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Liens 101: a Primer on the Various Types of Liens

There are many different types of liens, and we know them all. Liens are a creation of the legislature designed to allow certain ways to secure debts on real estate.

Here’s a brief introduction.

What is a lien?

A creditor may place a notice on your property requiring you to pay off your debt before you can sell the property and transfer title to the buyer. Liens are usually placed on real estate, but can also be attached to other personal property.

Judgment Liens

A judgment lien can be placed on your real estate or other property when a creditor files a lawsuit against you and wins the court judgment. Judgment liens vary from state-to-state. 

Other Types of Liens

Creditors can also place a lien on your property without suing you in a variety of different ways.

Property Tax Liens

Regardless of when it was placed, a property tax lien takes precedent over other mortgages or liens on your property. Because the government can sell your property to cover your unpaid taxes, lenders will pay the taxes themselves to protect the mortgage and add it to your debt. You might, however, be able to pay the back taxes and get your property back once “sold.” Procedures vary by state.

IRS Liens

If you receive notice from the IRS and still fail to pay your taxes, it can place a lien on your property, especially if they cannot garnish your wages due to unemployed or sporadic employment. The IRS tends to act swiftly and can force a sale of your home if you owe a significant amount.

Mechanic’s Liens

If you hire a contractor and don’t compensate him or her within one to six months, the contractor can place a lien on your property. The contractor can also sue you to enforce the lien within one month to six years, and potentially force the sale of your property. Procedures vary by state.

Child Support Liens

A recipient of alimony or child support from you may put a lien on your property until you pay what you owe, sell or refinance your real estate, or the recipient forces a lien sale. 

Family Law Real Property Lien

In some states, such as California, a spouse may file a lien against his or her community real estate interests to pay attorney fees in a marital action.

Meet BNN Services

Now that you know the different types of liens, it’s time to learn how to protect yourself and your clients from other unnecessary risks. BNN Services has been clarifying risk for its clients for over a decade. Visit our homepage to learn more!

Why You Need Title Insurance for a Newly Constructed Home

If you’re purchasing a brand new house, you’re probably wondering why you need title insurance on a newly constructed home. Title insurance is about protecting yourself from the debts, obligations, and errors to the title that the previous owners of your home may have incurred, but no one has owned your home yet besides you. So what gives? 

The answer is simple: title insurance also protects you from other losses your developer may have incurred. They might have committed fraud or have complicated inheritance issues, which puts your home in jeopardy. Plus, there was a previous owner of the land your home is on. 

Previous Owners of the Land

Who were the previous owners of the land you’re building a home on? Did they have liens against their land, or are their heirs in dispute about the land? Even if this is previously undeveloped land, whoever owned it could have failed to pay their taxes, taken out a lien on it, or died and left a dispute about the land. 

Through the process of securing title insurance, you can discover potential complications like these. The policy will cover the court costs if you need to resolve these issues in court. 

Developer & Clerical Errors 

Owners aren’t the only ones who can incur unresolved debts. If your developer gets into a dispute with a contractor, perhaps by failing to pay them, the contractor can put a lien on the property. No matter how responsible you think your developers are, even a subcontractor of their contractors can place a lien if they are not paid. That can put your title in jeopardy. 

Though you can discover these potential liens, sometimes the clerk will make an error and fail to disclose a lien or other complication on your property. If so, title insurance can also offer you protection from this error. 

Remember, your policy will protect you as long as you have an interest in this property. So, even if an error isn’t discovered until you build the home or move in, you’re still protected by your title insurance. 

Promote Trust 

Ultimately, you want to trust that your developer did everything right, such as purchasing land that doesn’t have any liens and paying all of the contractors involved in their work. Title insurance helps promote trust in the real estate industry. It allows everyone to move forward with their work and purchases even if there may be an error because we all know that we’re protected. That trust is critical.

A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country. Unlike other signing services, BNN Services “touches” each and every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.

 

 

Title Insurer Liability, Third Party Misconduct and Fraudsters on the Rise!

A noteworthy legal precedent about title insurer liability has emerged in a complex four-way suit between three real estate developers and one’s title insurance company.

Chief U.S. District Judge Frank D. Whitney granted a summary judgment motion in favor of Old Republic National Title Insurance Company, affirming that they were not liable for paying damages incurred by client LJW LLC as part of a fraud case.

