commitment (20 days from the binding agreement date). The seller is willing to waive this violation, but only under the condition that your client provide such loan commitment within 5 days of this date. This proposed waiver shall not act as a waiver of any other deadline or term of this contract. Please advise me as soon as possible as to whether your client will be able to meet this extended deadline.”

Without a notification like this, the seller risks waiving the “time is of the essence” clause totally, and may have a hard time cancelling the contract later for something like failure to close as scheduled. Remember, when it comes to “time is of the essence,” sometimes actions speak louder than words.

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Defining "Days" In The Contract Redux

2011-12-05T11:10:00.001-06:00

In the past we published a tip about the definition of the word "day" under the standard Crye-Leike contract forms for Tennessee and Mississippi. I thought it might be a good idea to revisit that issue in light of a recent question I received. In this particular scenario, the Binding Agreement Date for the contract was Friday, September 2, and the buyer had a 10-day inspection period under the terms of the contract. The listing agent was trying to determine the actual deadline for the inspection period and asked me what day was Day 1 of the inspection period, since the buyer couldn't get any inspection made over the holiday weekend (Saturday, Sunday and Labor Day). She wondered whether the inspection clock might not start ticking until Tuesday, which was the first business day after the Binding Agreement Date.

I reminded her that the term "day" is defined as a calendar day, and not a business day, under the current Crye-Leike contract forms, which would mean that the first day of the inspection period would be the day after the Binding Agreement Date (Saturday in this case). Her justifiable confusion came from the language in the form that allows for a performance deadline to be extended until the next business day if that deadline falls on a weekend or holiday. However, it is important to remember that this only applies when the last day of the particular time period (inspection period in this case) falls on a weekend or holiday, not the first day of that time period.

Please review our previous tip for a more complete explanation of calculating time periods under the contract and preventing problems with deadlines. Although it was written with a prior version of the TAR contract in effect, it still applies to the current version.

As always, please call your Realty Title representative with any questions.

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Resolution Period Blues

2011-11-11T21:01:00.005-06:00

The Resolution Period that first appeared in the Inspection paragraph in the 2011 TAR contract form appears to be an attempt at facilitating transactions that stalled under the prior structure of the post-inspection negotiation between buyer and seller. Some felt that the step-by-step approach of the repairs negotiation was too rigid and didn't lend itself to deal facilitation. But one consequence from the Resolution Period that frustrates selling agents is that there is nothing to compel the seller to respond to the buyer's repair request. In theory, if the buyer submits a repair request and the seller does not respond to it by the end of the resolution period, the contract is terminated and the buyer receives a refund of the earnest money. This may not be what the buyer wants, and raises questions as to whether the seller is dealing in good faith - it may be perceived as an attempt on the part of the seller to "tank" the deal.

For a buyer or selling agent who wants to avoid this problem, I would recommend adding language such as the following to the special stipulations paragraph:

Notwithstanding anything to the contrary contained herein, Seller's failure to respond in writing during the Resolution Period to Buyer's written list of requested repairs shall be deemed acceptance of Buyer's repair proposal, and shall bind Seller to make such repairs pursuant to the terms of this Agreement.

Please do not hesitate to call your Realty Title representative with any questions about this issue.

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Top Crye-Leike Agents (RT referrals) - October 2011

2011-11-09T10:37:00.006-06:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Curtis Ward - Quail Hollow
Joyce McKenzie - Collierville
Tommie Criswell-Jones - Arlington/Hwy 64
Chris Peaks - Olive Branch
Diana Vickers - Cordova
Mary Ann Tapp - Arlington/Hwy 64
Wendy Quinn-Hogue - Germantown-Forest Hill
Sarah Lea Matthews - Olive Branch
Jeanette Carlisle - Olive Branch
Bud Grimm - Quail Hollow
Katie Houston - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Tommie Criswell-Jones
Atoka - Crystal Burnett
Bartlett – Stanley Echols
Collierville – Joyce McKenzie
Cordova – Diana Vickers
Downtown - Nate Mitchell
East Memphis – Helen Akin
Germantown Forest Hill – Wendy Quinn-Hogue
Germantown Poplar – Joanie Whitaker
Hernando – Cecil Pettis
Hickory Ridge – Carolyn Randolph
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Gale Mueller

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Joyce McKenzie - Collierville
Danny Freeman - Bartlett
Bill Malone - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Rita Hallum - Bartlett
Tommy Salmon - Olive Branch
Cheryl Lamghari - Cordova
Patty Rainey - Arlington/Hwy 64
Tommie Criswell-Jones - Arlington/Hwy 64
Josie Robinson - Germantown-Forest Hill

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

Correct Vesting of Title to Real Property Involving Trusts (Mississippi)

2011-11-04T09:13:00.000-05:00

Last week we discussed the proper vesting of title for trusts in Tennessee. You may recall that we said Tennessee law does not recognize the trust as a separate legal entity, and that title to real property conveyed to the trust itself creates an issue of legitimacy, and may require a correction deed to specify the trustee as the titleholder. Mississippi takes a more relaxed approach to this issue. According to one of our Mississippi attorneys, Bethany Hesser, Section 91-9-2 of the Mississippi Code authorizes interests in real property to be acquired in the name of the trust, and any property conveyed to the trust in its name only will be deemed to be vested in the trustee of the trust. So if you are dealing with Mississippi property, you should not have any hiccups in your closing resulting from proper vesting for trusts. However, if you have any questions or need help with one of your transactions involving a trust, please do not hesitate to contact your Realty Title representative.

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Correct Vesting of Title to Real Property Involving Trusts (Tennessee)

2011-10-31T08:53:00.000-05:00

It is not uncommon in our daily practice of real estate closings to come across real property owned in the name of a trust, or more correctly, in the name of a trustee of a trust. You may recall from your real estate licensing course that a trust is a legal arrangement whereby a trustee holds property given to him by a trustor (or grantor) for the benefit of a different person named a beneficiary. And you may run across this yourself when listing or selling real property. What you may not know, though, is that Tennessee law does not recognize the trust itself as a separate legal entity, and therefore, it cannot hold title to property. Instead, property is to be held in the name of the trustee(s) of the trust.

This can trip a real estate transaction when there has been sloppy drafting on a prior deed in the chain of title. For instance, if the current deed shows "The Smith Family Trust" as the grantee (i.e. buyer), there is a question of whether title was actually conveyed to anyone since the "The Smith Family Trust" is not a legally recognized entity. Title insurers generally want this situation corrected by the execution and filing of a correction deed, showing the proper grantee as "John Smith, Trustee of the Smith Family Trust."

To avoid last minute problems in this area, it helps for you to ask about the current ownership of listed property - Is it owned by one person? More than one person? In his individual capacity? As trustee? And as always, please don't hesitate to contact your Realty Title representative to help navigate you and your clients through these issues. We'll review this issue from the Mississippi perspective in our next tip.

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Filling in the Blank on the FHA/VA Addendum

2011-10-21T10:22:00.007-05:00

As many of you are aware, FHA and VA only allow borrowers under their loan programs to pay certain costs associated with the closing of those loans. In the industry, the costs that are not allowed to be paid by borrowers under those programs are known as FHA or VA "non-allowable charges." There are a few other unique factors associated with FHA and VA loans such that the Tennessee Association of Realtors has promulgated a form addendum to the TAR residential contract to deal with them (Form F47 on the Crye-Leike intranet). One question that seems to come up quite a bit is how to complete the blank in paragraph 8 of that Addendum, "Non-Allowable Settlement Charges or Closing Costs."

The blank that appears in that paragraph seems to call for a maximum amount that the seller will contribute toward the FHA/VA non-allowable charges. So by way of example, if the parties insert $100 in that blank and the lender charges the borrower $200 in FHA/VA non-allowable charges, then the seller would have the opportunity object to the additional $100 and the deal may be cancelled. Some confusion is created by the fact that the paragraph further states that any amount paid toward non-allowable charges will be part of any amount the seller agreed to pay toward all of the buyer's closing costs. So if the seller agrees to pay $3000 in buyer closing costs in the special stipulations paragraph, and the buyer gets an FHA loan, then any FHA non-allowable charges will be included in that $3,000.

That still leaves the question about what number to fill in the blank unanswered, though. My suggestion is to use a number which will be sufficient to cover all of the expected non-allowable charges for the particular loan program. Since FHA non-allowable charges will vary from VA non-allowable charges, and both will even vary among lenders, it behooves the selling agent to discuss the amount of those charges with the proposed lender before completing the blank. If the lender says to expect $75 in FHA non-allowable charges, you may want to put $125 in the blank as a cushion. This will prevent the problem mentioned earlier where the non-allowable charges exceed the limitation and the parties may cancel the deal. As a fail-safe, if the seller will be paying a certain percentage or amount of closing costs in general, you could insert that amount in the blank. Theoretically, this would protect the deal in the unlikely event the non-allowable charges were a significant percentage of the sales prices (e.g. 3%).

Please contact your Realty Title representative with any specific questions you may have on this issue.

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Top Crye-Leike Agents (RT referrals) - September 2011

2011-10-17T11:13:00.004-05:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Tommie Criswell-Jones - Arlington/Hwy 64
Joyce McKenzie - Collierville
Carol Massey - Olive Branch
Patty Rainey - Arlington/Hwy 64
Claire Owen - Germantown-Forest Hill
Chris Peaks - Olive Branch
Bill Malone - Quail Hollow
Melinda & Eddie Crosslin - Arlington/Hwy 64
Rita Hallum - Bartlett
Tim Forrester - Cordova
Kent & Tammy Anderson - Germantown-Forest Hill
Tommy Salmon - Olive Branch
Janna "Flash" Gordon - Olive Branch
Jim Duke - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Tommie Criswell-Jones
Atoka - Peggy Stumph
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Tim Forrester
Downtown - Kris Gavin
East Memphis – Marty Morgan & Emily Sharp (tie)
Germantown Forest Hill – Claire Owen
Germantown Poplar – Billy Rodgers
Hernando – Diane Haskett
Hickory Ridge – Frances Anderson
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Frances Follis

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Joyce McKenzie - Collierville
Danny Freeman - Bartlett
Bill Malone - Quail Hollow
Rita Hallum - Bartlett
Tommy Salmon - Olive Branch
Cheryl Lamghari - Cordova
Mary Ann Tapp - Arlington/Hwy 64
Patty Rainey - Arlington/Hwy 64
Josie Robinson - Germantown-Forest Hill
Tommie Criswell-Jones - Arlington/Hwy 64
Barbara Stewart - Olive Branch
Melinda & Eddie Crosslin - Arlington/Hwy 64
Chris Peaks - Olive Branch

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

Seller Paid Closing Costs - What's Included?

2011-10-17T09:54:00.000-05:00

It is common to see the following language on a contract prepared for a residential transaction in our market: “Seller agrees to pay "X"% of the sales price toward buyer’s closing costs.” This seems to be fairly straightforward at first glance, but occasionally we encounter a disagreement at closing between the listing and selling agents (or even the seller and buyer) as to what is meant by “closing costs.”

To avoid such controversy and keep your closings on track, we recommend the following language be used in in the contract when addressing the issue of seller paid closing costs:

“Seller agrees to pay ___% of the purchase price (or $___________, as applicable) toward Buyer’s closing costs. Closing costs shall be defined for this purpose as any and all charges related to the closing which are allocated to the Buyer by agreement herein or by custom, whether such charge is optional to Buyer or not and regardless of the name given to such charge. Such charges shall include, but not be limited to, all loan fees, points, government fees, pre-paid items, escrow account deposit, real estate commission, and owner’s title insurance. The parties acknowledge that the purchase price was negotiated with this seller concession in mind, and it is the intent of the parties for the Buyer to receive the full benefit of it. In the event the amount of this seller concession exceeds the actual closing costs, the Seller authorizes the balance to be applied toward a principal reduction in the Buyer's loan or a reduction in the Buyer's share of prorated taxes for the year of closing, as approved by the Buyer's mortgage lender, if applicable.”

