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Buyer Beware

Recording Fee Overages

When you receive a small check for $2.00 or less in the mail, do you always deposit it?  Or do you throw it away?

Most closing attorneys have borrowers sign a statement at closing that allows the attorney to keep any overage for recording fees.  This could give an incentive to over-estimate recording costs. 

Origin Title and Escrow does NOT take any money that is not part of our fee.  If it’s listed as a recording fee on the closing statement and we don’t need it to record the deed, it’s returned to the borrower.  If the check never clears, the money then escheats to the state after 7 years.  Unfortunately, over the years, we have given the State of Georgia over $7,000 because borrowers have failed to deposit these small checks.

Hopefully this will soon come to an end because, going into effect January 1st, 2020, recording a document in the State of Georgia will cost a flat fee of $25. It really does matter who the closing attorney is, and borrowers can usually choose their own. Why give away even $10 when it’s not necessary? 

Changes to Recording Fees in the State of Georgia

Things don’t often change with real estate recordings.  In fact, it’s been over 20 years since recording fees changed in Georgia.  But times are changing and Origin Title and Escrow is prepared before they happen.  

Currently, one- or two-page deeds cost $10 or $12, mortgages cost about $60 to record and liens are about $10 to file. However, during the 2019 Legislative session, House Bill 288 was passed which will provide flat recording fees in all counties in the State of Georgia.  Starting January 1st, 2020, recording any document in the real estate records will cost a flat $25, no matter how many pages.  The only exception is that the county will charge $25 for each release. If one affidavit or deed lists three documents to be released, then the recording fee is $75.  Avoid having your filings rejected because of the wrong filing fee. 

Don’t Be Fooled by Last Minute Changes

Wire fraud is a real – and growing – danger for individuals who are buying homes. In 2018, fraudulent wire transfers stole $423 million from US consumers.  The scammer’s favorite tactic involves sending an email to the buyer, telling them to use the new wiring instructions enclosed. Buyers often don’t think to verify the information, they just follow the instructions, and their money is gone.

In 2018, the Federal Trade Commission reported that the three top states for wire fraud were Florida, Georgia and Nevada. The real estate closing attorney will make sure their systems are protected and that funds are transferred to the correct accounts.  Additionally, the attorney should provide wiring instructions early in the closing process, not a day or two before the closing.  Smart buyers should be suspicious of any request to change wiring instructions. They should also verify the information by phone before proceeding.

Tenancy Status Varies by State

In Georgia, people who buy homes together typically choose to declare joint tenancy with right of survivorship. This status guarantees that upon the death of one owner, their ownership interest immediate transfers to the survivor, without the need for probate.

In Florida, homeowners can choose to declare tenancy by the entirety. In this circumstance, the ownership interest cannot be separated. That matters if one spouse opens a credit card on their own, and amasses $50,000 in debt.  In Florida, a lien could not be filed against the house, because the debt did not apply to both spouses. In Georgia, a lien could attach to the property.

Loan officers who are licensed in Georgia and Florida will benefit from working with a closing attorney who is able to close loans in both states. 

Understanding regulations before a home purchase

 A home buyer can decide to undertake the purchase without the benefit of a real estate agent, but if they do, they take on the responsibility for understanding the local and federal regulations that will apply to their transaction. While everyone is most focused on the money that is changing hands, that’s just one of many steps that are legally required for the sale. 

An overconfident buyer may wrongly assume that all the forms they find on the internet are correct, and they may never realize there can be local requirements on the property that have to be met before a sale can occur. For example, in DeKalb County in metro Atlanta, all toilets in the home must be certified as low-flow before the new owner can get water service. Without the awareness of this requirement, a new homeowner might be faced with replacing every toilet in the home – and then getting the certificate of compliance – before the county will turn the water on. 

While it is possible to buy a house without a real estate agent, a closing attorney is required to make sure the transaction follows all the legal requirements of a sale. 