Case Backstory

The 28-acre development was started in 2007 by Ardley Land LLC, which sold it to Waters, Sr. and LJW in 2012. LJW and its owner Bill Waters were accused of conspiring with Waters’ son and his own company, Reverdy LLC, to cut the disputed property’s original owner out of valuable sales rights. Reverdy (and its owner Waters, Jr.) came to hold the property’s title through a complex series of document exchanges financed by a $1.2m loan from LJW. In exchange, the father-son team allowed Ardley to retain sales rights on several lots in the property and promised that the development would be done by February 2013 to take advantage of the yearly sales-boosting “Homearama” event.

Suit and Damages

Reverdy failed to hit its development deadline, and in January 2013, LJW began the foreclosure process on the entire property. Ardley then filed suit against both Waters under the claim that they had conspired to strip Ardley of rightfully owned assets through inaction. The suit also included a “quiet title” provision that sought to reclaim first lien rights for Ardley, given that the Waters had been working together as essentially one unit.

Ardley came out triumphant, and both LJW and Reverdy were ordered to remediate the damages caused by their fraud. Waters, Sr. then attempted to file restitution with the project’s title insurer Old Republic — but was rapidly shut down.

Quiet Title

Whitney’s ruling rested on the fact that the property’s deed of trust extinguishment was the product of active deception. He also specifically stipulated that even though LJW had asked for the quiet title complaint to be considered separately from suit damages, conspiracy allegations tainted the entire claim.

The legal reasoning is clear: for an insurance system to work for all involved, the beneficiary cannot have an interest in actively causing the circumstances of a claim. In other words, an insurer cannot assume liability for bad behavior on their client.

Fraud Red Flags and other Scams

The employees at BNN services are educated in the latest real estate schemes to protect you, our clients, from fraudulent conduct. With the burgeoning fraudster industry ascending in recent years, we train our specialists in all types of schemes so that we can recognize them before the damage is done.

For a stress-free closing experience, rest easy with BNN Services, on time every time for you!

FAQ on Owners Title Insurance

Question: “I’m getting ready to close on my new home, but there’s a settlement fee for the lender’s title insurance and also a similar one for the owner’s title insurance. Is it essential that I pay both?”

Answer: This question has been around for a long time, and many homeowners get very frustrated when dealing with it. It may seem silly to purchase owner’s title insurance, particularly when they are positive that the person who lived in it previously has been there for a very long time and is an otherwise trustworthy individual.

The first thing that’s important to understand is that obtaining lender’s title insurance is a must if you’re looking to get a mortgage from a commercial lender. Luckily, many states often make it mandatory for the seller themself to cover this cost on their own. In addition to that, many builders will agree to cover this cost for you if you agree to use their preferred lender and escrow organization.

Owner’s insurance, on the other hand, is completely optional. Basically, what title insurance does is cover the buyer and lender both against a loss that can result from a title defect, regardless of whether these are known or completely unknown at the time of the sale.

The above situation could arise in examples where someone who’s in bankruptcy and has no authority to sign a deed conveys it to another party or if, for example, a “buyer” forges a “seller’s” name to transfer the property to his or herself.

There are numerous instances where title issues can arise, and it’s important to realize that title insurance is different from homeowners’ or automobile insurance. Rather than covering a future mishap, it’s covering an existing but possibly unknown issue already in effect. When the seller of the property you’re looking into purchased the property in the past, the insurance policy covered any risks in place when they took the title, but nothing that would have arisen later on.

These situations occur rather frequently, as there may be a mechanic’s lien against the property, the home may have been sold at a tax sale, or the document may have been forged, but there are many other reasons.

It’s a fairly complex issue, but in the end, the decision to get an owner’s title insurance policy is completely up to you, although there are some significant risks if you decide to go without it. Because of that, it’s important to go over the sale with an attorney before actually closing.

A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country.

Unlike other signing services, BNN Services “touches” every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.

Ready to experience the BNN Services difference? Get started today!

A Primer on The Various Forms of Property Deeds

Most real estate transactions use various property deeds to transfer title from the grantor (the previous owner) to the grantee (the new owner). The type of deed used will depend on the type of title warranties and covenants that the grantor provides. Here are a few of the most common forms of property deeds to give you a better idea of what to expect in a real estate transaction:

General Warranty Deed

This type of deed gives the buyer the highest amount of protection. It certifies that the property’s title is clear and the grantor is the true and rightful owner of the property. Essentially, the grantor reassures the grantee with a promise to protect them from any entities that have a lien or claim on the property. A general warranty deed is granted after one’s title insurance company does a title search. After that, the title insurance agency will allow the grantee to buy an insurance policy for further protection from any issues with the title.