While it may not be possible to completely eliminate the occasional dispute over this issue, using the suggested language should go a long way toward minimizing such disputes. Please call your local Realty Title closing agent with any questions or specific situations.

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Click here to print a form addendum with this language: http://tinyurl.com/26w6yew

Contingency for the Sale of an Existing Home

2011-10-02T16:15:00.003-05:00

Under older versions of the TAR contract (2006 and prior), there was no pre-printed provision about whether the contract was contingent on the buyer’s ability to sell his current home. However, it was typically not necessary because if the buyer couldn’t sell his existing home, he couldn't qualify for a loan to buy the new home and the financing contingency would be invoked. This would allow the buyer to have a "sale of existing home" contingency contract without actually having to put such a contingency into the contract. In other words, the buyer was able to say, “the contract may not have said that the purchase was contingent upon the sale of my existing home, but I can’t get a loan without selling my existing home and it was contingent upon my ability to get a loan.” That has all changed, and the current version of the contract says the following:

“Loan Obligations
. . . (5) Unless otherwise stated in this Agreement, Buyer represents that this loan is not contingent upon the lease or sale of any other real property and the same shall not be used as the basis for loan denial;” (lines 102 & 103)

Therefore, if you are the selling agent and the buyer has to sell his existing home in order to purchase the new one, it is VERY IMPORTANT to specify that the contract is contingent upon that. Here is some suggested language you can put in paragraph 18, Special Stipulations:

“This contract, and performance by the Buyer hereunder, is contingent upon the sale and closing of the Buyer’s existing home located at ______________________. In the event said home does not sell and close prior to the scheduled closing date for this transaction, then Buyer shall have the option to cancel this contract by written notice to Seller and receive a full refund of the earnest money. For purposes of this provision, Buyer agrees to pursue the sale of closing of his existing home in good faith.”

IMPORTANT NOTE FOR MISSISSIPPI: The north Mississippi version of the contract is still the 5/2006 version, which does not contain this new language. Therefore, the old rules still apply with this form. To avoid confusion and clarify the expectations of the parties on the front end, we recommend using the same suggested language above in the Special Stipulations if the parties desire such a contingency.

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Borrower's Right of Redemption After Foreclosure

2011-09-26T09:33:00.004-05:00

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 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, one of our Mississippi attorneys, 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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Using the Short Sale Addendum

2011-09-19T08:56:00.000-05:00

Short sales are becoming more and more prevalent in our current market, and they can be a bit confusing for those who don't regularly deal with them. It's important to remember that a "short sale" involves a borrower (the seller) who is asking his existing mortgage lender to take an amount less than is actually owed on the loan in exchange for release of the lien against the property. In other words, the lender is not gettng paid in full but is still being asked to release its lien. This necessarily implies that the payoff lender must consent to the closing before it can happen, regardless of whether there is a signed contract between buyer and seller. It also implies that the terms of the contract between the buyer and seller are subject to change by that lender (e.g. the lender may not allow the seller to pay all of the buyer's closing costs).

If you've had experience with a short sale, you know that it can be a very frustrating process. This is because the lender must basically go through a qualification process again, and examine things like the borrower's current financial status (e.g. income, hardship, etc.) and the property itself (e.g. appraisal, title search, etc.). It's like originating the loan all over again, only this time on the back end. What further complicates the process is that there are various players whose approval must be obtained, such as the investor and mortgage insurance company, who are typically not motivated with the same sense of urgency that you and your clients have. And Heaven forbid if there's a second mortgage holder to deal with.

So at the very least, if you are going to tackle one of these short sales, please use the Short Sale Addendum which can be found on the Crye-Leike Intranet (Form F49(c)). This form is perfect for letting all the parties (buyer, seller and new lender) know about the nature of the transaction and what they can expect, which should keep you from having to answer difficult questions about delays and lack of communication.

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Top Crye-Leike Agents (RT referrals) - August 2011

2011-09-12T11:12:00.003-05:00

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

Top Agents of the Month (Company Wide)
Joyce McKenzie - Collierville
Judy McLellan - Quail Hollow
Barbara Stewart - Olive Branch
Danny Freeman - Bartlett
Cheryl Lamghari - Cordova
Leigh Anne & Terry Boyd - Olive Branch
Billy Rodgers - Germantown Poplar
Bill Malone - Quail Hollow
Debbie Stokes - Hernando
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown Poplar
Vicki Blackwell - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka - Crystal Burnett
Bartlett – Danny Freeman
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Denise Richardson
East Memphis – Janet Lee & Amy Woods (tie)
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Billy Rodgers
Hernando – Debbie Stokes
Hickory Ridge – Landra Pryor
Olive Branch – Barbara Stewart
Quail Hollow – Judy McLellan
Southaven – Diana Carr

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Danny Freeman - Bartlett
Joyce McKenzie - Collierville
Rita Hallum - Bartlett
Cheryl Lamghari - Cordova
Josie Robinson - Germantown-Forest Hill
Mary Ann Tapp - Arlington/Hwy 64
Tommy Salmon - Olive Branch
Patty Rainey - Arlington/Hwy 64
Trae Dilworth - Olive Branch
Bill Malone - Quail Hollow
Barbara Stewart - Olive Branch
Melinda & Eddie Crosslin - Arlington/Hwy 64

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

Tax Consequences of a Short Sale

2011-09-12T09:49:00.003-05:00

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 the Tax Consequence of a Sale that we discussed in a previous tip, 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 has 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). After 2012, the law will revert to the traditional provisions of designating forgiven debt as income.

The borrower is still required to report the forgiven debt on his income tax return using IRS form 982, and he should receive a 1099-C form 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 (http://www.irs.gov/) for an explanation (search site using the term "Mortgage Forgiveness Debt Relief Act of 2007") or to their tax adviser.

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Child Support Liens in Mississippi - By Richard Johnson

2011-08-29T09:10:00.001-05:00

Last week we discussed the effect of a child support lien in the State of Tennessee. In summary, child support liens are given priority over purchase money mortgages. This means that a lender’s Deed of Trust will be inferior to a child support lien. Obviously, this creates an unacceptable situation for a lender and the lender must require that the lien is released before they will extend a loan to a borrower.

This week’s tip will focus on the effects of a child support lien in Mississippi.

The Mississippi Code states that a judgment is automatically created any time a person fails to make court ordered child support payments for a period of at least thirty days. Although the judgment is automatic, the lien created by that judgment is only effective against third parties if (a) the third party actually knows of the judgment, or (b) the judgment is filed in the judgment roll of the Chancery Clerk’s Office by the department or attorney representing the person to whom the child support is owed.

Unlike Tennessee, however, the child support judgment lien in Mississippi is treated like any ordinary lien and does not have priority over purchase money mortgages. This does not necessarily mean that a lender will feel comfortable extending a loan to someone against whom a child support lien has attached. If a lender chooses to require that the lien is released (or is uncomfortable accepting a title insurance policy protecting their interest in the transaction) then the lien will have to be released.

Normally, Realtors will not learn through their customary representation that their client has a child support lien. It is also not expected of you to question your clients about possible child support liens. Realty Title will be made aware of any recorded child support liens in the due course of the title examination. However, if you should happen to learn of a child support situation, please contact us to pass that information along so we can get a head start on resolving the issue.

Attorney Reference: M.C.A. § 93-11-71

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Child Support Liens in Tennessee

2011-08-22T09:00:00.001-05:00

The state of Tennessee affords special status to liens against individuals for back child support owed. Tennessee law (TCA 36-5-901 et seq) specifically creates a lien against all property owned by an individual who owes back child support which is the subject of collection efforts by the Department of Human Services (DHS), or its contractors. In order to perfect the lien (i.e. make it effective against third parties), DHS must file a notice of the lien in the public records in the county where the property sits. Unlike federal tax liens or judgment liens, child support liens have a special status relative to purchase money mortgages. As explained in a previous tip, the federal government has taken the position that even if its federal tax lien is filed in the public records before a purchase money mortgage, it will allow the lien of the purchase money mortgage to take priority over it. The same holds true for a judgment lien; state law subordinates its priority to that of a purchase money mortgage. But a child support lien is different. If a prospective buyer has a perfected child support lien against him, he cannot buy property in Tennessee without discharging (i.e. paying off) that lien. So if you are working with a buyer, or seller, and you become aware of an outstanding child support lien, please contact your closing agent immediately to try to solve the problem, as it will stop a closing in its tracks.

As always, your Realty Title representative is available to answer any questions on this.

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Mississippi Withholding Requirements - By Richard Johnson

2011-08-15T09:30:00.001-05:00

The State of Mississippi places a special requirement on Buyers of real property located in Mississippi if the Seller is not a resident of Mississippi.

If the sales price in such a transaction is greater than one hundred thousand dollars ($100,000.00), the Buyer is required to withhold and pay to the State Department of Revenue an amount equal to five percent (5%) of the amount realized by the Seller on the sale.

However, if the amount required to be withheld exceeds the net proceeds payable to the Seller, the Buyer shall withhold and pay over to the State Department of Revenue only the net proceeds otherwise payable to the Seller.

The failure of the Buyer to withhold or pay to the State Tax Commission the amount to be withheld does not affect the title to the property, but the Buyer is personally liable to the State Tax Commission for the amount to be withheld.

Most transactions involving individuals are not affected by this requirement, as very few Sellers are non-residents who are selling property in Mississippi (e.g., second homes, vacation homes or investment property). If you do happen to represent such an individual, though, please let us know as soon as possible so that we can prepare the proper withholding form.

The potential for this requirement to become an issue arises more often when the Seller is an out-of-state builder or other business entity. For purposes of this requirement, however, a company registered to do business in the State of Mississippi shall be considered a resident of the state. If you represent a non-resident business entity, the prudent thing to do is to contact us early on to verify that your client is either organized or registered to do business in Mississippi. If they are not, the registration fees with the Mississippi Secretary of State are not extremely expensive ($500.00 for corporations, $250.00 for LLCs) and we can assist in performing this function.

As always, please contact us if you have any questions.

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Top Crye-Leike Agents (RT referrals) - July 2011

2011-08-08T09:54:00.004-05:00

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

Top Agents of the Month (Company Wide)
Joyce McKenzie - Collierville
Judy McLellan - Quail Hollow
Chris Peaks - Olive Branch
Bill Malone - Quail Hollow
Rita Hallum - Bartlett
Cyndi Craft - Bartlett
Tom Iverson - East Memphis
Tammy & Kent Anderson - Germantown Forest Hill
Pat Goldstein - Germantown Poplar
Frances Anderson - Hickory Ridge
Laquita Rucker - Hickory Ridge
Leigh Anne & Terry Boyd - Olive Branch
Cherie Price - Southaven

Agents of the Month (By Branch)
Arlington/Hwy 64 – Patty Rainey
Atoka - Peggy Stumph
Bartlett – Danny Freeman
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Nate Mitchell
East Memphis – Tom Iverson
Germantown Forest Hill – Tammy & Kent Anderson
Germantown Poplar – Pat Goldstein
Hernando – Cecil Pettis
Hickory Ridge – Frances Anderson
Olive Branch – Chris Peaks
Quail Hollow – Judy McLellan
Southaven – Cherie Price

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Rita Hallum - Bartlett
Danny Freeman - Bartlett
Joyce McKenzie - Collierville
Josie Robinson - Germantown-Forest Hill
Mary Ann Tapp - Arlington/Hwy 64
Cheryl Lamghari - Cordova
Bill Malone - Quail Hollow
Trae Dilworth - Olive Branch
Tommy Salmon - Olive Branch
Patty Rainey - Arlington/Hwy 64
Melinda & Eddie Crosslin - Arlington/Hwy 64

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

Foreclosure Law Change in Tennessee

2011-08-08T09:43:00.002-05:00

You may recall seeing in the news recently that a number of mortgage lenders faced criticism for certain practices in their foreclosure process. What you may not be aware of is that the criticism surrounds the preparation and execution of affidavits required for a judicial foreclosure, which is one requiring court approval before it can be finalized. Tennessee is not one of the 23 states that requires court approval for foreclosure, and has a statutory procedure for what is called non-judicial foreclosure. This procedure allows a trustee under the terms of a Deed of Trust to sell the collateral property at public auction after certain notice requirements are met. So while foreclosure proceedings in general have come under greater scrutiny lately, the process in Tennessee has not prompted that scrutiny.

