Paying Attention to Real Estate Contract Deadlines

As an attorney, I have dealt with Texas real estate purchase-sale contracts on numerous occasions—and in particular the TREC-promulgated real estate contracts. In dealing with brokers, real estate agents, buyers and sellers, I have come to the conclusion there is a need on all levels for a greater awareness of the various deadlines and responsibilities placed on each party.

Filling in the many deadline blanks in the TREC contract serves a more important function that just completing the contract. Each deadline is there to allow the buyer ample time to complete the complex due diligence of the property or show the seller that they have a firm buyer. First off, an agent should take due care to make sure the deadlines can be fulfilled realistically. Secondly, because of the busy schedules of the real estate professionals involved in the purchase and sale of real estate, it is easy to miss these deadlines, which could subject an agent to litigation risk should the transaction go bad.

A real estate contract should be read not only for the price, terms and conditions, but also for the critical dates. For example:

• Declaration of Bylaws and Rules of the Association (for condos or PUDs) should be delivered to the buyer by the seller in 20 days of the execution of the contract otherwise; the buyer can cancel the contract. Once the buyer receives the bylaws and rules of the association, the buyer has 6 days to object.
• The same goes for the Resale Certificate which cannot be older than three months. If the buyer objects within the timeframe given, the buyer can cancel and receive refund of earnest money.
• Commitment for Title Insurance is to be delivered to the buyer no later than 20 days along with documents evidencing restrictive covenants or exceptions to policy. If the title commitment is not delivered within 20 days, the contract extends 15 days or until the time of closing, whichever is earlier. Once the commitment is delivered, the buyer has 10 days or until the date of closing, whichever is earlier to make any title objections. If any objections are made, the Seller has 15 days to respond. If the title objections are not cured within 15 days, the buyer can cancel the contract and the earnest money will be refunded.
• From the time an Option Fee is paid the buyer has 10 days to review the contract and if the buyer decides to cancel, the buyer’s earnest money will be refunded, but not the option fee.
• It is customary that Third Party Financing Addendum normally states the buyer must obtain financing within 20 days (although since loan underwriting can take longer, it might be advisable for the buyer to negotiate for more days). Thus, if the buyer can not secure financing in 20 days, then the buyer can cancel and have his earnest money refunded.

These are just a few of the timelines to be aware of. Of course, the parties can always alter the amount of days listed above if agreed to by all parties.

At Griffin Law Firm, because this is such an important aspect of accomplishing the close of a transaction, we assist our real estate clients in keeping up with these deadlines throughout the purchase-sale process.

Sometimes Titles Mean Everything

Oftentimes the title aspect of a purchase transaction can be overlooked as a mere perfunctory function after you have invested much time locating the perfect property for your pernickety client, negotiated the best deal possible for them with an emotional[i] seller, and made sure they can obtain financing in these post-TARP days. [That was a lot; take a deep breath].

However, taking notice of certain items in the title commitment that title companies issue on a property can save your client heartache. It also can save you the weeping and gnashing of teeth that naturally comes from damaged credibility or possible litigation should the client fault you for not advising properly. We all want our clients to have happy thoughts associated with their memory of us, and we work too hard to create that association in order to only lose it.

The title company will ensure, among other things, that vesting is transferred into your client’s name and that all prior liens are removed. But it is advisable that you make sure your client understands all encroachments on the property and that the encroachments do not interfere with their vision for the property.

Schedule B of the title commitment will tell you all that. It lists all deed restrictions and easements, including those created by the municipality or a utility company. And if the metes and bounds gibberish is untranslatable, a new survey based on that Schedule B will give you a graphic representation of those encroachments.

I recently heard about an incident in which a man bought a home and did not notice that the water fountain flowing into the swimming pool sat in a utility easement. Shortly after the purchase, the utility company had to utilize their easement and tore up his beautiful fountain to reach the cables underground. The utility company is under no duty to restore the fountain or compensate the homeowner: it was on their property. Needless to say, the man was more than angry and felt the need to direct that energy at someone. Had the man reviewed his Schedule B, he would have known prior to his purchase that the pool fountain was potentially in jeopardy…unless of course, the title company failed to list the easement in the commitment.