Special Warranty Deed

The special warranty deed doesn’t offer the grantee as great protection as a general warranty deed does. This form of property deed will only address any issues with the title that were uncovered during the grantor’s ownership of the home. Basically, the grantor warrants that they have not done anything while holding title to the property that would cause issues. It does not provide a warranty against any problems that existed before the grantor’s ownership of the home.

Quitclaim Deed

A quitclaim deed, or a non-warranty deed, is a form of property deed offering the least amount of protection. The grantor doesn’t make any promises regarding the transfer of clear and free title. So, if there are issues with the title, the grantee will not have any legal recourse against the grantor. Under what circumstances would this deed ever be used, you ask? It is most commonly used when the grantor is unsure of the quality of the title or if they wish not to have any liability. This can also be used when a grantor wants to add someone close to them (i.e., a family member or friend) to the property title or remove them from the title.

Bargain and Sale Deed

Finally, the bargain and sale deed is very similar to a quitclaim deed; however, it offers the grantee reassurance that the grantor is the rightful owner of the property and is at liberty to sell it. This form of deed is often used during foreclosures or court seizures. The grantor will not always be protected by title insurance for this form of a deed, which could put them at risk for a claim or lien on the property.

 A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country.

Unlike other signing services, BNN Services “touches” every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.

Ready to experience the BNN Services difference? Get started today!

 

 

REO 101

Everything You Need to Know About REO

Investing in commercial real estate has been one of the most dependable paths to financial independence in the United States for centuries. Unfortunately, finding the right commercial property to buy is easier said than done.

What Is Real Estate Owned Property?

An REO or real estate-owned property is a property that a lending institution owns. Banks become commercial real estate owners when borrowers cannot make their payments and fail to find new buyers via short sales or auctions. Commercial REOs can be particularly difficult for small-time investors to secure.

The Benefits of Investing in Commercial REOs

The most significant advantage of buying commercial real estate-owned property is the potential for superior returns on investment. Many commercial REOs sell for far less than their market value due to a variety of factors. If a property simply needs a minor cosmetic facelift, a buyer can reap a substantial windfall.

Another great benefit of commercial REOs is the quick turnaround times that often accompany their sales. To put it in simple terms, banks are “motivated sellers” since they do not want non-performing assets on their balance sheets. Banks earn their profits by lending money, not by acting as commercial property managers.

Lastly, commercial REOs allow entry-level investors to get into the commercial real estate game without much capital. If you do a little homework and find a diamond in the rough by scouring commercial REO listings, you can quickly obtain a great property at a fraction of its value.

A Few Notable Commercial REO Downsides to Consider

The most significant risk that commercial REO buyers assume is the possibility of unexpected repair and renovation costs. Most commercial REO properties are sold “as is” and come with no guarantees that they will be viable investments. What’s more, buyers typically do not have much time to assess property beforehand.

Another major wrinkle to ponder is the financing arrangements needed to pull off commercial REO investment. If using a bridge loan to buy a commercial REO, getting the property up to snuff ASAP is critical. Finding a long-term lender to finance your play can be difficult even after the property is renovated.

How to Find Commercial REOs Worth Buying

For the most part, sites like ZillowTrulia, and Redfin are not the best places to find commercial REOs. The good news is that the USDAHUDFannie MaeFreddie MacWells FargoBank of America, and many other lenders maintain their own commercial REO real estate online listings worth perusing.

Most banks that own REOs use realtors to offload the unwanted property. Becoming good friends with local realtors specializing in foreclosure deals is a wise move if you are on the prowl for viable commercial real estate. Top realtors will pay for themselves and then some by directing you to great REOs before they hit the market.

Not every commercial REO worth looking at is owned by a nationwide lender. Many local credit unions have foreclosures on their books that they would like to sell in a hurry. Contact regional banks nearby and ask to speak with their REO specialists to get a better read on your options.

Get Started With REO Properties the Right Way

Commercial REO investment opportunities are everywhere if one knows where to look. Perform extensive due diligence and “kick the tires” on any deal before you make a firm commitment. As long as you understand the potential pitfalls of REO speculation, there is plenty of gold in that market, no matter what the overall economic situation may be.

A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country. Unlike other signing services, BNN Services “touches” each and every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.

 

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