I did want to make you aware of a recent change in Tennessee's foreclosure law, though. The legislature has passed a new law that imposes an additional notice requirement on the mortgage lender, and mandates that it send a Notice of the Right to Foreclose to the borrower at least 60 days prior to the first publication in the newspaper. The purpose of this Notice is to make the borrower aware of the possibility to resolve the delinquency in a manner other than foreclosure, such as loan modification, short sale, or deed in lieu of foreclosure. There are certain limitations, and it only applies to properties that are "owner-occupied residences." It also only applies to those foreclosures initiated by publication after September 1, 2010. If you find yourself faced with a listing in which the seller is in default on his loan, you may want to inquire if he has received this notice and encourage him to contact the lender for a more prompt resolution.

Please contact your Realty Title representative with any questions.

New Termite Letter Clause - Part 2

2011-08-01T12:06:00.000-05:00

Last week we advised you of the change to the 2011 TAR contract regarding the termite clearance letter, and how the buyer is now responsible for ordering and paying for it. We wanted to make you aware of one caveat, though, with this week’s tip. If the buyer is getting a VA loan, the termite clearance letter is generally considered a “non-allowable” charge and the borrower cannot pay for it. This would mean that the seller would be responsible for paying for the letter, although the buyer would presumably still order it.

This issue is addressed in paragraphs 7 and 8 of the TAR FHA/VA Addendum to the contract, which can be found on the Crye-Leike intranet (Form F47). Those paragraphs state that the seller shall comply with VA requirements regarding the termite letter, and that the seller shall pay all “non-allowable” charges not to exceed the amount specified. It becomes very important, then, for you as the agent to make sure that you use the FHA/VA addendum when appropriate. It should also help to establish with the coop agent who will be responsible for ordering the letter to avoid confusion or delay down the line.

Please contact your Realty Title representative with any questions on this matter.

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Termite Letter Clause in the 2011 TAR Contract Form

2011-07-25T13:58:00.001-05:00

We've seen some problems regarding termite clearance letters lately so we thought a reminder was in order. In our market, the seller has historically been responsible for providing (and paying for) a termite clearance letter in the typical residential transaction. The current version of the TAR contract (1/01/2011) has changed that. The new contract places the responsibility for ordering and paying for a termite clearance letter (whether desired by the Buyer or required by the Lender) squarely on the shoulders of the Buyer. This change is still catching some agents off guard, so it is very important to pay attention to the version of TAR contract you are dealing with.

Since the termite letter will now be treated like any other inspection, the Buyer will need to complete it before the expiration of the Inspection Period specified in the contract. The Seller will still be responsible for treatment of any active infestation found. However, the Buyer will now have to include any termite related repair requests in the Buyer’s Inspection Contingency Removal/Notification form, along with requests from the home inspection.

The new contract form can be found on the Crye-Leike intranet site for your review. Please contact your Realty Title representative with any questions on this change.

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The TAR Notification Form

2011-07-17T14:43:00.005-05:00

TAR has a form called "Notice of Progress of Agreement" or "Notification" for short, which is designed to help expedite the communication between parties to a contract. 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 and 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, and I could see how there could be a number of these forms utilized throughout the pre-closing period. While you theoretically could also use the same form throughout the process, having the Buyer and Seller initial and date where appropriate, I wouldn’t recommend it as it can quickly get messy. You can find the form on the Crye-Leike Intranet site (Form F26). 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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Top Crye-Leike Agents (RT referrals) - June 2011

2011-07-08T08:56:00.005-05:00

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

Top Agents of the Month (Company Wide)
Danny Freeman - Bartlett
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Judy McLellan - Quail Hollow
Rita Hallum - Bartlett
Bill Malone - Quail Hollow
Melinda & Eddie Crosslin - Arlington/Hwy 64
Janna "Flash" Gordon - Olive Branch
Bob Geabhart - Germantown Forest Hill
Doug Damico - Germantown Forest Hill
Mike Wooten - Germantown Forest Hill
Robert Gorman - Quail Hollow
Annice Kyle - Southaven
Shemika Barr - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Melinda & Eddie Crosslin
Atoka - Karen Reyes
Bartlett – Danny Freeman
Collierville – Joyce Chasteen
Cordova – Cheryl Lamghari
Downtown - Kris Gavin and Nate Mitchell (tie)
East Memphis – Janet Lee
Germantown Forest Hill – Bob Geabhart
Germantown Poplar – Helen Lloyd
Hernando – Virginia Skinner
Hickory Ridge – Bertha Pitts
Midtown - Bill Malone
Olive Branch – Leigh Anne & Terry Boyd and Trae Dilworth (tie)
Quail Hollow – Judy McLellan
Southaven – Annice Kyle

Top Agents (YTD)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Rita Hallum - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Danny Freeman - Bartlett
Josie Robinson - Germantown-Forest Hill
Bill Malone - Quail Hollow
Trae Dilworth - Olive Branch
Joyce McKenzie - Collierville
Tommy Salmon - Olive Branch
Cheryl Lamghari - Cordova
Patty Rainey - Arlington/Hwy 64
Virginia Skinner - Hernando

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

Power of Attorney Basics

2011-06-27T17:00:00.000-05:00

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. That buyer may tell you that he will not buy 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 buyer, 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

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.

FannieMae Announces Selling Agent Incentive

2011-06-20T09:00:00.001-05:00

A few weeks ago, we told you about FreddieMac's announcement regarding incentives to buyers and selling agents in order to move its inventory of REO homes. Well FannieMae has followed suit and just announced its incentive program for the sale of its REO inventory through the HomePath program. The incentive matches FreddieMac, and includes a $1,200 selling agent bonus and up to 3.5% of the sales price paid toward buyer closing costs, and is eligible on offers that are submitted on or after June 14 and closed on or before October 31. Be aware, though, that the incentive must be requested in the initial offer, so be sure to include specific language relating to both the buyer incentive and the selling agent bonus. For more information, please visit FannieMae's HomePath web site.

Use the Crye-Leike Disclaimer Notice

2011-06-12T19:44:00.006-05:00

There was a recent Tennessee court case in which the buyers in a real estate transaction sued the sellers and real estate brokers when the sellers could not convey title to the buyers because the sellers did not own the property. Apparently, the sellers had contracted to purchase the property themselves, and were planning to sell to the buyers in a flip transaction. When that deal fell apart, the buyers sued not only the sellers, but the brokers as well, claiming that the brokers breached their duty of due care when making representations about the status of title. The brokers apparently only told the buyers what the sellers had told them, and weren't aware of the tenuous nature of the first deal. In ruling in favor of the brokers, the court relied upon language in the contract which said that the brokers could not be held responsible for those matters which would be revealed by a survey, title search or inspection of the property.

When reading about this case, I reaffirmed my belief in the use of the Crye-Leike Disclaimer form by Crye-Leike agents. This is the form that is used to explain to the parties that the real estate agents involved in the transaction are not experts in things such as surveys, home inspections, title searches, etc., and that the parties to the transaction should avail themselves of such professional services during the transaction if they are concerned about those matters. So our simple advice this week is: this form should be used in all of your deals, and should be attached to the contract in each of those deals. You can find the form on the Crye-Leike intranet under the Forms & Contracts section, under the Listing Forms subsection, entitled "Disclaimer Notice." If you have any questions about the use of this form, please contact your broker, Crye-Leike counsel, or your Realty Title representative.

Top Crye-Leike Agents (RT referrals) - May 2011

2011-06-10T10:50:00.004-05:00

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

Top Agents of the Month (Company Wide)
Joyce McKenzie - Collierville
Rita Hallum - Bartlett
Leigh Anne & Terry Boyd - Olive Branch
Trae Dilworth - Olive Branch
Curtis Ward - Quail Hollow
Robert Gorman - Quail Hollow
Lolita Scott-Tucker - Cordova
Marcia Hughes - Germantown-Poplar
Frances Anderson - Hickory Ridge
Brian Raycher - Germantown-Poplar
Josie Robinson - Germantown-Forest Hill
Tommy Salmon - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Tommie Criswell-Jones
Atoka - Peggy Stumph
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Lolita Scott-Tucker
Downtown - Kris Gavin and Nate Mitchell (tie)
East Memphis – Beth Blumenfeld
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Brian Raycher
Hernando – Virginia Skinner
Hickory Ridge – Frances Anderson
Midtown - Bill Malone
Olive Branch – Leigh Anne & Terry Boyd and Trae Dilworth (tie)
Quail Hollow – Curtis Ward
Southaven – Carmen Kyle

Top Agents (YTD)
Judy McLellan - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Josie Robinson - Germantown-Forest Hill
Rita Hallum - Bartlett
Joyce McKenzie - Collierville
Trae Dilworth - Olive Branch
Leigh Anne & Terry Boyd
Tommy Salmon - Olive Branch
Patty Rainey - Arlington/Hwy 64
Bill Malone - Midtown

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

TN Mortgage Licensing Law Update

2011-06-06T08:49:00.005-05:00

We recently informed you of the position taken by the Tennessee Dept. of Financial Institutions regarding whether owners of real property had to have a mortgage originator's license in order to offer seller financing on property they sold. You may recall that the Department took the position that as long as the owner was an individual and did not sell more than five properties in any 12-month period in which financing was extended, then he met a de minimis exemption from the licensing requirement. You'll be happy to learn that the Tennessee legislature recently codified that position as an amendment to the Tennessee Residential Lending, Brokerage and Servicing Act. Specifically, TCA Section 45-13-201 was amended to add the following as an exception to licensing requirements:

(G)(i) Any person, or person under the control of another person who, as seller, receives or makes in any consecutive twelve-month period five (5) or fewer residential mortgage loans and who does not hold themselves out to the public as being in the residential mortgage lending business;

And the Act defines "person" to include a partnership, corporation, and limited liability company, so the limitation in the Dept. of Financial Institutions rule which required it to be an individual no longer applies. This is definitely good news for your investor clients, so be sure to contact your Realty Title representative with any questions.

Freddie Mac's Summer Sales Promotion

2011-05-22T18:17:00.004-05:00

Freddie Mac announced last week that it is holding a summer sales promotion which will include the payment of a $1,200 bonus to selling agents on sales of homes it currently holds as REO inventory. Freddie Mac sells its REO properties through its sales unit, HomeSteps, and is making the bonus payment good for offers submitted between May 16 and July 31, and which close on or before September 30. In addition to the selling agent bonus, Freddie Mac will pay up to 3.5% of the sales price toward the buyer’s closing costs and will provide the buyer with a limited 2-year warranty on the home. Please be aware that the sales promotion does not apply to properties purchased by investors. You can find out full details of the promotion, along with the inventory of homes, at the HomeSteps web site.

Tax Consequences of a Short Sale

2011-05-16T09:58:00.007-05:00

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).

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.

Credit In Lieu of Repairs?

2011-05-09T13:30:00.000-05:00

Parties to a real estate transaction will occasionally find themselves faced with a situation involving a proposed credit in lieu of repairs. This usually comes up when the repairs that the buyer requested from the inspection are not complete at the final walk-through, either because there wasn’t sufficient time to have the repairs made or the seller just “didn’t want to fool with it.” So the seller may propose that he give the buyer some money instead of making the repairs, and it sounds like a win-win situation – the seller relieves himself of the work involved in coordinating the repairs and the buyer gets to pick who does the work. Our customary advice to agents who call us regarding such a proposal is to check with the mortgage lender to verify the acceptability of such an arrangement. I’m always amazed and concerned when the answer from the lender is that it’s OK with them, as long as it’s not shown on the HUD-1.