Is it a mistake to do a deal when the property is “for sale by owner”?

We don’t recommend it, but it is possible to buy and sell a house without a real estate agent. 

Even without an agent, a closing attorney is required to complete the sale. The closing attorney will draft and review the sales contract and make sure the transfer of ownership is handled correctly.  

Often a person who has been renting a home will decide to buy it, and they may choose to complete the purchase without a real estate agent. Their first stop should be with a closing attorney.  The attorney will review the title, prepare closing documents, hold the funds for closing, and make all the required payoffs. 

No matter how easy the videos make it sound to buy or sell a house without an agent, smart consumers will be sure to get a closing attorney who will look out for their interests in the transaction.

HOA FEES DISCLOSED COMPLETELY, OR ELSE SELLER PAYS

In 2019, the Georgia Association of Realtors took steps to make sure that all Homeowner Association fees are fully disclosed to the buyer. The contract states that any HOA fee that isn’t disclosed properly will be paid by the seller. This keeps the buyer from being surprised at closing with unexpected fees.

HOA management companies have many fees in many names:  move-in fee, move-out fee, capital contribution, initiation fees, administrative fees, to name just a few.

No matter how complex the fee structure is from the Homeowner Association, it is the seller’s responsibility to accurately disclose the fees on the contract.

Real estate agents who have been surprised by unexpected fees enjoy working with closing attorneys who do not have hidden fees and who will work to be sure their clients don’t wind up owning extra money at closing.

MAKING SURE THERE ARE NO SURPRISES ON MOVE-IN DAY

When a prospective buyer sees a home with a luxury brand French-door refrigerator in the kitchen and the seller’s disclosure indicates the refrigerator stays with the home, said buyer understandably assumes that nice refrigerator is part of the purchase. Sadly, some unscrupulous sellers took advantage of the “loophole” in the seller’s disclosure, and substituted another lower-cost, lower-quality item.

In 2019, the Georgia Association of Realtors took steps to protect buyers from these unscrupulous sellers by modifying the seller’s disclosure statement to make it clear that the items included in the sale must remain, not replaced with something cheaper.

Real estate agents look for closing attorneys who are up to date on regulations and compliance, and who understand the reasons why contract changes are made.

PAYING EARNEST MONEY WITHOUT A CHECK

ACH (Automatic Clearing House) transfers push money from one bank account to another, and it can go two ways. An ACH transfer can send money to an account and it can pull money out of an account.

A wire transfer sends funds from one account to another, but it is always a one-way transaction. It cannot be reversed.

Real estate closing attorneys will sometimes hold earnest money on a residential purchase. The earnest money must clear and be god funds before closing.

As recent grads enter the workforce and consider home ownership, real estate agents who work with them will want to be sure these buyers know they can’t put down earnest money with Apple Pay.

Real estate agents want to know a closing attorney who understands the digital banking landscape and can provide buyers with easy instructions for appropriate methods for the transfer of funds.

SUPER LIENS OUTLIVE FORECLOSURES

Unpaid real estate property taxes never get “forgiven” or wiped out in a foreclosure.

They are super-liens that always have priority and stay attached to the property, no matter what.  In some jurisdictions in Georgia, water bills in the name of the property owner enjoy the same super-lien priority as property taxes.

If a buyer purchases a home and the title search does not uncover a super-lien before closing, then the title insurance company should cover those delinquent taxes – provided the buyer bought an owner’s title policy.

Ultimately, the previous owner is liable for those taxes. But in the case of a foreclosure or a short-sale, it is very unlikely that anyone would be able to collect those taxes from the previous owner. If they had been able to pay the taxes, they would have done so.

Investors who buy distressed properties will want to be sure to investigate the existence of an unpaid tax- or water-bill attached to the property.

Real estate agents who work with investors will enjoy working with a closing attorney who has seen the fall-out from incomplete title searches and can limit exposure to unpaid liens through a complete title search.

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