Nonetheless, taking the time to go over these encroachments with your client educates them more about the property they will buy and emboldens your role as their trusted advisor.

At Griffin Law Firm, as a fee office for a title company, we can always assist you in understanding a title commitment we have issued to you. We will be more than glad to educate you on these matters so you can be the expert your client needs when purchasing a home.

Griffin Law Firm focuses in real estate law and is a fee office for a title agency. We handle both residential and commercial transactions and realize your image often hinges on our performance. To open escrow with us, you can reach our office at 800.846.6011 or http://www.mytexastitle.com/.

[i] In your professional opinion, the seller was bipolar.

Our Arlington Location Central To All DFW Real Estate Closings

Griffin Law Firm's office is located in Arlington, Texas between Dallas and Ft. Worth, placing us in a central area to conduct title insurance and escrow closing services for real estate transactions in the Dallas-Ft. Worth metroplex. Unlike many metropolitan areas, DFW is a cluster of many cities like Arlington, Irving, Hurst, Euless, Bedford, Plano, Saginaw, Frisco--and not just Dallas or Ft. Worth. Our location is even central to Weatherford, Crowley, Burleson, Joshua and Cleburne. Much of the DFW metroplex's housing and commercial growth has occurred in these smaller surrounding cities, making our office a prime location for handling title insurance and escrow closing transactions.

What Texas Title Insurance Does

Texas title insurance provides the insured, i.e., the buyer or lender, legal and financial protection against risks unknown at the time a buyer purchases a property or a lender takes a mortgage against it. Any unknown risks could potentially lead to loss of title to the property and/or a significant financial loss.

In exchange for the one-time premium paid at closing, a Texas title insurance policy requires the title insurance company to defend the insured against lawsuits involving title to a property, the establishment of an interest in a property, or the enforcement of an encumbrance against a property. Further a Texas title insurance policy requires the title insurance company to indemnify the insured by either clearing up any title problems or paying the insured's losses. Even though the title insurance premium is paid only once at closing, the buyer's Texas title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it.

Examples of unknown risks that cause a loss of title or create an encumbrance of title are: forged or missing documents, mistakes in recording legal documents, and liens for unpaid estate, inheritance, income, or gift taxes.

Finally, a Texas title insurance policy insures the buyer or lender against mistakes made by the title company in the settlement of the purchase or refinance transaction. For example, should the title company fail to pay the seller's property taxes owed at the time of closing with funds collected for such purposes in the escrow account, the Texas title insurance policy will protect the buyer.

A Good Texas Title Insurance Premium Calculator

With the new Truth-In-Lending regulations in effect, the more accurate you can make your Good Faith Estimate, the more time you save getting your client to closing and the more streamlined the process. The Texas title insurance premium can be a difficult calculation to get right when setting up your GFE. Lenders want various endorsements in addition to the basic title premium. Additionally, if you are facilitating a refinance transaction for a borrower, they may be eligible for the R-8 refinance credit, which could greatly decrease their cost of title insurance. Use MyTexasTitle.com's Texas title premium calculator for an accurate cost of Texas title insurance. Get your Good Faith Estimates right the first time. Go to: http://www.mytexastitle.com/index.php?p=calc.

Texas Allows Personal Property Title Insurance

In 2008, the State of Texas began to allow the issuance personal property title insurance. Some may wonder upon the merits of its usefulness to the title insurance industry and to business as a whole. However, such an insurance product allows the title industry to play a greater role in mergers & acquisition activity. Such insurance product would be highly advisable by any investment bank or law firm representing a buyer conducting any asset-based purchase of a company. In the past, a title insurance company could only offer protection of the title to any real estate involved in a transaction. Companies' balance sheets are never composed just of real estate. Now title companies may offer their customers title insurance protection on a substantial portion of a target company's assets. Simultaneously, the buyer of a company's assets, its lenders and investors may rest assured that they hold marketable title to the assets they purchase.