Here’s one simple rule that can help keep your clients (and you) out of trouble with mortgage fraud: If you can’t show it on the HUD-1, you can’t do it. The buyers and sellers certify the following when signing the HUD-1:

“I have carefully reviewed the HUD-1 Settlement Statement and to the best of my knowledge and belief, it is a true and accurate statement of all receipts and disbursements made on my account or by me in this transaction. I further certify that I have received a copy of the HUD-1 Settlement Statement.”

If they have knowledge that there is another receipt/disbursement in the transaction, namely the credit in lieu of repairs, that is not shown on the HUD-1, they have just falsified it. And it’s hard to argue ignorance as a defense when the same form contains this warning:

“WARNING: It is a crime to knowingly make false statements to the United States on this or any similar form. Penalties upon conviction can include a fine and imprisonment. For details, see: Title 18 U.S. Code Section 1001 and Section 1010.”

So the answer from the lender that it’s OK to do the credit in lieu of repairs as long as it’s not shown on the HUD-1 should not be an acceptable answer. Either the lender allows it (it can be shown on the HUD-1) or they don’t (it’s an impermissible seller concession), but the advice should not be to falsify the HUD-1. That’s tantamount to suggesting criminal behavior, because for all practical purposes making false statements on the HUD-1 is making false statements to the United States. Here are some possible solutions the lender may allow in the event they don’t allow such a credit:

1. Use the amount toward the payment of buyer closing costs by the seller
2. Identify and prepay a repair company at closing for repairs to be made after closing
3. Use the amount toward an immediate principal reduction payment on the new loan at closing

Obviously, coming up with any solution at the 11th hour before closing is going to be problematic. A better approach would be to make a determination right after the inspection is complete whether the requested repairs can (or will) be done before closing, and if not then come up with a solution before the loan has gone through underwriting/final approval. We imagine it is much easier to make adjustments to things like closing costs, sales price, loan amount, etc. at that stage than after loan approval has been secured.

Top Crye-Leike Agents (RT referrals) - April 2011

2011-05-09T11:00:00.006-05:00

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

Top Agents of the Month (Company Wide)
Tommy Salmon - Olive Branch
Rita Johnson - Olive Branch
Mary Ann Tapp - Arlington/Hwy 64
Bill Malone - Midtown
Judy McLellan - Quail Hollow
Sarah Lea & Ed Matthews - Olive Branch
Amy Woods - East Memphis
Leigh Anne & Terry Boyd - Olive Branch
Danny Freeman - Bartlett
Billy Price - Germantown Poplar
Bonnie Patton - Germantown Forest Hill
Sheila Pinnix - Southaven
Margaret Fletcher - Quail Hollow
Ellen Thornton - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka - Crystal Burnett
Bartlett – Danny Freeman
Collierville – Jimmie Kay Finch
Cordova – Danny Bolding
East Memphis – Amy Woods
Germantown Forest Hill – Bonnie Patton
Germantown Poplar – Billy Price
Hernando – Jeff Hawkes
Hickory Ridge – Toni Withers
Midtown - Bill Malone
Olive Branch – Tommy Salmon
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix

Top Agents (YTD)
Judy McLellan - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Patty Rainey - Arlington/Hwy 64
Josie Robinson - Germantown-Forest Hill
Tommy Salmon - Olive Branch
Robert Farris - Germantown-Forest Hill
Suzanne Tidwell - Arlington/Hwy 64
Trae Dilworth - Olive Branch
Rita Hallum - Bartlett
Leigh Anne & Terry Boyd
Bill Malone - Midtown
Sheila Pinnix - Southaven

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

MS Mortgage Lender Licensing Update

2011-04-25T09:45:00.007-05:00

We previously reported on the status of the Tennessee mortgage licensing law relating to owners of real property who extend financing to purchasers, and the decision by the TN Department of Financial Institutions to exempt sellers who engage in owner financing fewer than 5 times during any 12-month period under a de minimis exemption. I recently spoke with John Allison, Commissioner of the Mississippi Department of Banking and Consumer Finance, about how Mississippi is handling this issue. Mr. Allison indicated that Mississippi just passed an amendment to its SAFE statute (i.e. mortgage licensing law) which specifies that owner financing is only covered by the statute to the extent specified by the Department of HUD through its rules, regulations and guidelines. Since HUD has not yet published any such rules, regulations or guidelines, Mr. Allison's department takes the position that owner financing does not trigger any license requirements for sellers.

Obviously, that could change in the future based on guidance from HUD, but for now Mississippi reaches the same result as Tennessee for the residential owner who offers owner financing in the sale of his property - no license required. So for now, you can let your clients know that owner financing may be a viable option in selling their home.

Please contact your Realty Title representative with any questions relating to this matter.

The Value of a Tax Deduction

2011-04-15T09:43:00.006-05:00

Given Monday's tax filing deadline, we felt it was appropriate to remind you about the value of a tax deduction so payment of your 2011 taxes can be a less painful experience. As independent contractors, real estate agents are self-employed, and as such, they encounter the same issues regarding income and expenses that any other sole proprietor or business owner encounters. As the saying goes, you gotta spend money to make money.

With that in mind, just how valuable is that money you spend to increase your business? Hopefully, it’s providing you an unbelievable return on investment – that postcard you paid $500 to send out got you five new prospects, four of whom turned into clients netting you$20,000 in commission; or that web site you paid to have created has led to $25,000 in commission. Maybe, maybe not. But one thing we do know is that every deductible business expense reduces your taxable income, and therefore can save you money otherwise paid in taxes.

The amount of that savings will vary based on your marginal tax rate, which is the rate at which the last dollar you earn for the year is taxed. For example, if you made $50,000 as a single person in 2010 your marginal tax rate would be 25% (the first $8,375 you made would be taxed at 10%, the next $25,625 you made would be taxed at 15%, and the last $16,000 you made would be taxed at 25%). So if you were to reduce your taxable income by $1,000 by way of a deduction, you would theoretically save $250 in taxes that you would have otherwise paid ($1,000 x 0.25 = $250). As you can see, it pays to maximize your business deductions as a real estate professional. The important thing to remember when it comes to deductions for business expenses is that they must be ordinary and necessary in the course of your business. This means that the expense should be a common and accepted one for real estate agents, and helpful toward making you money.

And finally, you also must be able to prove you paid the expense, so don't forget to keep your receipts. This is the part that always seems to be the most difficult.

For more information on this topic or for help with your particular situation, please either see your tax professional or visit IRS Publication 535.

Potential Problem with FNMA REOs

2011-04-08T14:05:00.008-05:00

Some of our offices have recently encountered an issue involving FNMA ("Fannie Mae") as a seller of REO property that we think you should be aware of. That issue involves the identity of the buyers in the purchase agreement signed with Fannie Mae. According to Fannie Mae's closing agent, it will not allow any change in the identity of the buyer(s) between the purchase agreement and the closing. For example, if a husband and wife sign the purchase agreement as buyers, but during the loan qualification process the husband is dropped due to credit problems and the wife is going to be the only person in title or obligated on the loan, then a new purchase agreement with the wife listed as the sole buyer will have to be signed and submitted to Fannie Mae for approval. We are being told that you cannot cure this with a contract amendment or alteration, and Fannie Mae will not approve any HUD-1 unless both original names appear on it. Obviously, this can cause big problems with closing. The catch is that the new lender may not approve the HUD-1 with both names on it, especially in an FHA loan scenario. If you as the selling agent and are not made aware of this until the day before closing, it could jeopardize whether the closing occurs as scheduled. Our advice is to pay attention to this issue if your client is purchasing an REO property. We suggest that the buyers get pre-qualified for the loan before signing the purchase agreement to ensure that no changes of this type to that document are necessary.

Please contact your Realty Title representative with any questions.

Top Crye-Leike Agents (RT referrals) - March 2011

2011-04-06T15:26:00.006-05:00

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

Top Agents of the Month (Company Wide)
Suzanne Tidwell - Arlington/Hwy 64
Rita Hallum - Bartlett
Betty Carter - Cordova
Robert Farris - Germantown-Forest Hill
Judy McLellan - Quail Hollow
Jeff Hawkes - Hernando
Carol Iverson - Quail Hollow
Danny Burke - Quail Hollow
Trey Hogue - Cordova
Don Cockroft - Quail Hollow
Johnnie Key-Jenkins - Cordova
Ray Duke - Bartlett
Vicki Blackwell - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Suzanne Tidwell
Atoka - Crystal Burnett
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Betty Carter
East Memphis – Janet Lee
Germantown Forest Hill – Robert Farris
Germantown Poplar – Helen Lloyd
Hernando – Jeff Hawkes
Hickory Ridge – Toni Withers
Midtown - Neal Jackson & Bill Malone (tie)
Olive Branch – Chris Peaks
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix & Stephanie Crosslin (tie)

Top Agents (1st Quarter)
Judy McLellan - Quail Hollow
Mary Ann Tapp - Arlington/Hwy 64
Patty Rainey - Arlington/Hwy 64
Josie Robinson - Germantown-Forest Hill
Suzanne Tidwell - Arlington/Hwy 64
Trae Dilworth - Olive Branch
Tommie Criswell-Jones - Arlington/Hwy 64
Rita Hallum - Bartlett
Robert Farris - Germantown-Forest Hill
Marceline Williams - Germantown-Forest Hill

*Ranked in order by unit numbers
**Managers excluded

Federal Tax Liens

2011-04-04T09:00:00.007-05:00

Receiving notice that your client, or the client of the coop agent, has a federal tax lien filed against him can give you that sick feeling in your stomach. It’s the kind of thing that doesn’t generally come up until well into the deal, after the title search has been done and examined. By that time, you’ve invested a lot of time, effort and money into the deal, and you’re understandably upset that something may derail it. Notice of a federal tax lien is typically filed in the public records of the county of residence of the delinquent taxpayer. As soon as it is filed, it becomes a lien against all property the taxpayer owns in that county, including his principal residence. If the taxpayer attempts to sell or refinance his property, the tax lien will serve as a cloud on the title and will generally have to be discharged by paying it at or before closing. That’s the bad news. The good news is that if the taxpayer is buying a house in that county, the IRS has taken the position that it will subordinate its lien to the lien of a “purchase money mortgage” (See Revenue Ruling 68-57). A purchase money mortgage is a mortgage loan in which the loan proceeds are used entirely to buy the property. For example, if I borrow $100,000 from Magna Bank and use that money to buy my $120,000 dream home at 123 Main Street, Magna will be granting me a purchase money mortgage. So in this case, since the IRS will subordinate its lien to Magna’s mortgage lien, the title insurer will agree to insure Magna’s lien as a “first lien,” and Magna will agree to make the loan. However, that doesn’t mean that the tax lien disappears – it will still be a subordinate lien against the property the taxpayer buys and will haunt him when he tries to sell or refinance. But the lesson for our purposes is that a federal tax lien against a buyer is much easier to deal with than one against a seller. Having said all that, you may encounter a similar situation involving a state tax lien - good news if you’re in Mississippi, bad news if you’re in Tennessee. Mississippi generally takes the same position as the IRS in terms of lien priority, and will subordinate to a purchase money mortgage. Tennessee takes the opposite stance and sticks with the “first in time, first in priority” rule. If a buyer has a Tennessee tax lien filed against him, then he will generally have to discharge it before buying real property. IMPORTANT NOTE: The above applies only to the priorities of the respective liens. A borrower may still not be able to get a mortgage loan with an outstanding federal tax lien due to the effect it may have on that borrower’s debt-to-income ratio.

