Buying real estate that is in bankruptcy

Homes purchased that are part of a bankruptcy can present unique challenges. There are also different types of bankruptcy which can make the transaction even more complex. 

Under Chapters 7 and 11, the trustee is the appointed seller of the home.  In most other cases, the owner is the proper seller.  In either case, a court order authorizing the sale is typically required.   When a home is part of a bankruptcy, it is likely to have other liens and debts attached to it.  Did you know that eliminating a debt does not eliminate a lien?   Once there’s a lien on the property, the lien must be removed in addition to any debt being eliminated. 

When the property’s trustee accepts an offer, all of the lienholders will be notified and they will be given a chance to review the offer. You can see that there are major challenges that come along with buying real estate in bankruptcy. It’s important to know that title insurance can help to avoid a huge headache by checking the liens and insuring that, as a purchaser, you will not be stuck paying for a property that has several liens on it. 

Like it or not, real estate transactions are public record

When a person buys a house or refinances real estate, the warranty deed and mortgage are filed at the courthouse and become public record. Anyone can look up a deed or mortgage to find out how much their neighbor borrowed against their house, and even for how much it was purchased. These public records are the reason people get swamped with junk mail when they refinance or purchase a home. 

Have you ever bought something and then found the same item much cheaper soon after? When buying a home, DO NOT pay any company $89 to get a certified copy of your deed. This is a scam that fools people into paying for something they don’t need. You will receive the original deed at no extra cost. In Georgia, if there comes a time when you need a certified copy, you can get it at the courthouse for $2.50.  

What rights do homeowners have to the alleyways behind their house?

Alleys are found mostly in the City of Atlanta and in older neighborhoods. In the 1980’s, the city of Atlanta decided that was too costly to maintain those alleys. They officially abandoned all alleyways, except for a few specific ones which have been historically maintained. This means that the other rights-of-way were still there, but no one maintained them. Each homeowner gained ownership of half of the alleyway, but subject to an easement right for each homeowner adjacentto the alleyway.

The alleyways can still be utilized, as long as they are in usable condition.  How long does it take for that pot hole to get fixed in front of your house?  If it’s in the alleyway, it’s never going to get fixed unless the owners do it themselves. 

Making a Closing a Pleasant Experience

Spring is right around the corner, which means it is home buying time! New real estate agents come into the market frequently with dreams of working just a few hours a week while earning $100K a year.  We all know that’s unrealistic.  It takes years to build up a client base, and clients only come back when they had a great experience the first time around.  

Delayed closings and extended wait times can really change how a client feels about their experience. Origin Title & Escrow doesn’t waste people’s time because we don’t overbook closings.  Our attorneys have the title information on hand at closing and can easily answer any questions that should arise.  

Buyers always remember the day they got the keys to their new home, ensure it’s a pleasant experience by using Origin Title & Escrow.  

Importance of a Buyer’s Closing Attorney

Buying a home is, perhaps, the largest and most significant investment of your life. It also involves a unique set of property laws that can raise unexpected issues at closing. That’s why a buyer usually selects the attorney to handle the transaction.  

We have a client who is an investor that fixes up and sells old homes. He didn’t quite trust the seller’s closing attorney, so he brought Origin Title on to review the title.  As it turned out, the seller only got a deed from one heir while there were two more individuals with an interest in the property.  Even with title insurance, cleaning up the title would take valuable time and lower the value of the investment.  It’s not always about title insurance, but about seeing the potential problems before buying a property. 

A buyer’s attorney serves to make sure the buyer’s interests are protected. The buyer normally choses the closing attorney, especially in a cash-purchase where the closing attorney represents the buyer.  It is important for cash-purchasers and investors to have an attorney look at title and closing documents on their behalf before closing, even when the seller insists on using their closing attorney.  Origin Title and Escrow can help avoid drawn-out and expensive title issues for their clients. 

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.