De Minimis Exemption from TN Mortgage Licensing Law

2011-03-28T09:00:00.005-05:00

You may recall our previous tips in June and October last year on Tennessee's relatively new law regarding mortgage loan originator licensing. In the June tip ("Investors Beware"), we made you aware of the law and how it could affect your investor clients who wish to finance the sale of their investment property, and in the October tip ("Tennessee Mortgage Lender Licensing Redux") we updated you with the opinion from the Tennessee Attorney General, who said that licensing would be required in such situations unless the investor met certain limited statutory exceptions (e.g. selling to an immediate family member or selling a primary residence). Fortunately for investors, the TN Department of Financial Institutions, the agency responsible for licensing administration and enforcement, has issued guidance in the form of a Compliance Bulletin that creates a de minimis exemption from the licensing requirements. Specifically, the Bulletin exempts individuals from license requirements if the following conditions are met: 1. The person is acting in an individual capacity (i.e. not as a business entity) 2. The person is selling his own real property 3. The person finances the sale of no more than 5 such properties during any 12-month period If these conditions are met, then the Department considers such individual to be exempt from the mortgage loan license requirements in the Tennessee law previously mentioned. However, please be aware that the Department has adopted this position subject to future clarification from the US Dept. of HUD, which could change the rules tomorrow. So it would behoove any investor wishing to finance the sale of his property to periodically check with the Department of Financial Institutions about any change to this position. You can find a copy of the Bulletin here: http://www.tn.gov/tdfi/compliance/bulletins/C-10-2.html, and points of contact in the Department are listed at the bottom of it. Please click here to print this tip: DeMinimis Exemption

Don't Forget to Adjust the Closing Costs Too

2011-03-11T09:42:00.006-06:00

During the negotiation of a real estate deal, it can be easy to get overwhelmed with all the details. One particular item that can cause problems is the amount of buyer closing costs to be paid by the seller. The way this usually comes up is in the offer, which may ask the seller to pay "X% of the sales price toward buyer's closing costs, not to exceed $_______."

For example, let's say the buyer presents an offer with $100,000 sales price and asks the seller to pay 3% of the sales price toward the buyer's closing costs, not to exceed $3,000. Let's further say that the seller counters with a new sales price of $110,000, but doesn't touch the closing cost provision. If the buyer accepts this counter, he may think that he's getting the house for $110,000 and that the seller is contributing 3% (or $3,300) toward his closing costs. However, the dollar limitation of $3,000 is still there, and caps the seller's contribution at that amount.

To avoid this trap, either don't include a specific dollar limitation when asking for closing costs, or be sure to adjust that limitation to reflect the correct percentage amount as the sales price changes during negotiations. In the above example, before the buyer accepted the counter-offer, the selling agent should have changed the closing cost cap to $3,300.

As always, if you have any questions on this topic, please contact your Realty Title representative.

Please click here to print this tip: http://tinyurl.com/46ehukh

Events Around Memphis for March & April

2011-03-10T15:47:00.002-06:00

Thanks to Bethany Hesser for compiling this list of events around Memphis for the months of March and April. Please feel free to share with friends and clients.

To view list, please click here: Events for March and April

Top Crye-Leike Agents (RT referrals) - February 2011

2011-03-10T12:54:00.006-06:00

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

Top Agents of the Month (Company Wide)
Mary Ann Tapp - Arlington/Hwy 64
Tommie Criswell-Jones - Arlington/Hwy 64
Judy McLellan - Quail Hollow
Melissa Hayes - Quail Hollow
Trae Dilworth - Olive Branch
Sheila Pinnix - Southaven

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Bartlett – Rita Percer
Collierville – 7-way tie (Jeri Bechard, Wavor Lynn Brown, Jimmie Kay Finch, Nancy Halyard,
Nash Hassan, Nancy Thompson, Carlo Van Rantwyk)
Cordova – Betty Carter and Winona Williams (tie)
East Memphis – Janet Lee and Lynn Walker (tie)
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Tammy Bunnell
Hernando – Cecil Pettis
Hickory Ridge – 5-way tie (Bunnie Fields, Darron Garrett, Jimmie Hopson, Landra Pryor, Toni Withers)
Midtown - Denise Richardson
Olive Branch – Trae Dilworth
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix

*Ranked in order by unit numbers
**Managers excluded

A Big Victory for Magna

2011-03-04T16:11:00.003-06:00

This week’s tip is not so much a tip on contract or legal issues, as it is a tip on a great mortgage lender. We always like to recognize our fellow Crye-Leike core services when the opportunity arises, and it has in the case of Magna Bank.

We were asked to close the purchase of a house in East Memphis which involved a mortgage loan from one of the big national lenders (who shall remain nameless). The buyer was scheduled to get married a few days before closing and wanted to be able to move into the house with his new bride, so needless to say he was under a significant amount of stress worrying about the deal and his wedding.

A few days before the scheduled closing, he contacted our office and expressed his concern about being able to close as scheduled. He was starting to get requests from the lender for additional information and documentation after he had been told he was approved, and it was making him nervous. We confirmed for him that we had been told of his approval as well, and as far as we knew we were just waiting to receive the loan package for closing. Two days before the scheduled closing his lender requested additional copies of bank statements, which he promptly sent. The day before the scheduled closing, the lender asked him to get verification from his employer relating to disability income, which he promptly sent. The day of the scheduled closing, he was sitting on pins and needles, waiting for his lender to send us a loan package. And then it happened – the lender denied his loan. As you can imagine, a loan denial on the day of closing is a disaster.

Our office immediately started disaster recovery efforts and referred him to Magna Bank. Magna’s loan officer “took the bull by the horns” and was able to get the loan closed the first day after the mandatory federal disclosure period ended, making all involved extremely happy. Turning around a loan in that period of time is no easy feat, but Magna proved again what makes it a premier mortgage lender. Magna played the role of hero in this story, and certainly earned it.

Please click here to print this tip: http://tinyurl.com/4tq5bct

Short Sales - New Offers and Back-up Contracts

2011-02-25T13:42:00.011-06:00

I had a very interesting conversation the other day with a Crye-Leike associate from the Germantown-Poplar branch (who shall remain nameless at this point), in which she expressed concern over a provision in the TAR Short Sale Addendum (2011 version). In particular, she was concerned over paragraph 4 of that Addendum, which notifies the buyer that in a short sale situation the Seller's existing mortgage lender may require the Seller to continue to market the property and accept additional offers or back-up contracts. She raised the excellent point that this language puts the Buyer in a precarious position - it leaves him exposed to losing his deal with the Seller if a higher price offer subsequently comes in. Naturally her question was how to protect such a Buyer.

As she and I discussed, I believe the purpose behind the language in the Addendum is to enlighten the Buyer as to what he can expect in the short sale process. Since it is a short sale, the Seller is really not in control of the transaction; rather, his mortgage lender is. As such, the short sale can prove to be a bumpy ride for the Buyer, and I believe that TAR wanted to protect its members from claims by Buyers that they weren't warned of that possibility. Be that as it may, that doesn't help the Buyer much. One possibility we discussed to help the Buyer was to place a time limit on how long the Seller could continue to market the property and accept other offers or back-up contracts. In this case, the Seller (and listing agent) would be prohibited from forwarding any other offers or back-up contracts to the mortgage lender after the deadline given, and the mortgage lender would have to either accept or reject the contract at hand first.

While this may not be a perfect solution, it does afford the Buyer some protection. The biggest problem will be compliance with whatever instructions are given by the mortgage lender as to the short sale. As stated earlier, that lender is calling the shots. But it may be worth a shot, and unfortunately in the short sale arena I don't believe there are any perfect solutions. Please contact your Realty Title representative for help in language to use in the contract for this purpose.

Also, the first person to correctly guess who the mystery agent in this tip is wins a $10 Starbucks gift card. You must post your guess as a comment to this blog post and identify yourself in the comment. Good luck!!

Please click here to print this tip: http://tinyurl.com/4myr5l4

Lucy Doane Picks Realty Title for Contract!!

2011-02-25T11:46:00.005-06:00

This just in - Lucy Doane, Crye-Leike Germantown-Poplar, was at the Crye-Leike Kick Start and announced that she has just written a contract and identified Realty Title as the closing office!

FIRPTA Follow Up

2011-02-11T09:22:00.008-06:00

Recently we discussed the topic of FIRPTA (Foreign Investment in Real Property Tax Act) and how it has appeared in the new (2011) version of the TAR contract form. As we indicated in that tip, there isn't any change to the law itself. Rather, the fact that it appears in the contract form has generated a lot of buzz. One thing we promised earlier was a suggestion on how to nip any problems related to FIRPTA in the bud. Here's one idea: if you are the listing agent, ask your client (seller) at the time of listing if he is a citizen or permanent resident alien of the U.S. If he answers "yes," then you should not have any problems related to FIRPTA - either the transaction will be exempt based on the price point ($300,000 or less) exception or the seller can sign a FIRPTA affidavit. If you prefer to have him sign that affidavit in advance of closing, which should allay any fears the buyer may have about having to withhold proceeds, you can just give us a call and we'll prepare the affidavit. Otherwise, he can just sign it at closing.

If he answers "no" to that question, please contact us ASAP. We can help guide you through the process to ensure there aren't any problems at closing.

Please contact your Realty Title representative with any questions or visit the IRS website.

Please click here to print this tip: http://tinyurl.com/4cw87cd

Top Crye-Leike Agents (RT referrals) - January 2011

2011-02-08T09:37:00.004-06:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Marceline Williams - Germantown-Forest Hill
Josie Robinson - Germantown-Forest Hill
Patty Rainey - Arlington/Hwy 64
Joyce McKenzie - Collierville
Susan East - Southaven
Lauren Harkins - East Memphis
Clare Maness - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Patty Rainey
Atoka - Crystal Burnett
Bartlett – John White
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
East Memphis – Lauren Harkins
Germantown Forest Hill – Marceline Williams
Germantown Poplar – Tammy Bunnell & Pam Watson (tie)
Hernando – Virginia Skinner & Cecil Pettis (tie)
Hickory Ridge – Eddie Parker
Midtown - Denise Richardson
Olive Branch – Clare Maness
Quail Hollow – Judy McLellan
Southaven – Susan East

*Ranked in order by unit numbers
**Managers excluded

The TAR Notification Form

2011-02-04T10:44:00.005-06:00

TAR has a form called "Notice of Progress of Agreement" or "Notification" for short, which is designed to help expedite the communication between parties to a contract. 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 and 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, and I could see how there could be a number of these forms utilized throughout the pre-closing period. While you theoretically could also use the same form throughout the process, having the Buyer and Seller initial and date where appropriate, I wouldn’t recommend it as it can quickly get messy. You can find the form on the Crye-Leike intranet site (Form F26). 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.

Please click here to print this tip: http://tinyurl.com/4exqym5

What in the World is FIRPTA?

2011-01-28T09:39:00.005-06:00

There’s been a lot of talk recently about a change to the 2011 TAR contract relating to new language about the “Foreign Investment Tax Act” (paragraph 2B). That law is actually called the Foreign Investment in Real Property Tax Act of 1980 (hence the acronym “FIRPTA”), and there’s nothing new about it. The only thing that has changed is that TAR has now addressed it in the contract form.

The law generally says that a purchaser of real property must withhold 10% of the sales price and tender that to the IRS when buying that property from a foreign person as defined under the law. A “foreign person” is generally someone who is not a citizen or permanent resident alien (i.e. green card holder) of the United States. As you can imagine, this is a tax law so it’s not nearly as simple as that, and there a certain important exceptions that generally shield you and your clients from having to worry too much about it. The two exceptions that are most applicable are as follows:

The seller provides an affidavit stating that he is not a “foreign person” as defined under the law, and the buyer does not have actual knowledge to the contrary. (We routinely get these signed at closing)
The sales price is $300,000 or less and the buyer intends to use the property as a residence. The IRS has created a test relating to use as a residence: the buyer must have definite plans to reside at the property for at least 50% of the number of days that anyone resides at the property for the first two years after purchase. Days in which the property is vacant do not count in this calculation.

These two exceptions apply to the vast majority of closings in the Memphis area, and I can count on one hand the number of times we’ve actually had to withhold under the law. So for your purposes, there shouldn’t be any real change in your practice. However, in future tips we will provide some advice to effectively nip any FIRPTA problems in the bud.

Please visit the IRS web site for further information on FIRPTA.

To print this tip, please click here: http://tinyurl.com/4upssbz

Top Crye-Leike Agents (RT referrals) - December 2010

2011-01-07T09:34:00.005-06:00

It's that time of year again - when we announce the Crye-Leike Agents of the Year for referrals to Realty Title. I don't want to spoil the surprise in our announcement at Kickoff Meeting next Tuesday, so I'm just going to give you the Agents of the Month for December here. To find out the Agents of the Year, come to the Kickoff.

Agents of the Month (By Branch)
Arlington/Hwy 64 – Melinda & Eddie Crosslin
Atoka - Nancy Carroll
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Selina Smith
Downtown - Kris Gavin
East Memphis – Judson Williford
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Tammy Bunnell
Hernando – Virginia Skinner
Hickory Ridge – Alice Payne
Midtown - Bill Malone
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Bud Grimm
Southaven – Stephanie Crosslin

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Top Crye-Leike Agents (RT referrals) - November 2010

2010-12-07T10:20:00.005-06:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Danny Freeman - Bartlett
Vicki Blackwell - Quail Hollow
Josie Robinson - Germantown-Forest Hill
Mike Wooten - Germantown-Forest Hill
Sharon Ellis & Mickey Brown - Germantown-Forest Hill
Melinda & Eddie Crosslin - Arlington/Hwy 64
Joyce McKenzie - Collierville
Alice Payne - Hickory Ridge
Tonda Thomas - Quail Hollow

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Joyce McKenzie - Collierville
Cheryl Lamghari - Cordova
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Jimmie Hopson - Hickory Ridge
Danny Freeman - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Melinda & Eddie Crosslin - Arlington/Hwy 64
Susan Brubaker - Quail Hollow
Chris Peaks - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Melinda & Eddie Crosslin
Atoka - Karen Reyes
Bartlett – Danny Freeman
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Kris Gavin
East Memphis – Judson Williford
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Billy Price
Hernando – Maggie Lucado
Hickory Ridge – Alice Payne
Midtown - Nate Mitchell
Olive Branch – Chris Peaks
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Potential Pitfalls of Agents Selling Their Own Home

2010-12-06T09:00:00.008-06:00

The Tennessee Supreme Court recently ruled on whether a real estate agent selling her house is subject to the Tennessee Consumer Protection Act ("Act") (TCA 47-18-101 et seq) for claims of unfair or deceptive practices in a business or trade. Traditionally the rule has been that the Act applies only to the protection of consumers from unfair and deceptive practices by businesses, and being subject to the Act means the agent could be sued and liable for three times the amount of actual damages suffered by the plaintiff as well as the payment of the plaintiff's attorney fees.

In our context, this begs the question of whether a licensed agent can be sued under the Act for unfair or deceptive practices when selling a house she owns. The TN Supreme Court answers that question by saying, "if the [agent] sold her personal residence 'in the course of the real estate trade' or if she were 'in the business of selling property as owner or broker,' then she is covered by the Tennessee Consumer Protection Act." In other words, if the agent is acting in a business capacity when selling her home then she is subject to the Act and can be sued under it.

This obviously begs the question of when an agent is acting in a business capacity when selling her home. And this is where it gets a bit sticky. The Court acknowledged that the answer to this question depends on the facts of each case, but did provide some general principles in arriving at an answer. First, whether the sale is a casual or isolated sale vs. part of a series of sales is very important. Casual and isolated sales are less likely to be considered to be done in a business capacity. Second, whether the agent is providing or performing any professional services is important. In this particular case, the owners were both real estate professionals and had a practice of living in homes they recently constructed for brief periods of time before selling them. The Court concluded that this was sufficient to bring them within the reach of the Act, and ruled against them. The only sure thing to take away from this is that each case will be different, but if you are moving and selling your home on a regular basis, or if you are selling your home to your own clients, then you are probably covered by the Act.

It's important to remember that this situation is only applicable when an agent sells her own home. When an agent is conducting business and selling the homes of others, she is always subject to the Act. If you'd like to read the actual case, here's the link: Fayne v. Vincent.

To print this tip, click here: http://tinyurl.com/2u5w2jh

Top Crye-Leike Agents (RT referrals) - October 2010

2010-11-05T11:09:00.005-05:00

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

Top Agents of the Month (Company Wide)
Joyce McKenzie - Collierville
Judy McLellan - Quail Hollow
Rita Hallum - Bartlett
Connie Lester - Germantown-Forest Hill
Cheryl Lamghari - Cordova
Allen Keeton - Quail Hollow
Helen Lloyd - Germantown-Poplar
Mallie Jo Nagle - Germantown-Forest Hill
Clare Maness - Olive Branch
Evelyn Isbell - Olive Branch
Bertha Pitts - Hickory Ridge
Barbara Stewart - Olive Branch

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Joyce McKenzie - Collierville
Cheryl Lamghari - Cordova
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Danny Freeman - Bartlett
Susan Brubaker - Quail Hollow

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka -Peggy Stumph
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Lynn Harvey
East Memphis – Janet Lee
Germantown Forest Hill – Connie Lester
Germantown Poplar – Helen Lloyd
Hernando – Virginia Skinner
Hickory Ridge – Bertha Pitts
Midtown - Nate Mitchell
Olive Branch – Clare Maness
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Mortgage Lender Licensing Follow Up for MS

2010-10-18T11:06:00.003-05:00

You may recall in our last tip that we discussed the pitfalls for sellers in Tennessee in dealing with the restrictions related to seller-financing and mortgage lender licensing requirements. As we mentioned, a seller must have a mortgage lender's (broker's) license before extending seller-financing in the sale of residential property in Tennessee unless he meets one of the exemptions (e.g. the home was his principal residence or he is selling to an immediate family member). We have received inquiries as to whether Mississippi has a similar restriction, and Richard Johnson (one of our Mississippi attorneys) has confirmed that it does not (at this point). So for now, sellers of Mississippi property are free to extend seller-financing in residential transactions without the need to comply with state mortgage lender licensing laws. We will alert you if that changes in the future.

As always, please feel free to contact your Realty Title representative with any questions.

Top Crye-Leike Agents (RT referrals) - September 2010

2010-10-11T17:41:00.005-05:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Cheryl Lamghari - Cordova
Selina Smith - Cordova
Sherry Hulen - Germantown-Poplar
Tammy Bunnell - Germantown-Poplar
Sheila Pinnix - Southaven
Lisa Smith - Southaven
Josie Robinson - Germantown-Forest Hill
Nancy Moore - Bartlett
Robbin Sanders - Midtown
Ellen Thornton - Olive Branch
Beth Price - Olive Branch
Vicki Blackwell - Quail Hollow
Marcia Hughes - Germantown-Poplar
John White - Bartlett
Sarah Lea & Ed Matthews - Olive Branch
Shemika Barr - Quail Hollow
Christie May - Germantown-Forest Hill

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Joyce McKenzie - Collierville
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Susan Brubaker - Quail Hollow
Danny Freeman - Bartlett

Agents of the Month (By Branch)
Arlington/Hwy 64 – Suzanne Tidwell
Atoka - Karen Thompson
Bartlett – Nancy Moore
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Kris Gavin
East Memphis – Helen Akin
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Sherry Hulen
Hernando – Virginia Skinner
Hickory Ridge – Jimmie Hopson
Midtown - Robbin Sanders
Olive Branch – Ellen Thornton
Quail Hollow – Judy McLellan
Southaven – Sheila Pinnix

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Tennessee Mortgage Lender Licensing Redux

2010-10-04T09:13:00.008-05:00

We detailed back in a June tip that the State of Tennessee had implemented a law (TCA 45-13-101 et seq.) that required persons who provided seller financing (except involving the sale of their principal residence) to be licensed as mortgage lenders by the Department of Financial Institutions. As agents, you may work with real estate investors who engage in providing seller financing and who are now subject to these licensing requirements. By way of an update, the Tennessee Attorney General published an opinion (Opinion No. 10-93) on August 24 regarding this law, and confirmed what we had said in our earlier post - investors who extend seller financing for the purchase of residential property must be licensed by the state, except in limited circumstances. Two of those pertinent limited circumstances would include a situation where the seller used the property as a home prior to the sale and when the seller is extending the financing to an immediate family member. If your investor client doesn't meet either of these two exceptions, then he/she in all likelihood must be licensed before engaging in seller financing. Failure to obtain the license can lead to penalties of up to $10,000 per violation and refund of any interest collected from a borrower under a seller financed loan. (See TCA 45-13-405)

Please direct your investor clients to the Tennessee Department of Financial Institutions (615-741-3186) with any questions regarding licensing.

Final Property Disclosure Requirement in Tennessee

2010-09-25T15:24:00.006-05:00

Tennessee law (TCA 66-5-205) imposes a duty upon the owner/seller of real estate to supplement his disclosure about the condition of the property with any material changed circumstances at or before closing. This is usually accomplished with the dreaded “Sellers Final Property Disclosure” form, which is the last page of the TAR Form “Tennessee Residential Property Condition Disclosure.” The reason I characterize this form as dreaded is that it seems to cause all sorts of headaches for agents in getting the form properly completed. The law itself only requires the seller to provide the update on the physical condition of the property, but the form has signature blocks for both buyer and seller, implying that the buyer must acknowledge the re-disclosure. Technically, there is no statutory requirement for acknowledgement by the buyer, but it is certainly good practice and I would commend the TAR committee for including those signature blocks. Having said that, though, we a faced with the reality of trying to get the form completed with all appropriate signatures “at or before closing” in a split-closing environment.

The problem faced with the split-closing environment is that the buyers and sellers are separated by space, and usually time, for their respective closing ceremonies. This may not present a problem if the seller closes before the buyer, in which case the form can be completed at the closing table and forwarded to the buyer’s closing agent for signature at buyer’s closing. However, the more typical case involves the buyer closing first, which means that if the seller waits until the closing ceremony to complete the form it will not be available for the buyers to acknowledge. Some have proposed having the buyers sign a blank form with the sellers completing it after the fact. However, I do not believe that such solution comports with the spirit of the form, which is meaningful disclosure to the buyer. I also don’t believe it would pass scrutiny by a court if ever reviewed. As such, I would recommend against approaching the problem in that manner. Rather, I would suggest that the listing agent have the form completed by the seller at or around the time of the final walk-thru inspection. If the buyer is available to sign the form at that time, great. Otherwise, the listing agent can forward the form (signed by the seller) to the closing agent for completion by the buyer at closing. This will ensure a fully executed form, which will be available for distribution to both agents for record-keeping purposes.

Cashier's Checks Redux

2010-09-10T09:07:00.007-05:00

You may recall our recent tip about why we require wire transfers for money in excess of $10,000 which needs to be brought to closing. I wanted to shed a little more light on our reasoning in this area, so that you and your clients have a better appreciation for the protection it provides to all involved in the transaction.

Below you will find a sample Special Alert I received from the FDIC just the other day regarding counterfeit cashier’s checks. This is one of eight such alerts I received that day regarding banks all over the country, and is representative of the alerts I receive on a regular basis. I wanted to show this to you to help you understand that in addition to cashier's checks taking longer to clear, there is the risk of fraud associated with them. And since we are dealing with money belonging to other people (e.g. your clients, mortgage lenders, you, etc.), we have to exercise extreme caution in handling that money.

The maxim "GIGO" (Garbage In, Garbage Out) applies to bank accounts as well as computer programming. If we accept a counterfeit check, all the checks we issue that are covered by that check are no good either. And the last thing we want to do is have to explain to you or your clients why the checks we've issued are no good. So the simple rule to remember is that wire transfers are as good as gold at closing.

Incidentally, counterfeit cashier's checks aren't just used in real estate transactions. I recently read of someone who sold his motorcycle to a buyer using a counterfeit cashier's check. Unfortunately, the seller thought he was being smart in requiring that form of payment, but ended up being the victim of a savvy con artist. If you have concerns about cashier's checks in your personal life, check out this article from the FDIC (second story down).

Please contact your Realty Title representative with any questions.

From: FDIC Subscriptions [mailto:subscriptions@fdic.gov]
Sent: Wednesday, September 08, 2010 12:53 PM
To: mmcdonald@realtytitle.com
Subject: SA-123-2010: Counterfeit Cashier's Checks - Timberwood Bank, Tomah, Wisconsin

Special Alert

SA-123-2010
September 8, 2010

TO:	CHIEF EXECUTIVE OFFICER (also of interest to Security Officer)
SUBJECT:	Counterfeit Cashier's Checks
Summary:	Counterfeit cashier's checks bearing the name Timberwood Bank, Tomah, Wisconsin, are reportedly in circulation.

Timberwood Bank, Tomah, Wisconsin, has contacted the Federal Deposit Insurance Corporation (FDIC) to report that counterfeit cashier's checks bearing the institution's name are in circulation.

The counterfeit items display the routing number 075918130, which is assigned to Timberwood Bank. The items are similar to authentic cashier's checks; however, they display the word "REMITTER" in the lower-left corner.

Authentic cashier's checks are light red in color with a marbleized background. The bank's logo (trees) is displayed behind the bank's name in the top-left corner.

Copies of a counterfeit item and an authentic check (VOID) are attached for your review. Be aware that the appearance of counterfeit items can be modified and that additional variations may be presented.

Any information you have concerning this matter should be brought to the attention of:

Dennis Peters
Security Officer
Timberwood Bank
110 West Veterans Street
Tomah, Wisconsin 54660
Telephone: (608) 372-2265
Fax: (608) 372-3757
E-mail: dpeters@timberwoodbanks.com

Information about counterfeit items, cyber-fraud incidents and other fraudulent activity may be forwarded to the FDIC's Cyber-Fraud and Financial Crimes Section, 550 17 ^th Street, N.W., Room F-3054, Washington, D.C. 20429, or transmitted electronically to alert@fdic.gov. Questions related to federal deposit insurance or consumer issues should be submitted to the FDIC using an online form that can be accessed at http://www2.fdic.gov/starsmail/index.asp.

For your reference, FDIC Special Alerts may be accessed from the FDIC's website at www.fdic.gov/news/news/SpecialAlert/2010/index.html. To learn how to automatically receive FDIC Special Alerts through e-mail, please visit www.fdic.gov/about/subscriptions/index.html.

	Sandra L. Thompson
	Director Division of Supervision and Consumer Protection

Attachment (not available electronically)

NOTE: As a security precaution, the FDIC does not post to its Web site electronic images of fraudulent items or authentic checks that have been counterfeited. This is to avoid attempts by others to use these instruments to facilitate additional fraud. Financial institutions can view images of the fraudulent items and authentic checks (marked as VOID) using the FDIC's free, secure Web site, FDICconnect. (See more information about FDICconnect at http://www.fdic.gov/news/news/financial/2006/fil06032.html.) Printed copies of each Special Alert and its attachment(s) may also be obtained from the FDIC's Public Information Center (telephone: 1-877-275-3342 or 703-562-2200; fax: 703-562-2296; or e-mail: publicinfo@fdic.gov).

Distribution: FDIC-Supervised Banks (Commercial and Savings)

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Top Crye-Leike Agents (RT referrals) - August 2010

2010-09-08T09:08:00.005-05:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Joyce McKenzie - Collierville
Billy Rodgers - Arlington/Hwy 64
Saeed Nia - Quail Hollow
Gale Mueller - Southaven
Billy Price - Germantown-Poplar
Nate Mitchell - Midtown
Chris Peaks - Olive Branch
Ellen Thornton - Olive Branch

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Joyce McKenzie - Collierville
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Susan Brubaker - Quail Hollow
Carlo Van Rantwyk - Collieriville

Agents of the Month (By Branch)
Arlington/Hwy 64 – Billy Rodgers
Atoka - Peggy Stumph
Bartlett – Danny Freeman
Collierville – Joyce McKenzie
Cordova – Cheryl Lamghari
Downtown - Kris Gavin
East Memphis – Lauren Harkins
Germantown Forest Hill – Kent & Tammy Anderson
Germantown Poplar – Billy Price
Hernando – Diane Krayer
Hickory Ridge – Jimmie Hopson
Midtown - Nate Mitchell
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Gale Mueller

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Federal Tax Liens

2010-08-13T09:48:00.004-05:00

Receiving notice that your client, or the client of the coop agent, has a federal tax lien filed against him can give you that sick feeling in your stomach. It’s the kind of thing that doesn’t generally come up until well into the deal, after the title search has been done and examined. By that time, you’ve invested a lot of time, effort and money into the deal, and you’re understandably upset that something may derail it.
Notice of a federal tax lien is typically filed in the public records of the county of residence of the delinquent taxpayer. As soon as it is filed, it becomes a lien against all property the taxpayer owns in that county, including his principal residence. If the taxpayer attempts to sell or refinance his property, the tax lien will serve as a cloud on the title and will generally have to be discharged by paying it at or before closing. That’s the bad news. The good news is that if the taxpayer is buying a house in that county, the IRS has taken the position that it will subordinate its lien to the lien of a “purchase money mortgage” (See Revenue Ruling 68-57). A purchase money mortgage is a mortgage loan in which the loan proceeds are used entirely to buy the property. For example, if I borrow $100,000 from Magna Bank and use that money to buy my $120,000 dream home at 123 Main Street, Magna will be granting me a purchase money mortgage. So in this case, since the IRS will subordinate its lien to Magna’s mortgage lien, the title insurer will agree to insure Magna’s lien as a “first lien,” and Magna will agree to make the loan. However, that doesn’t mean that the tax lien disappears – it will still be a subordinate lien against the property the taxpayer buys and will haunt him when he tries to sell or refinance. But the lesson for our purposes is that a federal tax lien against a buyer is much easier to deal with than one against a seller.
Having said all that, you may encounter a similar situation involving a state tax lien - good news if you’re in Mississippi, bad news if you’re in Tennessee. Mississippi generally takes the same position as the IRS in terms of lien priority, and will subordinate to a purchase money mortgage. Tennessee takes the opposite stance and sticks with the “first in time, first in priority” rule. If a buyer has a Tennessee tax lien filed against him, then he will generally have to discharge it before buying real property.
IMPORTANT NOTE: The above applies only to the priorities of the respective liens. A borrower may still not be able to get a mortgage loan with an outstanding federal tax lien due to the effect it may have on that borrower’s debt-to-income ratio.

Top Crye-Leike Agents (RT referrals) - July 2010

2010-08-11T15:03:00.004-05:00

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

Top Agents of the Month (Company Wide)
Joyce McKenzie - Collierville
Danny Freeman - Bartlett
Carole Ann Burns - Cordova
Josie Robinson - Germantown-Forest Hill
Mary Ann Tapp - Arlington/Hwy 64
Carlo Van Rantwyk - Collierville
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Clare Maness - Olive Branch
Elsie & Curtis Ward - Quail Hollow
Kay Paul - Collierville
Diana Vickers - Cordova
Denise Richardson - Midtown
Ann Etta Moore - Arlington/Hwy 64

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Josie Robinson - Germantown-Forest Hill
Cheryl Lamghari - Cordova
Joyce McKenzie - Collierville
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Susan Brubaker - Quail Hollow
Crystal Burnett - Atoka
Danny Freeman - Bartlett

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka - Crystal Burnett
Bartlett – Danny Freeman
Collierville – Joyce McKenzie
Cordova – Carole Ann Burns
Downtown - Kris Gavin
East Memphis – Jan Gordon
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Pat Goldstein
Hernando – Robert Clay
Hickory Ridge – Thomas McGhee
Midtown - Denise Richardson
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Elsie and Curtis Ward
Southaven – Carmen Kyle

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

"But I Got a Discharge in My Bankruptcy!"

2010-08-09T10:47:00.006-05:00

Note: This is a re-publication of a post from last December to help remind you about a fairly common problem in today's market.

There is a common misconception among many who undergo the bankruptcy process, and even some lawyers, that the discharge obtained through the bankruptcy wipes out all the liens against the debtor's property. This misconception typically arises in a real estate transaction when an owner of property has previously filed bankruptcy and received a discharge. In the title search, we may find a judgment lien or mortgage lien that existed prior to his filing of bankruptcy, and as a result of the discharge, he believes that the lien no longer exists. Unfortunately, in this situation we may have to inform the owner (and his real estate agent) that the discharge does not wipe out those liens. The effect of the discharge is to wipe out the personal liability of the debtor for the debt. However, if the debt is not paid in full through the bankruptcy plan, then the creditor can institute what’s called an “in rem” action against the property that served as collateral for the debt (typically the house he’s trying to sell). This is a fancy way of saying that even though the creditor cannot sue the debtor personally, it can still force a sale of the property and use the proceeds to satisfy the remaining balance of the debt. As you may well imagine, this scenario would prohibit the title company’s ability to insure good and marketable title for the new buyer and lender. In such a case, we will have to perform curative work in which the lien is released, whether through payment at closing or some other negotiated settlement between the debtor and creditor. To minimize obstacles and delays in closing under this scenario, it is a good idea for a listing agent to get a feel for the financial history of his or her client, or perform a quick check of the bankruptcy records to determine whether the client has previously filed, or is currently in, bankruptcy. As always, you may call your favorite Realty Title representative for assistance with this.

Mississippi Property Disclosure Requirements

2010-07-19T13:58:00.002-05:00

Mississippi law (MCA 89-1-501 et seq) requires both the listing and selling agent to fulfill certain duties with respect to the disclosure statement concerning Mississippi residential property.

Listing Agent:
1. Inform your seller of their rights in connection with the Property Condition Disclosure. Typically this is by delivery of the Informational Statement (first page) of the disclosure (found on the Crye-Leike intranet under Tools:Forms and Contracts).
2. Deliver to the buyer the written property condition disclosure statement as soon as practicable before execution of the contract. This typically means prior to the acceptance of the terms of the contract by the buyer.
3. If the disclosure is delivered after the buyer has made an offer to purchase, the buyer has three (3) days after delivery in person or five (5) days after delivery by deposit in the mail, to terminate his or her offer, without penalty, by delivery of a written notice of termination to the seller or his agent.
4. Advise your seller to fully disclose any material fact concerning the property which would impact the buyer’s decision to purchase the property.
5. Have your sellers sign the Confirmation of Understanding on the first page of the disclosure before making an offer.
6. Also, have your sellers complete pages 2 and 3 of the disclosure, then initial the second page and sign the third page at the time of listing.
7. Have the sellers sign the disclosure again at closing indicating that there have been no substantial changes. If there have been any substantial changes, they should be disclosed in writing.

Selling Agent:
1. Inform your buyers of their rights in connection with the Property Condition Disclosure. Again, typically this is by delivery of the Informational Statement (first page) of the disclosure.
2. Deliver the executed property condition disclosure to the buyer prior to the execution of the contract. This allows the buyer to make an informed decision to purchase the property.
3. Advise your buyers of any material fact concerning the property which would impact the buyer’s decision to purchase the property.
4. Have your buyers sign the Confirmation of Understanding on the first page of the disclosure before making an offer.
5. Also, have your buyers review pages 2 and 3 of the disclosure, then initial the second page and sign the third page.

We would recommend that you advise your buyers of any changes to the property prior to closing, review any changes to the property condition disclosure statement and have both the buyer and seller initial any such changes. If a seller or agent intentionally fails to disclose a matter pursuant this disclosure of which he has personal knowledge, he may be liable for any damages suffered by a buyer. Also, remember that the Property Condition Disclosure is not a warranty and is not part of the contract, but is for disclosure purposes only. Further, any appliances deemed to be personal property should be negotiated as part of the contract or other addendum and not as part of this disclosure. The Mississippi Real Estate Commission is authorized to enforce the provisions of this disclosure and any violation of the provisions shall be treated in the same manner as a violation of the Real Estate Broker License Law, and shall be subject to same penalties. Remember, when in doubt, disclose! If you have any other questions concerning this disclosure, please contact your Realty Title representative.

Condominium Seller Alert in Tennessee

2010-07-09T10:12:00.004-05:00

The Tennessee legislature passed a law in 2008 that requires condominium associations (or developers in the absence of an association) to provide copies of certain documents related to the condominium project upon request by a prospective purchaser or his agent (TCA 66-27-502 et seq.). The list of items to be provided is quite extensive, and the Tennessee Association of Realtors has created a form (found on the Crye-Leike intranet under the contract forms as “Condominium Association Information Request (F23)”) to help the selling and listing agent ensure compliance with the law. The list of items includes, among other things, copies of the Master Deed for the project and By-Laws, Charter, and current rules and regulations of the association, as well as financial statements for the association and status of condo fees for the particular unit in question. While providing copies of all of these for every transaction can be a burden on an association, the law allows the association to charge a reasonable fee for compliance, and to assess the particular unit for payment of the fee if the deal falls apart. Timely compliance is important for the association, as the law creates a $250 penalty for failure to provide the requested information within 10 business days after the request, and another $500 penalty if not supplied within 10 business days after the second request.

If you are a listing agent for a condominium unit, or work with condominiums frequently, it behooves you and your client to gather this information and documentation shortly after listing, or verify with the association that it can properly respond to a request, to avoid problems. The law allows for associations to store the information in electronic format or send by electronic means (i.e. web site or e-mail), so you may want to advise any associations that you work with on a regular basis to streamline their responses to such requests in one of these manners.

Please contact your Realty Title representative with any questions.

Top Crye-Leike Agents (RT referrals) - June 2010

2010-07-09T09:43:00.004-05:00

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

Top Agents of the Month (Company Wide)
Judy McLellan - Quail Hollow
Joyce McKenzie - Collierville
Mary Ann Tapp - Arlington/Hwy 64
Marcie Dean - Atoka
Tammy Bunnell - Germantown-Poplar
Jimmie Hopson - Hickory Ridge
Brenda Hampton - Hickory Ridge
Sherry Hulen - Germantown-Poplar
Karen Thompson - Atoka
Carlo Van Rantwyk - Collierville
Annice Kyle - Southaven
Trey Hogue - Cordova
Josie Robinson - Germantown-Forest Hill
Landra Pryor - Hickory Ridge
Sherry Roberts - Germantown-Forest Hill
Judson Williford - East Memphis
Toni Withers - Hickory Ridge
Leigh Anne & Terry Boyd - Olive Branch
Carol Maness - Olive Branch

Top Agents of the Year (Company Wide)
Judy McLellan - Quail Hollow
Leigh Anne & Terry Boyd - Olive Branch
Cheryl Lamghari - Cordova
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Joyce McKenzie - Collierville
Mary Ann Tapp - Arlington/Hwy 64
Tammy Bunnell - Germantown-Poplar
Betty Carter - Cordova

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka - Marcie Dean
Bartlett – Rita Hallum
Collierville – Joyce McKenzie
Cordova – Trey Hogue
Downtown - Kris Gavin
East Memphis – Judson Williford
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Tammy Bunnell
Hernando – Idella Haynes
Hickory Ridge – Jimmie Hopson
Midtown - Ruth Ann Terry
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Annice Kyle

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Investors Beware

2010-06-25T14:59:00.003-05:00

The Tennessee state legislature passed a law in 2009 that requires mortgage loan originators to be licensed and registered with the Tennessee Department of Financial Institutions before originating mortgage loans involving Tennessee real property. There are a few exceptions to this requirement (e.g. originators that are also depository institutions), that are specified because the legislature felt like proper regulation of the originator already existed elsewhere. And there is at least one exception in which the legislature felt like regulation wasn’t appropriate because of the nature of the relationship of the parties. That was the exception specified in TCA Section 45-13-201(b)(5), which says: “The requirement of a license under subsection (a) and this chapter do not apply to . . . (5) An individual who makes a residential mortgage loan, or simply offers or negotiates terms of a residential mortgage loan, when the loan is secured by a dwelling that served as the individual's residence.”

This exception allows a seller to offer seller financing without having to be licensed and registered as a mortgage loan originator, but only applies in instances when the property was that person’s residence. It does not appear to apply to the seller who is selling investment property, which is catching a number of investor’s by surprise. So if you have a client who is in the real estate investment business, you may want to point out to him that he may need to get licensed with the state if he is offering seller financing. Please contact either the Tennessee Department of Financial Institutions (http://www.tennessee.gov/tdfi/ or 615-741-2236) or your Realty Title representative with any questions.

More on the Repair Paragraph of the Contract

2010-06-21T14:12:00.003-05:00

In keeping with our recent theme related to the Inspection and Repair paragraph of the current TAR contract form, you may recall that once the seller has made a decision about the buyer's repair proposal then the ball may be placed back in the buyer's court. Remember that if the seller does not respond at all then he is deemed to accept the buyer's repair proposal and move forward to closing. The seller's other option is to counter the buyer's repair proposal with a different one, which means the buyer has a decision to make (and a certain amount of time to make it). In this case, the buyer can either accept the seller's proposal and move forward to closing or reject it and terminate the contract. If the buyer, instead, wants to counter at this point he can do so, but I believe the contract must be amended to reflect that since that is not one of the pre-printed options.

One thing to keep in mind as the buyer's agent is that you should not potentially prejudice your client's rights under the contract by offering to pay for repairs to make a deal work without first getting the approval of your client. A recent deal illustrated this danger when the listing broker refused to return the buyer's earnest money after learning of such an offer by the selling agent. Sometimes agent concessions are necessary in order to make the deal work, but before offering such concessions you should discuss them with your client and Realty Title closing representative to avoid any unintended consequences.

The current MS version of the contract is the same except that it allows the buyer to make a counter repair proposal by its pre-printed language.

Seller's Counter Repair Proposal Time Period

2010-06-11T09:10:00.006-05:00

As a follow-up to last week's tip regarding the inspection paragraph, we wanted to point out a potential pitfall in filling in the contract blanks. Since there is no repair limitation in the current contract form, the seller must actually go through the process of pricing requested repairs and either accept the proposed repairs or make a counter repair proposal. This means that it becomes very important to allow sufficient time for the seller to assess the requested repairs and make an appropriate response. You should not, out of force of habit, simply fill in the seller’s response time as “2 days.” In a good number of cases, that will simply not be enough time for the seller to contact various contractors/vendors to arrange for visits to the property and submittal of bids. As a listing agent, you don’t want to have to bear the brunt of your client’s frustration when he scrambles to comply with a contract term that you recommended. A good rule of thumb to follow may be to match the buyer’s inspection period – if you allow the buyer 10 days to do the inspection(s), you may want to allow the seller 10 days to respond. This may not work in all cases as some deals are just “faster” than others. But in all cases, you should give appropriate attention to this time period to avoid problems for everyone.

If you are stuck with a very short period of time for the seller to respond to the buyer's repair request, you could always counter with a specific dollar amount vs. an actual itemization of agreed repairs. For example, if you, as listing agent, receive a 10-page inspection report with over 30 repair items on it on Friday afternoon, and the seller only has 2 days to respond under the contract, rather than actually try to arrange for individual estimates over the weekend you could just counter with an offer to pay a specific amount toward the repairs. This would limit the seller's exposure and allow the buyer to prioritize with that specific amount in mind. This can also save you (or your seller) from scrambling to get repair estimates in a very short time frame and prevent the seller from thinking that you didn't plan very well when you filled the blank in with "2 days."

Remember that this tip applies only to the current Tennessee contract form, as the current Mississippi form (5/06) still contains a repair limitation in paragraph 10. Please contact your Realty Title representative with any questions.

Top Crye-Leike Agents (RT referrals) - May 2010

2010-06-04T14:33:00.004-05:00

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

Top Agents of the Month (Company Wide)
Leigh Anne & Terry Boyd - Olive Branch
Rita Johnson - Olive Branch
Judy McLellan - Quail Hollow
Elbert Carr - Hickory Ridge
Trey Hogue - Cordova
Cheryl Lamghari - Cordova
Rita Hallum - Bartlett
Tommy Salmon - Olive Branch
Curtis Ward - Quail Hollow
Allen Keeton - Quail Hollow

Top Agents of the Year (Company Wide)
Leigh Anne & Terry Boyd - Olive Branch
Judy McLellan - Quail Hollow
Cheryl Lamghari - Cordova
Josie Robinson - Germantown-Forest Hill
Jimmie Hopson - Hickory Ridge
Rita Hallum - Bartlett
Cathay Fleming - Cordova
Susan Brubaker - Quail Hollow
Betty Carter - Cordova
Crystal Burnett - Atoka
Carol Massey - Olive Branch

Agents of the Month (By Branch)
Arlington/Hwy 64 – Mary Ann Tapp
Atoka - Crystal Burnett
Bartlett – Rita Hallum
Collierville – Carlo Van Rantwyk
Cordova – Trey Hogue
Downtown - Kris Gavin
East Memphis – Jim Pascover
Germantown Forest Hill – Josie Robinson
Germantown Poplar – Pat Goldstein
Hernando – Warren Johansen
Hickory Ridge – Elbert Carr
Midtown - Bill Malone
Olive Branch – Leigh Anne & Terry Boyd
Quail Hollow – Judy McLellan
Southaven – Annice Kyle

*Ranked in order by unit numbers
**Managers excluded
***Ties for Agent of the Month are broken by YTD totals for tied agents

Inspection Paragraph - By Bethany Hesser

2010-06-04T09:24:00.003-05:00

A purchaser’s right to make inspections of the property is contained in Section 8 of the Purchase and Sales Agreement (TAR Version 1/1/2010). Specifically, Section 8 (D) covers the process of the buyer submitting his repair requests, and the options that the seller has upon receipt. Our tip this week addresses the importance of meeting the specific deadlines of this section and the impact on your sellers if they are not met.

The Purchase and Sales Agreement states that the buyer shall complete his inspections within certain specified days from the Binding Agreement Date and either:

(1) Give the seller a list of objections, a copy of the inspection reports and terminate the agreement, OR
(2) Accept the property “AS IS”, OR
(3) Provide the seller a copy of the inspection reports and a written list which the purchaser requires to be repaired

The seller then has a deadline for his response, and he may either:

(1) Accept the repair proposal, OR
(2) Submit a counter proposal

If the seller fails to respond within the allowed time, then he has accepted the buyer’s repair proposal. Up to this point, the new Purchase and Sales Agreement is very similar to previous versions. However, the new Purchase and Sales Agreement does not contain what was Section 10 of a previous version, which placed a limit on the amount of repairs the seller is obligated to complete. This means that the seller is now obligated to complete all of the repairs on the buyer’s proposal, regardless of cost, if he fails to respond to the buyer’s repair request.

It is easy to understand what a frustrating situation this can create that can be avoided entirely by making sure that deadlines are met. Having a clear understanding of this issue allows you as an agent to avoid exposing sellers to unexpected and expensive costs.

Realty Title Offices Closed Memorial Day

2010-05-21T16:11:00.003-05:00

Just a reminder that the Realty Title offices will be closed on Monday, May 31, in observance of Memorial Day. This will make the last working day of the month Friday, May 28, so please keep this in mind in scheduling your closings and have a happy and safe Memorial Day weekend.

Borrower Right of Redemption After Foreclosure

2010-05-21T16:03:00.003-05:00

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 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.